Classification: GENERAL

This semestral report is prepared by the Supervisory Policy and Research Department, Financial Supervision Sector,
Bangko Sentral ng Pilipinas pursuant to Section 39(c), Article V of Republic Act (R.A.) No. 7653 (The New
Central Bank Act), as amended by R.A. No. 11211, R.A. No. 7906 (Thrift Bank Act of 1995), R.A. No. 7353 (Rural
Bank Act of 1992), as amended by R.A. No. 10574, R.A No. 7721 (Foreign Banks Law), as amended by R.A. No. 10641,
R.A. No. 8367 (Revised Non-Stock Savings and Loans Association of 1997), R.A. No. 9178
(Barangay Micro Business Enterprises Act of 2002), R.A. No. 10000 (Agri-Agra Reform Act of 2009), and
R.A. No. 11901 (The Agriculture, Fisheries and Rural Development Financing Enhancement Act of 2022).

The report is available at http://www.bsp.gov.ph.

Table of Contents

i Glossary of Terms
viii Prologue

1 Highlights of the Report

The Banking Sector

5 The Philippine Banking System

19 Box Article 1: Developments on the Implementation of the New

Agri-Agra and Rural Financing Law
20 Foreign Bank Branches and Subsidiaries
24 Foreign Currency Deposit Unit Operations

29 Trust Operations

36 The BSP-supervised Non-Bank Financial Institutions

41 Policy Reform Agenda
46 Box Article 2: Visualization Tool for Analytics (VisTA)

47 Box Article 3: Building Resiliency of Banks through Enhancements of

the Recovery Planning Requirements

Annexes
49 Annex 1: Implementation of Barangay Micro Business Enterprise Act

53 Annex 2: Survey Results on the Implementation of Foreign Banks Law

58 Appendices
 Glossary of Terms

A. FINANCIAL TERMS

1. Agency account – the account wherein the trust institution (agent) binds itself to render
asset management services in representation, or on behalf, of the client (principal) with the
consent or authority of the latter. The trust institution, as agent, does not hold legal title to
the asset as it remains with the principal. In providing wealth, asset or fund management
services to the client, the trust institution exercises either discretionary or non-discretionary
investment authority under an agency contract.

2. Assigned capital - refers to the capital permanently assigned by a foreign bank to its
branches operating in the Philippines pursuant to Section 4 of Republic Act No. 7721 (An Act
Liberalizing the Entry and Scope of Operations of Foreign Banks in the Philippines and For
Other Purposes).

3. Bonds payable – the amortized cost of obligations arising from the issuance of bonds.

4. Capital – the total of the unimpaired paid-in capital, surplus and undivided profits, subject
to adjustments. The term is synonymous with unimpaired capital and surplus, combined
capital accounts and net worth.

5. Common equity Tier 1 (CET1) capital – for domestic banks, consists of paid-up common
stock, common stock dividend distributable, additional paid-in capital, deposit for stock
subscription, retained earnings, undivided profits, other comprehensive income, and
minority interest in subsidiary banks, subject to regulatory adjustments. For branches of
foreign banks, this consists of permanently assigned capital, undivided profits, retained
earnings, accumulated net earnings and other comprehensive income, subject to regulatory
adjustments.

6. Credit risk – risk of default on a debt that may arise from a borrower failing to make required
payments such as failure to repay a loan.

i 7. Demand deposit – deposits subject to withdrawal by check through available bank

channels. Also known as current or checking accounts, these deposits may or may not earn
interest.

8. Deposit substitute – an alternative form of obtaining funds from the public, other than
deposits, through the issuance, endorsement, or acceptance of debt instruments for the
borrower’s own account, for the purpose of relending or purchasing of receivables and other
obligations. These instruments may include bankers’ acceptances, promissory notes,
participations, certificates of assignment and similar instruments with recourse, and
repurchase agreements. The phrase "obtaining funds from the public" shall mean borrowing
from 20 or more lenders at any one time, and, for this purpose, "lenders" shall refer to
individuals and corporate entities that are not acting as financial intermediaries subject to
the safeguards and regulations issued by the Monetary Board. The Monetary Board shall
determine what specific instruments shall be considered as deposit substitutes for purposes
of Section 94 of Republic Act (R.A.) No. 11211, provided, however, that deposit substitutes of
commercial, industrial, and other non-financial companies for the limited purpose of
financing their own needs or the needs of their agents or dealers shall not be covered by the
provisions of Section 94 of R.A. No. 11211.

9. Derivative – a financial instrument or other contract with all of the following characteristics:
a. its value changes in response to the change in a specified interest rate, financial
instrument price, commodity price, foreign exchange rate, index of prices or rates, credit
rating or credit index, or other variable, provided that, in the case of a non-financial
variable, the variable is not specific to a party to the contract (sometimes called the
“underlying”);
b. it requires no initial net investment or an initial net investment that is smaller than what
is required for other types of contracts that would be expected to have a similar response
to changes in market factors; and
c. it is settled at a future date.

10. Digital bank – a bank that offers financial products and services that are processed end-to-
end through a digital platform or electronic channels with no physical branches offering
financial products and services. This is a new bank category that is separate and distinct
from existing bank classifications.

Financial Supervision Sector

 Glossary of Terms

11. Distressed assets – the sum of non-performing loans and real and other properties acquired
(ROPA), gross non-current assets held for sale and performing restructured loans.

12. Dividend income – cash dividends earned or actually collected on equity instruments.

13. Earning assets – the sum of (1) due from BSP; (2) due from other banks; (3) financial assets –
debt instruments measured at fair value through profit or loss (FVTPL) at fair value through
other comprehensive income (FVOCI) and at amortized cost; (4) financial assets – derivatives
with positive fair value held for trading (stand‑alone and embedded); and (5) total loan
portfolio inclusive of interbank loans (IBL) and loans and receivables arising from repurchase
agreements, certificates of assignment or participation with recourse and securities lending
and borrowing transactions (RRPs), net of allowance.

14. Equity investments – investments in the equities or shares of stock of subsidiaries,

associates, and joint ventures.

15. Fee-based income – the sum of income from payment services, intermediation services,
custodianship, underwriting and securities dealership, securitization activities, fiduciary
activities, and other fee-based revenues.

16. Financial assets (other than loans and receivables) – the sum of all investments in debt and
equity instruments measured and classified based on their contractual cash flow
characteristics and the business model for holding the instruments as provided under the
Philippine Financial Reporting Standards 9 (PFRS 9). The measurement categories in which
financial assets shall be classified are as follows: (a) debt instruments measured at FVTPL; (b)
debt instruments at FVOCI; (c) debt instruments at amortized cost; (d) equity instruments
at FVTPL, including those held-for-trading (HFT), and at FVOCI; and (e) derivatives at FVTPL.

17. Financial assets measured at amortized cost – a debt instrument, other than those that are
designated at fair value through profit or loss, which is held within a business model whose
objective is to hold financial assets in order to collect contractual cash flows; and where its
contractual terms give rise on specified dates to cash flows that are solely payments of ii
principal and interest on the principal amount outstanding.

18. Financial liabilities designated at fair value through profit or loss (DFVPL) – financial
liabilities that, upon initial recognition, are designated by the bank at fair value through
profit or loss.

