Big Banks' Assets Grew 10% In Q4

The combined resources of the country’s local largest banks grew by nearly 10% in the fourth quarter of 2022, as economic activity continued to pick up.

Photo Insert: BDO Unibank, Inc. (BDO) remained the largest bank in terms of assets with P4.01 trillion as of the fourth quarter.

A quarterly banking report showed the combined assets of 45 universal and commercial banks (U/KBs) jumped by 9.4% to P22.51 trillion from P20.56 trillion in the same three months last year. The Asset growth quickened from the 8.38% year-on-year expansion in the third quarter of 2022 and the 8.59% in the same period in 2021.

Aggregate loans of big banks expanded by 9.73% year-on-year to P11.14 trillion in the October-December period, faster than the 5.93% growth in the same period in 2021. However, it was nearly unchanged from the 9.74% growth in the third quarter.

The fourth quarter also saw nonperforming loans (NPLs) drop by 9.45% year on year to P336.54 billion from P371.65 billion in the fourth quarter of 2021. This brought the NPL ratio, or the bad loans as a portion of the total loan portfolio, to 3.17% in the fourth quarter, higher than the NPL ratio of 2.91% in the third quarter of 2022.

Year-on-year, the NPL ratio was an improvement from 3.95% in the same quarter of 2021, reflecting Filipinos’ increased capacity to repay their loans.

Loans are classified as nonperforming if the principal and/or interest are unpaid for more than 90 days from contractual due date. These may pose risk to the lenders’ asset quality as borrowers are likely to default on these debts.

The big banks’ nonperforming asset (NPA) ratio — the share of NPLs and foreclosed properties to total assets — stood at 0.99% as of the quarter ending December. This was the lowest NPA ratio since 0.91% in the first quarter of 2020, when the coronavirus pandemic began.

Foreclosed real and other properties as a share of the big banks’ total assets steadied to 0.28% quarter-on-quarter but were higher than 0.25% in the final three months of 2021. Meanwhile, total loan loss reserves inched up 0.34% quarter on quarter to P382.54 billion in the fourth quarter. On an annual basis, this was 12.10% higher than P341.23 billion in the fourth quarter of 2021.

Profitability as the median return on equity (RoE) slightly eased to 6.36% from the preceding quarter’s 6.42%, but still higher than the RoE of 3.11% in the fourth quarter of 2021.

The RoE ratio measures the amount that shareholders make on every peso they invest in a firm, and is calculated by dividing the net profit by average capital. It also measures how well a firm makes use of the money from shareholders to generate income.

BDO Unibank, Inc. (BDO) remained the largest bank in terms of assets with P4.01 trillion as of the fourth quarter. State-owned Land Bank of the Philippines (LANDBANK) came in second with P3.16 trillion, while Metropolitan Bank & Trust Co. (Metrobank) ranked third with P2.92 trillion.

The Sy-led bank was also the top bank in terms of loans issued with P2.53 trillion, followed by Bank of the Philippine Islands (BPI)’s P1.69 trillion and Metrobank’s P1.39 trillion.

Among banks with assets of at least P100 billion, Union Bank of the Philippines (UnionBank) posted the fastest year-on-year asset growth of 31.13%, followed by China Banking Corp. (27.94%), and Security Bank Corp. (25.46%).

Hongkong and Shanghai Banking Corp. Ltd. saw the quickest loan growth, with a year-on-year expansion of 70.78%, followed by Bank of Commerce (42.64%) and UnionBank (42.52%). BDO had the most deposits with P3.22 trillion, followed by LANDBANK with P2.78 trillion and Metrobank with P2.22 trillion.

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