By Lee C. Chipongian

Thrift banks reported combined net profits of P12.38 billion as of end-September, slightly more than same time last year of P12.27 billion, data from the Bangko Sentral ng Pilipinas (BSP) show.

The third quarter’s modest 0.94 percent year-on-year net profit growth is an improvement from the previous quarter’s net loss of 1.81 percent.

These mid-sized banks reported a net interest income from lending and deposit-taking activities of P46.80 billion as of end-September, up 9.17 percent from same time in 2017 of P42.86 billion.

Non-interest income however continue to decline, amounting to P9.74 billion compared to same time last year of P10.41 billion or down 6.44 percent. This is better than the second quarter’s 40 percent year-on-year drop because of lower income from fixed-income securities.

BSP Deputy Governor Chuchi G. Fonacier said thrift banks’ loan portfolio growth is supported by adequate capitalization. The thrift banking industry’s risk-based capital adequacy ratio stood at 15.79 percent as of June this year and above the BSP’s requirement, she noted. “Retained earnings was the industry’s primary source of capital as thrift banks registered steady profitability (in the third quarter this year),” said Fonacier.

As of end-October this year, there are 54 thrift banks supervised by the BSP. The top ten thrift banks are BPI Family Savings Bank, Philippine Savings Bank, RCBC Savings Bank, Philippine Business Bank and China Bank Savings. This list also includes PNB Savings Bank, Sterling Bank of Asia, Bank of Makati, UCPB Savings Bank and First Consolidated Bank.

Fonacier said the thrift banking sector has been growing its client base by investing more in technology, strengthening its risk management particularly credit risk and cybersecurity risk.

Thrift banks’ assets rose by 6.8 percent year-on-year to P1.2 trillion as of the end of the third quarter, boosted by its 5.62 percent growth in total deposits of P970 billion as of end-September this year.

Fonacier also said that the sector continue to enjoy sustained lending with P95.5 billion in credit to MSMEs in June, which was 6.7 percent higher than same time in 2017. Its household consumption loans accounted for about 35.8 percent of total lending.

However, the BSP official said the industry should “remain vigilant” when it comes to the quality of its loan portfolio since in September, thrift banks had a higher non-performing loans (NPL) ratio of 5.2 percent versus same time last year of 4.9 percent. Its NPL coverage ratio also dropped from 69.9 percent to 57.6 percent.

Still, Fonacier said the industry remains bullish in its outlook, citing the BSP’s newest survey, the Banking Sector Outlook Survey before a recent gathering of the Chamber of Thrift Bank members.

The survey revealed that 75 percent of 54 thrift banks expect the economy to grow between five to seven percent until 2020, while 61 percent think the local banking system will remain strong and stable in the next two years.