19. Financial liabilities HFT – the sum of derivatives with negative fair value HFT and liability for
short position.

20. Financial reporting package (FRP) – a set of financial statements for prudential reporting
purposes composed of the balance sheet, income statement and supporting schedules. The
FRP is primarily designed to align the BSP reportorial requirements with the provisions of
the PFRS and Basel Capital Adequacy Framework. It is also designed to meet the BSP’s
statistical requirements.

21. Financial soundness indicators (FSIs) – a set of key data on the current financial health and
soundness of a country's financial institutions as well as its corporate and household sectors.
They include both aggregate data on individual financial institutions and indicators that are
representative of the markets in which the financial institutions operate. Supervisory data
are important sources for calculation of FSIs. The indicators are calculated and disseminated
to support macroprudential analysis.

22. Foreign currency deposit unit (FCDU)– a unit of a local bank or of a local branch of a foreign
bank authorized by the BSP to engage in foreign currency-denominated transactions,
pursuant to the provisions of Republic Act (R.A.) No. 6426 (Foreign Currency Deposit Act of
the Philippines), as amended.

23. Gains/(losses) on financial assets and liabilities HFT or Trading income (loss) – the sum of
realized gains/(losses) from sale/derecognition of, and unrealized gains (losses) from
marking-to-market of financial assets and liabilities HFT as well as realized gains/(losses)
from foreign exchange transactions.

Supervisory Policy and Research Department

 Glossary of Terms

24. Gross assets – total assets plus allowance on non-performing assets or NPA (allowance for
credit losses on loans; allowance for credit losses on sales contract receivable; accumulated
depreciation and allowance for losses on real and other properties acquired; and allowance
for losses on non-current assets held for sale).

25. Gross domestic product (GDP) – the sum of the gross value added of all resident producer
units. Gross value added is defined as the value of output less the value of intermediate
consumption. Output, in turn, refers to the goods and services produced by an
establishment. It is equal to the value of sales adjusted for the changes in inventories of
finished goods, that is, goods produced and ready for sale but not yet sold, or goods sold
adjusted for sales of goods produced in an earlier period. Meanwhile, intermediate
consumption consists of the value of the goods and services consumed as inputs by a
process of production, excluding fixed assets whose consumption is recorded as
consumption of fixed capital.

26. High-quality liquid assets (HQLA) – an asset that can be converted easily and immediately
into cash at little or no loss of value in private markets to meet the banks' liquidity needs
during times of stress. To qualify as HQLA, the liquid asset should possess the asset and
market liquidity characteristics, and should satisfy the operational requirements, for
monetization prescribed under the liquidity coverage ratio standard.

27. Income tax expense – the periodic provision for income tax.

28. Interest-bearing liabilities – the sum of financial liabilities HFT, financial liabilities at DFVPL,
deposit liabilities, due to other banks, bills payable, unsecured subordinated debt, bonds
payable, redeemable preferred shares, derivatives with negative fair value held for hedging,
and finance lease payment payable.

29. Islamic bank – refers to a bank that conducts banking business with objectives and
operations that do not involve interest (riba) as prohibited by the Shari’ah and which
conducts business in accordance with the principles of the Shari’ah.1
iii
30. Liquid assets – the sum of cash and due from banks as well as net financial assets, exclusive
of equity investments.

31. Liquidity risk – the current and prospective risk to earnings or capital arising from a bank’s
inability to meet its obligations when they fall due without incurring unacceptable losses or
costs. Liquidity risk includes the inability to manage unplanned decreases or changes in
funding sources.

32. Loans to regular banking unit (RBU) by FCDU/EFCDU – FCDU/EFCDU funds lent to RBU, as
allowed under existing regulations.

33. Long-term negotiable certificates of deposit (LTNCD) – interest bearing negotiable

certificates of deposit with a minimum maturity of five years.

34. Market risk – the risk to earnings or capital arising from adverse movements in factors that
affect the market value of instruments, products, and transactions in an institution’s overall
portfolio, both on- or off-balance sheet. Market risk arises from market-making, dealing, and
position–taking in interest rate, foreign exchange, equity and commodities markets.

35. Money Service Business (MSB) - any entity that engages in remittance, money changing
and/or foreign exchange dealings. This includes remittance agent and sub-agent,
remittance platform provider, E-money issuer and money changers or foreign exchange
dealers.

36. Negotiable order of withdrawal (NOW) accounts – interest-bearing deposit accounts that
combine the payable on demand feature of checks and investment feature of savings
accounts.

37. Net interest income (NII) – the difference between interest income, and the sum of provision
for losses on accrued interest income from financial assets and interest expense.

1
Republic Act No. 11439 dated 22 Aug 2019 (An Act Providing for the Regulation and Organization of Islamic Banks).

Financial Supervision Sector

 Glossary of Terms

38. Net profit/(loss) – the difference of total operating income and non-interest expenses,
plus/(less) the recoveries/(losses) on financial assets, share in the profit/(loss) of
unconsolidated subsidiaries, associates, joint ventures, and minority interest in profit/(loss)
of subsidiaries, less provision for income taxes.

39. Non-interest expenses – the sum of compensation and fringe benefits, taxes and licenses,
fees and commissions, other administrative expenses, depreciation and amortization, and
impairment losses and provisions.

40. Non-interest income – the sum of dividend income, fee-based income (including income
from fiduciary activities), gains on financial assets and liabilities HFT, foreign exchange
profits, profits from sale/derecognition of non‑trading financial assets and liabilities, profits
from sale/derecognition of non-financial assets, profits on financial assets and liabilities
DFVPL, profits on fair value adjustment in hedge accounting and other non-interest income.

41. Non-performing assets (NPAs) – the sum of non-performing loans (NPL) and ROPA, gross,
excluding performing SCR (as provided under Circular No. 380 dated 28 March 2003) and
including NCAHS (as provided under Circular No. 512 dated 3 February 2006).

42. Non-performing loans (NPLs) – loans, investments, receivables, or any financial asset that
are considered impaired under existing accounting standards, classified as doubtful or loss,
in litigation, or with signs that full repayment of principal and interest is unlikely without
foreclosure of collateral, if any. Net NPL refers to gross NPLs less specific allowance for credit
losses on NPLs.

43. Open foreign exchange position – the extent that banks' foreign exchange assets do not
match their foreign exchange liabilities. An open position may either be "positive", "long", or
"overbought" (i.e., foreign exchange assets exceed foreign exchange liabilities) or "negative",
"short", or "oversold" (i.e., foreign exchange liabilities exceed foreign exchange assets).

44. Pawnshop Business - the business of lending money on personal property that is physically
delivered to the control and possession of the pawnshop operator as loan collateral. The iv
term shall be synonymous, and may be used interchangeably, with pawnbroker or pawn
brokerage.

45. Personal equity and retirement account (PERA) – a voluntary retirement saving program
that supplements the existing retirement benefits from the Social Security System,
Government Service Insurance System and employers. A Filipino citizen with the capacity
to contract and obtain a Tax Identification Number can be a PERA contributor.

46. Provision for losses on accrued interest income from financial assets – the impairment loss
on accrued interest income from loans and other financial assets, net of equity securities,
charged against current operations.

