Philippine banks show robust Q2 growth in profitability

The banking sector witnessed improvements in its return on assets (ROA) and return on equity (ROE) during the second quarter.

According to data from the Bangko Sentral ng Pilipinas (BSP), the ROA had climbed to 1.57 percent by the end of June, up 1.52 percent at the close of March and a substantial increase from the 1.19 percent recorded in the same period in 2022.

The industry’s cost-to-income ratio surged to 61.48 percent at the end of June, marking an increase from 54.97 percent in the preceding quarter and 58.95 percent in June last year.

The cost-to-income ratio gauges the percentage of non-interest expenses, net of impairment losses, in relation to total operating income.

The ROA, signifying the percentage of net profit or loss in proportion to average assets, demonstrated robust performance, with annualized net profit for banks reaching P349.5 billion by the end of June. Average assets also rose to P21.32 trillionwhile total assets stood at P23.27 trillion.

ROE, measuring the percentage of net profit or loss relative to average capital, was calculated based on an average capital of P2.71 trillion in the second quarter, surpassing the figure recorded during the corresponding period the previous year, which stood at P2.54 trillion.

The BSP, in its report, highlighted the banking sector’s strong performance, as evidenced by its continuous expansion in assets, deposits, and profits, coupled with stable capital, liquidity buffers, and substantial provisions for credit losses.

By the end of June, banks’cumulative net profits grew 24.7 percent to P178.50 billion.