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March 22, 2023

Philippines banks reach peak profit in 2022

The growth was mainly due to higher interest income.

Banks in the Philippines saw a 37.5% increase in their earnings from 2021 to 2022, reaching an all-time high of P309 billion, according to data from the Bangko Sentral ng Pilipinas (BSP). This was largely due to higher interest income from the aggressive rate hikes implemented by the BSP, as well as increased trading gains. The previous record high was P230.67 billion, recorded in 2019.

Operating income for the banking sector also saw a 15.5% increase from P869.42 billion in 2021 to P1 trillion in 2022. Net interest income increased by 12.8% from P661.84 billion to P746.46 billion, driven by a 16% rise in interest income to P901.84 billion from P777.23 billion. Interest expenses also increased by 34.6% to P154.89 billion.

In addition, the sector’s non-interest earnings increased by 24.1%, from P207.59 billion to P257.55 billion, due to a 70.4% increase in trading gains. Fees and commission income also saw double-digit growth of 13.6% from P107.25 billion in 2021 to P121.85 billion. The non-interest expenditures of banks increased by 8.2% from P512.37 billion to P554.22 billion.

The credit loss provision for loans and other financial assets dropped 1.8% to P104.44 billion in 2022, as the economy re-opened from COVID-19 restrictions. The country’s gross domestic product grew by 7.6% in 2022, exceeding the government’s target range of 6.5 to 7.5%.