47. Quasi-banks (QBs) – entities engaged in the borrowing of funds through the issuance,
endorsement or assignment with recourse or acceptance of deposit substitutes as defined
in Section 95 of RA No. 7653 (the New Central Bank Act), as amended, for purposes of
relending or purchasing of receivables and other obligations. The elements of quasi–banking
are:
a. borrowing funds for the borrower’s own account;
b. 20 or more lenders at any one time, whereby lenders shall refer to individuals and
corporate entities that are not banks, quasi-banks or other financial intermediaries;
c. methods of borrowing are issuance, endorsement, or acceptance of debt instruments
of any kind, other than deposits, such as acceptances, promissory notes, participations,
certificates of assignments or similar instruments with recourse, trust certificates,
repurchase agreements, and such other instruments as the Monetary Board may
determine; and
d. the purpose of which is relending or purchasing receivables and other obligations.

48. Real and other properties acquired (ROPA) – real and other properties, other than those
used for banking purposes or held for investment, acquired by the bank in settlement of
loans through foreclosure or dation in payment (dacion en pago) or for other reasons, whose
carrying amount will be recovered principally through a sale transaction.

Supervisory Policy and Research Department

 Glossary of Terms

49. Real estate exposures (REEs) – assets held by financial institutions made up of:
a. real estate loans (RELs), which, in turn, consist of:
• residential RELs to individual households for occupancy; and
• commercial RELs, which refer to loans granted for purposes of financing real estate
activities, to the following:
i. individuals (including sole proprietorships), other than residential real estate
loans granted to individual households for occupancy;
ii. land developers and construction companies; and
iii. other corporate borrowers, such as real estate brokers, real estate lessors,
property management companies, and holding companies;
b. investments in debt and equity securities issued by land developers, construction
companies and other corporate borrowers for purposes of financing real estate
activities.

REEs do not include loans and investments in debt and equity securities, which are used to
finance infrastructure projects for public use.

50. Recoveries on charged-off financial assets – the collection of accounts or recovery from
impairment of charged-off financial assets and financial assets provided with allowance for
credit losses.

51. Redeemable preferred shares – preferred shares issued that provide for redemption on a
specific date.

52. Relief measures – policy and regulatory issuances of the BSP especially aimed at providing
assistance to BSP-supervised financial institutions (BSFIs) and support to household and
business enterprises to help them endure the adverse effects of the COVID-19 pandemic
crisis. These regulatory and operational relief measures are meant to encourage BSFIs to
extend financial relief to their borrowers, incentivize bank lending, promote continued
access to credit and financial services, ensure continued delivery of financial services to
enable consumers to complete financial transactions during the quarantine period and
support the level of domestic liquidity during the pandemic.
v
53. Residential real estate price index (RREPI) – an indicator of change in the prices of
residential properties in the Philippines over a period of time. The growth rate of the index
measures house price inflation.

54. Restructured loans – loans and other credit accommodations the original contractual terms
and conditions of which have been modified in accordance with a formal restructuring
agreement that sets forth a revised schedule of payments for the purpose of lessening the
financial difficulty of the borrower and maximizing collection and realizable economic
value on an obligation within a reasonable period of time.

55. Sales contract receivable (SCR) – the amortized cost of assets acquired in settlement of
loans through foreclosure or dation in payment (dacion en pago) and subsequently sold on
installment basis whereby the title to the said property is transferred to the buyers only upon
full payment of the agreed selling price.

56. Savings deposit – interest- or non-interest-bearing deposits that are withdrawable upon
demand through available bank channels.

57. Securities – a fungible, negotiable financial instrument that holds some type of monetary
value. It is generally categorized into two: a) equity securities, or securities that represent
ownership interest held by shareholders in an entity, realized in the form of shares of capital
stock, and b) debt securities, or securities that represent borrowed money that must be
repaid, with terms that stipulate the size of the loan, interest rate, and maturity or renewal
date.

58. Shari’ah – refers to the practical divine law deduced from its legitimate sources: the
Qur’an, Sunnah, consensus of Muslim scholars, analogical deduction and other
approved sources of Islamic law.2

2
Ibid, footnote 1.

Financial Supervision Sector

 Glossary of Terms

59. Sustainable finance – any form of financial product or service that integrates environmental,
social and governance criteria into business decisions that support economic growth and
provides lasting benefit for both clients and society while reducing pressures on the
environment. This also covers green finance, which is designed to facilitate the flow of funds
towards environmentally friendly economic activities as well as climate change mitigation
and adaptation projects.

60. Tier 1 capital – also known as going-concern capital and is composed of CET1 and additional
Tier 1 capital.

61. Time certificates of deposit – interest-bearing deposits with specific maturity dates and
evidenced by certificates issued by the bank.

62. Total assets – the sum of all net assets, adjusted for net due from head office, branches or
agencies and due to head office, branches or agencies of foreign bank branches.

63. Total operating income - the sum of net interest income and non–interest income.

64. Trust – a relationship or an arrangement whereby a person called a trustee is appointed by

a person called a trustor to administer, hold and manage funds or property of the trust or
for the benefit of a beneficiary.

65. Trust account – the account wherein legal title to funds or properties of the trustor is
transferred to the trustee (trust institution), subject to an equitable obligation of the trustee
to administer, hold and manage such funds and or properties for the use, benefit or
advantage of the trustor or other designated beneficiaries. These consist of wealth, asset or
fund management services to the client where the trust institution exercises either
discretionary or non-discretionary investment authority.

66. Trust business – any activity resulting from a trustor-trustee relationship (trusteeship)
involving the appointment of a trustee by a trustor for the administration, holding, and
management of funds and properties of the trustor by the trustee for the use, benefit, or vi
advantage of the trustor or of others called beneficiaries.

67. Unit investment trust fund (UITF) – an open-ended, pooled trust fund denominated in pesos
or any acceptable currency that are operated and administered by a trust entity and made
available by participation. As an open-ended fund, participation or redemption is allowed
as often as stated in its rules.

68. Visualization Tool for Analytics (VisTA) – it is an in interactive analytics tool and supervision
technology or SupTech that provides quick data-driven insights to internal and external
stakeholders. As an application of data analytics and business intelligence, the ViSTA
provides relevant information pertaining to the financial condition of the banking system
that can be swiftly analyzed for reporting and policy making.

B. FINANCIAL AND OTHER RATIOS

1. Basel III leverage ratio (BLR) – the percentage of capital (i.e., Tier 1 capital) to exposure
measure (composed of on-balance sheet exposures, derivatives, securities financing
transactions and off-balance sheet items). The BLR is designed to act as a supplementary
measure to the risk-based capital requirements aimed at restricting the build-up of leverage
in the banking sector.

2. Capital adequacy ratio (CAR) – the percentage of total qualifying capital to risk-weighted
assets computed in accordance with the risk-based capital adequacy framework. The
current capital framework incorporates credit risk (Circular No. 280 dated 29 March 2001),
market risk (Circular No. 360 dated 3 December 2002), operational risk (Circular No. 538
dated 4 August 2006), capital conservation buffer (Circular No. 781 dated 15 January 2013),
countercyclical capital buffer (Circular No. 1024 dated 6 December 2018), and higher loss
absorbency (HLA) capital requirement for domestic systemically important bank (D-SIB)
(Circular No. 856 dated 29 October 2014, as amended).

3. Common equity tier 1 (CET1) ratio – the percentage of regulatory CET1 capital to risk-
weighted assets.

Supervisory Policy and Research Department

 Glossary of Terms

4. Cost-to-income ratio – the percentage of non-interest expenses, net of impairment losses,

to total operating income.

