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Thrift Bank's profits grow 126% Saturday, September 7, 2013

Published on Manila Bulletin
by Lee C. Chiponglan

The thrift banking sector posted profits of P4.976 billion in the first quarter, up 126 percent year-on-year based on data culled by the Bangko Sentral ng Pilipinas (BSP).
The BSP currently supervise 70 thrift banks. In the first three months, the industry reported a 71 percent increase in non-interest income of P7.399 billion. These are trading income or from treasury gains. The sector’s interest income which comes from lending activities rose 9.92 percent to P7.875 billion as of end-March. 
The BSP noted that thrift banks’ return on equity slipped to 3.38 percent during the period from 13.57 percent the same time in 2012. Return on assets slightly improved to 1.76 percent from 1.63 percent last year. The middle-capitalized banks have also brought down its cost to income ratio of 65.31 percent as of end-March from 66.56 percent in 2012. 
Of the 70 thrift banks, the Ayala controlled BPI Family Savings Bank is the biggest in asset size as of end-March. The bank has P164.65 billion total assets. The Metrobank subsidiary PS Bank is second largest with P115.97 billion followed by RCBC Savings Bank with P63.68 billion.
Thrift banks in the top 10 also include Planters Development Bank, Philippine Business Bank, Sterling Bank of Asia, HSBC Savings Bank, City Savings Bank, China Bank Savings and Citibank Savings.
Thrift banks, especially subsidiary units of the big universal and commercial banks, have a large portion of the industry’s property and car loans.
In a separate report, the BSP said the thrift banks’ non-performing loans (NPL) ratio increased to 5.34 percent at the end of 2012, mostly soured loans from the real estate and wholesale and retail trade sectors.
The BSP said the expansion in the NPL real estate, wholesale and retail trade loans of most thrift banks triggered the build-up in the industry’s NPLs. At the end of December, thrift banks’ total loan portfolio amounted to P446.56 billion, about 10.65 percent of the entire banking system’s total loan portfolio.
The thrift banks’ NPL coverage ratio or loan loss reserves to NPLs decreased to 64.59 percent during the period from 71.55 percent in end-June. Compared to the same period in 2011 however, provisioning was higher.
“This also indicates that the industry’s credit risk remains well-contained amid the current low-interest market environment and growing domestic economy,” noted the BSP.
The real estate loans and loans to individuals for consumption purposes and financial intermediation sectors account for bulk of releases or about 70.47 percent of total.

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