5. Deposits to net loans ratio – the percentage of total deposits to total loan portfolio, exclusive
of interbank loans.

6. Distressed assets ratio – the percentage of distressed assets to total loans (gross of
allowance for probable losses), inclusive of interbank loans, plus ROPA (gross of allowance
for losses).

7. Earning asset yield – the percentage of interest income to average earning assets.

8. Efficiency ratio – measures the ability of the bank to generate income using its assets. It is
the percentage of total expenses to total revenues.

9. Funding cost – the percentage of interest expenses to average interest-bearing liabilities.

10. Interest spread – the difference between earning asset yield and funding cost.

11. Liquid asset ratio – the percentage of liquid assets to total assets.

12. Liquid asset-to-deposit ratio – the percentage of liquid assets to total deposits.

13. Liquidity coverage ratio (LCR) – the percentage of high-quality liquid assets to total net cash
outflows.

14. Loan concentration by counterparty – the percentage of lending to major counterparties to

total loan portfolio.

15. Loan concentration by economic activity – the percentage of lending to major economic
activities to total loan portfolio.
vii
16. Minimum liquidity ratio (MLR) – the percentage of a bank’s or QB's eligible stock of liquid
assets to its total qualifying liabilities. This is applicable to standalone thrift banks, rural and
cooperative banks and QBs.

17. Net interest income-to-total operating income ratio – the proportion of net interest income
to total operating income.

18. Net interest margin (NIM) – the percentage of net interest income to average earning assets.

19. Net stable funding ratio (NSFR) – the percentage of a covered bank’s or QB’s available stable
funding to its required stable funding.

20. NPA coverage ratio – the percentage of allowance on NPAs to total NPAs.

21. NPA ratio – the percentage of NPAs to total assets, gross of allowance for credit losses.

22. NPL coverage ratio – the percentage of allowance for credit losses on loans to total NPLs.

23. NPL ratio – the percentage of NPLs to total loans (gross of allowance for credit losses),
inclusive of interbank loans.

24. Return on assets (RoA) – the percentage of net profit or loss to average assets.

25. Return on equity (RoE) – the percentage of net profit or loss to average capital.

6 4

Financial Supervision Sector

Prologue
The Report on the Philippine Financial System is a semestral report prepared by the Supervisory
Policy and Research Department (SPRD), Financial Supervision Sector (FSS), Bangko Sentral ng
Pilipinas (BSP), to be submitted by the Governor to the President and the Congress, pursuant to
Section 39 (c), Article V of Republic Act (R.A.) No. 7653 or The New Central Bank Act, as amended by
R.A. No. 11211, and other pertinent laws.

R.A. No. 11211 expanded the BSP supervisory powers over money service businesses, credit granting
businesses and payment system operators. Meanwhile, R.A. No. 11127 (The National Payment Systems
Act) mandated the BSP to oversee the payment systems in the country. Moreover, R.A. No. 11439 (An
Act Providing for the Regulation and Organization of Islamic Banks) mandated the BSP to regulate
and supervise the operations of Islamic banks in the country.

The report analyzes the insights from various periodic reports submitted by BSP-supervised and
regulated financial institutions to the Department of Supervisory Analytics, FSS. As of end-December
2022, these consisted of 497 banks with 12,744 branches and other offices, 1,348 non-bank financial
institutions with 15,125 branches and one offshore banking unit.

Effective 3 July 1998, the supervision and regulation of the BSP over certain non-banking financial
institutions were turned over to the Securities and Exchange Commission (SEC) for corporations and
partnerships, and to the Department of Trade and Industry (DTI) for single proprietorships, in
accordance with Section 130 of R.A. No. 7653. Likewise, the supervision and regulation over building
and loan associations were transferred to the Home Guarantee Corporation (HGC) effective 07
February 2002, in accordance with Section 94 of R.A. No. 8791 or The General Banking Law of 2000).

viii
 H i g h l i g h t s of t h e R e p o r t
OVERVIEW

The Philippine financial system sustained its strong performance in 2022 amid the lingering uncertainties
in the global financial system following the COVID-19.

Philippine banks likewise exhibited sustained growth momentum in assets, deposits, and profit, as well
as maintained adequate capital and liquidity buffers. The banks’ asset growth, funded mainly by deposits,
enabled the banking system1 to continue to support the economy’s recovery through improved credit
activity. Importantly, the financial soundness indicators on capital adequacy, asset quality, profitability,
liquidity, and sensitivity to market risk point to the continued stability and resilience of the banking
system despite tighter financial conditions.

In 2022, total assets of the banking system grew by 10.7 percent to ₱23,047.7 billion, faster than the 7.0
percent recorded in 2021. By banking group, universal and commercial banks (UKBs) held the largest
share of the total assets of the banking system at 94.2 percent (₱21,706.9 billion). Meanwhile, thrift banks
(TBs) and rural and cooperative banks (RCBs) each held around 4.2 percent (₱968.3 billion) and 1.6 percent
(₱372.5 billion) share, respectively.

Lending continued and supported economic recovery as gross loans rose by 10.8 percent to ₱12,625.1
billion in 2022, faster than the 4.8 percent recorded in 2021. By economic sector, bank loans went mainly
to real estate activities (18.3 percent share, ₱2,314.0 billion), household consumption (11.0 percent, ₱1,388.0
billion), wholesale and retail trade (10.9 percent, ₱1,378.6 billion), manufacturing (10.2 percent, ₱1,287.1
billion), electricity, gas, steam & air-conditioning supply (9.6 percent, ₱1,207.4 billion), and financial and
insurance activities (8.3 percent, ₱1,052.3 billion).

On mandatory credit to the agri-agra sector, the banking system set aside a total of ₱848.0 billion of its
loanable funds for agriculture and agrarian reform credit as of end-June 2022 (latest data), expanding by
7.4 percent from the ₱789.7 billion recorded as of end-June 2021. The compliance ratio however, of 9.5
percent for other agricultural and 0.8 percent for agrarian reform was below the minimum required of 15
percent and 10 percent, respectively.

With the passage of “The Agriculture, Fisheries and Rural Development Financing Enhancement Act of
2022” or R.A. No. 11901 in July 2022, amending the R.A. No 10000, the BSP expects that the new law will
strengthen rural development and improve the well-being of agricultural and rural community
beneficiaries. Under the new law, banks will no longer be required to set aside 10 percent and 15 percent
of their loanable funds for agrarian reform credit and other agricultural credit, respectively. Instead, banks
shall set aside at least 25 percent of their total loanable funds for agriculture, fisheries, and rural
development financing (see Box Article 1).

The BSP also continues to monitor the credit allocation of banks to micro, small and medium enterprises
or MSMEs even if the mandatory credit allocation for this sector, as set forth in R.A. No. 6977, as amended
by R.A. Nos. 8289 and 9501, ended last 16 June 2018. In 2022, the banking system provided a total of ₱493.5
billion credit to MSMEs (₱190.5 billion to micro and small enterprises, and ₱303.0 billion to medium
enterprises), higher than the ₱463.1 billion in 2021.

Similarly, the banking system, together with concerned government financial institutions, continued to
serve the financing needs of Barangay Micro Business Enterprises (BMBEs) in line with R.A. No. 9178,
otherwise known as the BMBEs Act of 2002. Based on bank submitted MSME reports, 21 banks granted a
total of ₱43.3 million retail loans to 2,580 BMBE borrowers in 2022, lower than the ₱67.2 million (3,510
BMBE borrowers) in 2021. Annex 1 of the report discusses the role of banks in serving the financing needs
of BMBEs.

1
As of end-December
1 2022, the total assets of the banking system represented 82.8 percent of the total resources of the
Philippine financial system. Total resources of the financial system exclude the assets of the BSP but include the assets of
2
banks and non-bank financial institutions.

Classification: GENERAL
 Highlights of the Report

Alongside the improvement in credit activity, the banking system’s non-performing loan
(NPL) ratio in 2022 further eased to 3.2 percent from the 4.0 percent in 2021. This was
accompanied by high NPL coverage ratio of 107.0 percent, increasing from the
87.7 percent in 2021. The NPL ratio is seen to remain in single-digit and to gradually return
to pre-pandemic levels.

Robust growth in deposits mirrored the economy’s recovery and the depositors'
continued confidence in the banking system. In 2022, deposits grew by 9.4 percent to
₱17,770.4 billion, faster than the 9.0 percent in 2021. These deposits were mostly peso-
denominated (84.8 percent share) and generated from resident individuals (45.6 percent)
and private corporations (33.4 percent), indicating domestic orientation and stability of
banks’ funding source.

Strong capital position was sustained by the banking system in 2022 providing further
cushion against shock. Total capital increased by 5.1 percent to ₱2,706.4 billion, slower
than the 5.9 percent in 2021. On risk-based capital, the capital adequacy ratios (CARs) of
the banking system of 15.7 percent on a solo basis and 16.3 percent on a consolidated basis
as of end-December 2022 continued to be well above the minimum thresholds of 10
percent set by the BSP and 8 percent by the Bank for International Settlements (BIS).
Moreover, the banks’ risk-taking activities remained supported by adequate capital
composed mainly of common equity and retained earnings.

All banking groups maintained higher than the minimum standard CARs. UKBs
registered ratios of 15.4 percent and 16.1 percent, respectively, on a solo and consolidated
bases. Stand-alone thrift banks (TBs) and rural banks (RBs) and cooperative banks (CBs)
reported their CARs at 20.3 percent, 22.0 percent, and 18.6 percent, respectively, as of the
same reference period. Meanwhile, subsidiary TBs and RBs posted an 18.2 percent and
16.9 percent, respectively.

Notwithstanding this, the BSP recognizes the critical role of building the resilience of
banks through the enhancements to recovery planning requirements as provided under
Circular No. 1158 dated 18 October 2022 (see Box Article No. 3).
2
Banks likewise maintained ample liquidity to meet liquidity and funding requirements of
their clients. In 2022, the liquidity coverage ratio (LCR) of U/KBs on a solo and consolidated
bases stood at 185.7 percent and 185.4 percent, significantly higher than the 100 percent
minimum threshold. For smaller banks, the minimum liquidity ratio (MLR) of stand-alone
TBs, RBs, and CBs were favorably high at 29.9 percent, 63.7 percent, and 44.4 percent,
respectively, on solo basis, surpassing the 16 percent minimum requirement as of the
same reference period. Meanwhile, the net stable funding ratio (NSFR) of UKBs reached
136.7 percent and 138.1 percent on a solo and consolidated bases, respectively, well-above
the minimum regulatory requirement of 100 percent.

Banks sustained profitable operations with double-digit growth in net profit of 38.0
percent to ₱310.1 billion in 2022, slower than the 44.8 percent growth in 2021. Key
performance measures also improved like return on assets and return on equity, rising to
11.9 percent and 1.4 percent, respectively, from the 9.0 percent and 1.1 percent in 2021.

The strong performance of banks was supported with leaner, stronger, and more inclusive
and technology-enabled network. In 2022, the total number of bank head offices stood at
497, down from 506 in 2021 in view of merger, voluntary surrender of bank license and
closure of some banks. Nonetheless, the total number of branches and other offices
increased to 12,744 from 12,648 the previous year.

Meanwhile, the banking system’s foreign currency deposit unit (FCDU) operations, which
accounted for 15.1 percent of the banking system’s total assets, grew by 7.1 percent to
US$61.9 billion (₱3,475.0 billion), reversing the 1.2 percent contraction in the same period
last year. This asset expansion was largely funded by resident foreign currency-
denominated deposits, supported by strong remittance and investment inflows. Deposits
continued to expand, growing by 3.8 percent to US$47.9 billion (₱2,685.5 billion) from the
2.3 percent in 2021. In terms of deposit mix, the majority of deposits was held by residents
(97.2 percent share or US$46.5 billion) thus, shielding the industry from possible funding
withdrawals by non-resident depositors due to developments in the global financial
markets.

Supervisory Policy and Research Department

 Highlights of the Report

FCDU investment and loans continued to account for most of the assets, each holding a
share of 44.6 percent (US$27.6 billion) and 34.5 percent (US$21.4 billion), respectively.
FCDU loans remained diversified and continued to support key economic activities in the
country. Alongside the loan expansion, NPL ratio eased to 1.1 percent in 2022 (from 3.6
percent in 2021) on the back of economic recovery of the country which contributed to
the improvement in the overall quality of loans particularly those extended to
manufacturing, and transportation and storage sectors and non-residents. The
improvement in loan quality was matched with adequate provisioning as NPL coverage
ratio stood at 196.4 percent.

The operations of FCDU remained profitable as net profit rose by 33.0 percent to US$1.1
billion (₱60.3 billion) driven primarily by the double-digit increase in interest income from
lending and investing activities and supplemented by non-interest income.

Foreign bank branches and foreign bank subsidiaries’ operations, which accounted for 6.2
percent of the banking system’s total resources, expanded amid global uncertainties.
They remained an integral part of the country’s financial system, connecting retail and
corporate customers to trade as well as cross-border lending and investment
opportunities across the globe. Total assets of these banks grew by 1.5 percent to ₱1,417.6
billion in 2022. Results of the survey that covered 29 respondent foreign bank branches
and foreign bank subsidiaries are summarized in Annex 2 of the report.

On trust operations of banks, total assets of the industry, which represented around 23.2
percent of the banking system’s total resources, grew by 5.7 percent to ₱5,345.9 billion in
2022 and continued to be domestic-oriented and highly liquid. Most of the industry’s
assets was in the form of investments in securities and bank deposits at 66.1 percent
(₱3,534.1 billion) and 22.1 percent (₱1,181.0 billion), respectively.

Total accountabilities were made up mostly of ₱2,708.6 billion (50.7 percent share) in
agency accounts and ₱2,043.4 billion (38.2 percent) in trust accounts, collectively holding
around 88.9 percent share. By type of accountability, unit investment trust funds (UITFs)
3 comprised 17.9 percent of total accountabilities and stood at ₱955.1 billion with 3,531,167
participants in 2022. The trust industry reported annual growth in the number of
participants in UITFs as trust entities leveraged on digital technology and offered small-
value retail UITF products to their clientele. Meanwhile, Personal Equity and Retirement
Account (PERA) contributions continued to draw new participants and generated
additional contributions. In 2022, PERA recorded double-digit growth in both
contributions and contributors, growing by 30.1 percent to ₱329.5 million and 16.4 percent
to 5,100, respectively.

Net income of the trust industry stood at ₱7.2 billion in 2022, declining by 2.2 percent and
reversing the 17.3 percent growth in 2021.

Similarly, the BSP-supervised non-bank financial institution (NBFI) industry, as

represented by NBFIs with quasi-banking functions (NBQBs), non-stock savings and loan
associations (NSSLAs), pawnshops and money service businesses remained supportive of
their clients by delivering financial products and services through extensive network
nationwide. Total assets of BSP-supervised NBFIs, as represented by NBQBs and NSSLAs
stood at ₱450.9 billion in 2022 and were largely in the form of loans at 79.3 percent share
(₱357.5 billion) and cash and due from banks at 8.6 percent (₱38.9 billion). NSSLAs
comprised most of the industry’s total assets at 66.5 percent share (₱299.6 billion) while
NBQBs held the remaining 33.5 percent (₱151.3 billion).

In terms of loan quality, both NBQBs and NSSLAs’ NPL ratios remained manageable at 5.9
percent and 8.1 percent, respectively, in 2022. Both NBFIs likewise maintained provisions
with NPL coverage ratio of 36.2 percent and 115.4 percent, respectively, as of the same
reference period.

Total capital of the industry, which funded around 47.3 percent share of the total assets,
rose by 1.6 percent to ₱213.4 billion in 2022. Bills payable continued to comprise the
majority of NBQBs’ source of funding particularly deposit substitutes (68.9 percent share
of NBQBs’ total assets) followed by capital (14.1 percent share of NBQBs' total assets).
Meanwhile, NSSLAs’ funding was provided mainly by their members’ capital (64.1 percent
share of NSSLAs’ total assets) and deposits (28.8 percent share of NSSLAs’ total assets).

Financial Supervision Sector

 Highlights of the Report

Overall operations of both NBQBs and NSSLAs likewise remained profitable, as they
posted double-digit growth in net profit at 11.7 percent (to ₱24.95 billion) and 40.1 percent
(to ₱1.8 billion), respectively, in 2022. This strong performance translated to high return on
assets and equity.

Network of BSP-supervised NBFIs continued to expand with 23,796 total offices

nationwide (1,978 head offices and 21,818 other offices) as of end-December 2022.
Pawnshops continued to account for the lion’s share with 15,999 total offices as of end-
December 2022 (1,172 head offices and 14,827 other offices), an increase of 4.0 percent from
15,388 in 2021. Money service businesses also contributed a total of 7,584 offices (743 head
offices and 6,841 other offices) during the same period, growing by 1.8 percent from 7,449
in 2021. Notably, some pawnshops and money service businesses are leveraging on
technology, offering their products and services through online platforms, thus, enabling
them to further expand their reach in the country. Meanwhile, NBQBs and NSSLAs’ total
network stood at 19 (5 head offices and 14 other offices) and 194 (58 head offices and 136
other offices), respectively, as of the same reference period.

The rapidly changing financial landscape in the country necessitates the transformation
and improvement of the financial supervision process to make it more adaptive to the
new environment. This involves the enhancement of provision and delivery of data and
strengthening of supervisory tools and processes to ensure effective monitoring,
supervision, and regulation of financial institutions. The implementation of visualization
tool for analytics or VisTA, as a Supervision Technology (SupTech) strategy of the BSP and
an interactive analytics tool, aims to provide quick data-driven insights to internal and
external stakeholders. With the application of data analytics and business intelligence,
relevant information pertaining to the financial condition of the banking system can be
swiftly analyzed for bank supervision and policy making (see Box Article 2).

In summary, the Philippine financial system exhibited sustained resilience and remained
supportive of the economy through continued delivery of financial products and services
to businesses and households. For its part, the BSP will continue to monitor risks and
lingering vulnerabilities from the COVID-19 pandemic that may put undue pressure on the
4
performance of the financial system. Moreover, the BSP remains committed in pursuing
prudential and progressive reforms that will further strengthen corporate and risk
governance as well as promote responsible innovation and sustainable finance in its
supervised financial institutions. These are intended to foster a sound, stable, and
sustainably inclusive financial system supportive of economic growth.

Supervisory Policy and Research Department

 PHILIPPINE BANKING
SYSTEM

OVERVIEW

The Philippine banking system sustained its strong performance in 2022 as

shown by continued growth in assets, loans, deposits, and profit, as well as
adequate capital and liquidity buffers and ample loan loss reserves. Funded by
deposits, the growth in resources enabled the banking system to remain
supportive of the economy through continued delivery of financial products and
services. Key indicators on capital, asset quality, earnings, liquidity, and sensitivity
to market risk likewise point to stable and resilient banking system despite
macroeconomic challenges.

Capital
P2,706.4 billion

CAR* and CET1 Ratio*

16.1 percent and 15.0 percent Net Profit
(Consolidated)
P310.1 billion
Deposits
P 17,770.4 billion RoE and RoA
11.7 percent and 1.4 percent

Loans
P12,625.1 billion

NPL and NPL

LCR* and NSFR*
Coverage 185.4 percent and
Ratios 138.1 percent
3.2 percent and (Consolidated,)

107.0 percent

Assets
P23,047.7 billion Net FX to
Regulatory
Capital
2.0 percent
* Universal and commercial banks and their subsidiary banks/quasi-banks

5
 Philippine Banking System

ASSETS FURTHER EXPANDED, NEARING PRE-PANDEMIC GROWTH

Figure 1 Total assets grew by 10.7 percent year-on-

Total Assets
As of End-Periods Indicated In Billion₱ and Growth Rate in Total
Assets
year1 (y-o-y) to ₱23,047.7 billion in 2022,
24,000.0
,
15.0 funded mainly by deposits and channeled
to core activities particularly loans and
22,000.0
20,000.0
12.0
18,000.0
16,000.0
10.7
investments. The asset growth was faster
14,000.0
12,000.0
9.0
than the 7.0 percent growth rate in 2021
10,000.0
8,000.0
6.0 but remained lower than the pre-
6,000.0
4,000.0
3.0
pandemic average growth rate2 of 11.0
2,000.0
0.0 0.0
percent (Figure 1).

Total Loans, net

Loans, net3 continued to account for most
Total Investments, net
Cash and Due from Banks
Total Assets y-o-y Growth Rate (R S)
Others of the banking system’s total assets at 52.9
Source Department of Supervisory Analytics (DSA) p/ preliminary percent (₱12,198.4 billion), followed by
investments4 and cash and due from banks
with 27.5 percent share (₱6,329.4 billion) and 14.2 percent share (₱3,271.7 billion),
respectively.

Across banking groups, universal and commercial banks (UKBs) held the largest share of
the total assets at 94.2 percent (up by 12.8 percent to ₱21,706.9 billion). Meanwhile, thrift
banks (TBs) and rural and cooperative banks (RCBs) each held around 4.2 percent (down
by 23.5 percent to ₱968.3 billion) 5 and 1.6 percent (up by 19.4 percent to ₱372.5 billion)
share, respectively.

DOUBLE-DIGIT GROWTH AND DIVERSIFIED LENDING ACROSS KEY

PRODUCTIVE SECTORS
Credit activity in the country continued to Figure

cater to key industries, with gross loans Gross Total Loans

As of End-Periods Indicated In Billion₱ and Growth Rate in 6
rising by 10.8 percent to ₱12,625.1 billion in 14,000.0
Total Loans
₱ 12,625.1
20.0

20226, faster than the 4.8 percent recorded 12,000.0 17.0

in 2021 but remained lower than the 13.8 10,000.0 14.0

percent pre-pandemic growth7 (Figure 2). 8,000.0

10.8
11.0

6,000.0 8.0

Banks’ loan growth largely went to 4,000.0 5.0

productive sectors, particularly
2,000.0 2.0
information and communication,
manufacturing, electricity, gas, steam and
0.0 (1.0)

air-conditioning supply, wholesale and

retail trade, and real estate, which Total Loans Total Loans y-o-y Growth Rate (R S)
p/ preliminary
increased by 21.8 percent (up by ₱106.0
Source DSA

billion), 15.6 percent (up by ₱174.1 billion), 14.3 percent (up by ₱151.1 billion), 11.3 percent (up
by ₱140.0 billion) and 4.8 percent (up by ₱105.3 billion), respectively. Loans for household
consumption8 likewise contributed to the improved credit activity particularly salary-
based general-purpose consumption loans (SBGPCLs) and credit card receivables (CCRs),
which posted substantial growth of 62.2 percent (up by ₱134.0 billion) and 26.0 percent
(up by ₱114.6 billion), respectively.9 Overall, these sectors accounted for 60.9 percent
(₱7,682.9 billion) of the banking system’s gross total loans.

1
All discussed growth rates and report period pertain to y-o-y and end-December 2022, unless otherwise stated.
2
The pre-pandemic compounded annual growth rate (CAGR) of total assets was 11.0 percent. Pre-pandemic CAGR
is computed using end-December 2015 to end-December 2019 data.
3
Includes Interbank Loans Receivable (IBL) and Reverse Repurchase (RRP), net of allowance for credit losses.
4
Comprised of investments in debt and equity securities, derivatives, as well as equity investments in subsidiaries,
associates and joint ventures, net of allowance for credit losses
5
The decline was due to a merger of a TB with its parent UB.
6
Across banking groups, UKBs held the largest share of the industry’s total loans at 93.5 percent (up by 12.9 percent
to ₱11,802.5 billion). Meanwhile, TBs and RCBs each held around 4.8 percent (down by 20.8 percent to ₱607.6
billion) and 1.7 percent (up by 28.9 percent to ₱214.9 billion) share, respectively.
7
Pre-pandemic CAGR.
8
Excluded are loans to individuals for housing purposes or residential real estate loans.
9
Based on BSP’s Q4 2022 Senior Loan Officers’ Survey (SLOS), banks indicate increased loan demand for both
businesses and households (i.e., housing loans, credit card loans, and personal/salary loans). Respondents cited
that credit demand of businesses was driven by the improvement in customers' economic outlook and increase
in customer inventory and accounts receivable financing needs. Meanwhile, loan demand of households
increased due to higher household consumption, and banks' more attractive financing terms.

Supervisory Policy and Research Department

 Philippine Banking System

The improving credit activity mirrors the industry outlook as banks remain cautious but
project a double-digit increase in lending in the next two years.10

Across various industries and Figure

borrower types (Figure 3), loans Loans y E ono i A tivity
As of End-Period Indicated Share in

to real estate activities, though

leading at 18.3 percent share 100.0
1

(₱2,314.0 billion) of the banking 80.0

11

system’s total loans, remained 60.0

1

comfortably below the

1
6
40.0
regulatory cap of 25.0
percent.11 Other activities that 20.0

figured prominently include 0.0

loans for household Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 p/

consumption (11.0 percent Others (including 15 remaining sectors)

Financial and Insurance Activities
Information and Communication
Electricity, Gas, Steam Air-Conditioning Supply
share, ₱1,388.0 billion), Manufacturing
For ousehold Consumption
holesale and Retail Trade
Real Estate Activities
wholesale and retail trade (10.9 Source DSA p/ preliminary

percent share, ₱1,378.6 billion),

manufacturing (10.2 percent share, ₱1,287.1 billion), electricity, gas, steam & air-
conditioning supply (9.6 percent share, ₱1,207.4 billion), and financial and insurance
activities (8.3 percent share, ₱1,052.3 billion).

By sectoral activity, distribution remained largely stable (Figure 4)12 with loans to resident
Figure
non-financial private
Loans y E ono i Se tor Counterparty
As of End-Periods Indicated Share in
corporations still holding the
100.0
largest share of total loans at
47.9 percent (₱6,053.5 billion).
11

80.0
Loans to resident private
60.0 financial corporations13 and
resident individuals followed,
40.0
each accounting for around
11.4 percent (₱1,434.5 billion)
1
20.0

0.0
and 19.7 percent (₱2,483.0
Dec-18
Non-Residents
Dec-19 Dec-20 Dec-21
Contracts to Sell
Dec-22 p/
billion), respectively.
MSMEs Agri-Agra
Individuals Non-Financial Private Corporations

Banks likewise provided relief

Banks Financial Private Corporations BSP
Government

to their borrowers through

Source DSA
p/ preliminary

extension and/or modification in loan terms. In 2022, total restructured loans (RLs)
reached ₱329.7 billion or about 2.6 percent of total loans. The level of RLs contracted by
7.6 percent but remained substantially higher by 7.3 times than the pre-pandemic level of
₱45.0 billion in February 2020.

10
Based on BSP’s Banking Sector Outlook Survey (BSOS) for the First Semester of 2022.
11
Circular No. 1093 dated 20 August 2020 (Amendments to the Real Estate Limits of Banks).
12
Based on the Financial Soundness Indicators (FSIs) developed by the International Monetary Fund, lack of
diversification in the loan portfolio may signal the existence of a vulnerability in the financial system. Loan
concentration in a specific economic sector or activity (measured as a share of total loans) renders banks
vulnerable to adverse development in that industry. Hence, sectors of the economy where bank credit tends to
concentrate are closely monitored for macroprudential purposes. FSIs are indicators of the current financial
health and soundness of the financial institutions in a country, and of their corporate and household counterparts.
They include both aggregated individual institution data and indicators that are representative of the markets in
which the financial institutions operate. Source IMF Financial Soundness Indicators Compilation Guide, c2006,
2019.
13
This refers to loans to resident banks and resident financial private corporations.

Financial Supervision Sector

 Philippine Banking System

LENDING RATES INCHED UP AMID IMPROVED ECONOMY

The BSP’s accommodative policy
Figure 5
stance14 continued to support the UKBs Weig ted Average Interest Rates WAIR on Loans
recovery of the economy and enable For End-Periods Indicated
banks to pass on lower lending rates to 9.0

their clients during the crisis. ith the Mean AIR

improving economy, inflationary 8.0
Median AIR
pressures and policy normalization, 7.0
6
interest rates on bank loans inched up in
2022 compared to that posted in 2021. 6.0 5

Based on latest data for the period-

ended October 2022, the overall mean 5.0

weighted average interest rates ( AIR)

4.0
on loans of UKBs stood at 6.9 percent,
lower than the 8.2 percent in
March 2020 (pre-pandemic) but higher Source DSA p/ preliminary

than the 5.3 percent in October 2021 (Figure 5). Meanwhile, the overall median AIR
registered at 5.7 percent for the same period, lower than the 5.8 percent in March 2020
but higher than the 5.1 percent in October 2021.

Generally, most loan types displayed a similar trend in both mean and median WAIR with
rates starting to rise in 2022. (Figures 6 and 7).

Figure 6 Figure
Mean WAIR on UKBs Loans y Loan Type Median WAIR on UKBs Loans y Loan Type
For End-Periods Indicated For End-Periods Indicated

16.0 12.0

14.0
10.0
12.0
8.0
10.0

8.0 6.0
6.0
4.0
4.0

2.0 2.0

Loans to Government Loans to Private Corporations Loans to Government Loans to Private Corporations
Contracts to Sell Agrarian Reform and Other Agricultural Loans Contracts to Sell Agrarian Reform and Other Agricultural Loans
SME Loans Microenterprise Loans SME Loans Microenterprise Loans
Loans to Individuals Loans to Individuals
p/ preliminary p/ preliminary
Source DSA Source DSA

MODEST EXPANSION IN REAL ESTATE EXPOSURES…

Figure
Real estate exposures or REEs of UKBs and
Real Estate E posures o UKBs and TBs Consolidated
As of End-Periods Indicated In Billion₱ and Growth Rate in Total TBs remained relatively modest in 2022,
REEs
3,000.0
₱3,023.6
16.0
growing at a slower pace of 5.4 percent
2,500.0
14.0 (₱3,023.6 billion). This expansion was lower
2,000.0
12.0 than the 9.3 percent recorded in 2021 and
10.0
far from the 13.2 percent pre-pandemic
1,500.0 8.0

6.0
average15 (Figure 8).
1,000.0
5.4 4.0
500.0
REEs were made up mainly of real estate
2.0

0.0
Dec-18 Dec-19 Dec-20 loans (RELs), representing 85.6 percent
Dec-21 Dec-22 p/
0.0

Commercial RELs
Real Estate Investments
Residential RELs
Total REEs y-o-y Growth Rate (R S)
share, which increased by 5.2 percent to
Source DSA ₱2,587.3 billion in 2022, slower than the 7.3
p/ preliminary

percent growth in 2021.16 Real estate investments continued to be minimal at 14.4 percent
share.

As to types of RELs, commercials RELs accounted for the majority at 63.5 percent, growing
by 5.1 percent to ₱1,642.7 billion at a slower pace than the 7.2 percent growth in 2021

14
Since May 2022, the BSP has increased the policy rate by an aggregate of 425 basis points (bps). In particular, the
BSP policy rate increased effective 20 May 2022 and 24 June 2022 both by 25 bps, effective 14 July 2022 by 75 bps,
effective 19 August 2022 and 23 September 2022 both by 50 bps, effective 18 November 2022 by 75 bps, effective
16 December 2022 and 16 February 2023 both by 50 bps, and effective 24 March 2023 by 25 bps.
15
The pre-pandemic CAGR of REEs was 13.2 percent.
16
The pre-pandemic CAGR of RELs was 13.5 percent.

Supervisory Policy and Research Department

 Philippine Banking System

(Figure 9). Most of these commercial RELs were unsecured17, used to finance land
development, acquisition, construction and/or improvement of commercial real estate
units18, and had residual maturity of over one year to five years19. Meanwhile, residential
RELs, which hold the remaining 36.5 percent share, expanded by 5.4 percent to ₱944.6
billion, although at a slower pace vis-à-vis the 7.5 percent in 2021 (Figure 10). Mid-end and
low-cost housing loans20 held the largest portion of residential RELs while a little over half
had a residual maturity of over ten years21.

Figure Figure 1
Co er ial RELs o UKBs and TBs Consolidated Residential RELs o UKBs and TBs Consolidated
As of End-Periods Indicated In Billion₱ and Growth Rate in Percent ( ) As of End-Periods Indicated In Billion₱ and Growth Rate in Total
Residential
Total Commercial
1,800.0 20.0 RELs ₱ 944.6
RELs ₱1,642.7 1,000.0 15.0
1,600.0

1,400.0 15.0
800.0 12.0

1,200.0
10.0
1,000.0 600.0 9.0

800.0
5.0 400.0 6.0
600.0 5.1
5.4
400.0 0.0 200.0 3.0
200.0

0.0 (5.0) 0.0 0.0

Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 p/ Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 p/
Commercial RELs
Residential RELs Total Residential RELs y-o-y Growth Rate (R S)
Total Commercial RELs y-o-y Growth Rate (R S)
Source DSA p/ preliminary Source DSA p/ preliminary

The expansion in both commercial and residential RELs while on a decelerated pace
reinforces the upbeat view of the industry experts that the property market is already
showing signs of recovery.22,23 Similarly, the latest index on residential real estate prices in
the Philippines mirrored the growth in residential RELs as the said index moved up by 7.7
percent, driven by price increases across all housing types, except for townhouses. By area,
residential property prices in the National Capital Region (NCR) went up by 16.1 percent as
prices across all housing units increased. For property prices in the areas outside the NCR
the increase was at 4.5 percent as all types of housing units, excluding townhouses,
registered an upward movement in prices. By type of housing unit, the annual growth in
the nationwide price index was primarily driven by the double-digit growth in prices of
duplex housing units, condominium units, and single-detached/ attached houses, which
rose by 42.9 percent, 12.9 percent, and 10.0 percent, respectively. Meanwhile, prices of
townhouses registered a 6.8 percent contraction.24 Moreover, per industry report,
residential prices are expected to rise by 2.3 percent in 2023 as economy and employment
recover fueled by the improving outlook of business and consumers, and the continued
inward remittances of overseas Filipino workers.25

Considering the importance of the property market in the economy and banks’ exposure
to this industry, the BSP regularly assesses the banking system’s vulnerabilities including
risks from its exposures to the property sector. Based on the end-September 2022 results
of the real estate stress test or REST26, banks remain adequately capitalized against

17
At around 72.1 percent share (P1,184.4 billion).
18
At around 80.6 percent share (P1,323.3 billion).
19
At around 48.0 percent share (P788.2 billion).
20
Mid-end and low-cost housing loans with share of around 43.6 percent (₱411.4 billion) and 41.7 percent (₱393.4
billion), respectively.
21
At around 51.0 percent share (P481.7billion).
22
Based on Collier’s Q4 2022 Property Market Report–Office, the demand for commercial space in the country
continued to rise amidst concerns on the rationalization of office requirements from outsourcing companies with
hybrid work arrangements. The report likewise indicated opportunities in fully fitted spaces to minimize costs,
office demand from healthcare outsourcing firms, and projects in provincial territories. Source
https //www.colliers.com/en-ph/research/colliers-quarterly-property-market-report-office-q4-2022-philippines
23
Based on Collier’s Q4 2022 Property Market Report–Residential, residential rents and prices are expected to grow
by 2.0 percent and 2.3 percent, respectively, in 2023 as the economy and employment recovers fueled by
improving business and consumer sentiments as well as continued inward remittances of OF s. Source
https //www.colliers.com/-/media/files/asia/philippines/colliers_manila_q4_2022_residential_v1.ashx
24
Based on BSP’s Q4 2022 Residential Real Estate Price Index or RREPI. The RREPI is a measure of the average
change in the prices of various types of housing units, i.e., single detached/attached houses, duplexes,
townhouses, and condominium units, based on banks’ data on actual mortgage loans granted to acquire new
housing units only. It is a chain-linked index, which is computed using the average appraised value per square
meter, weighted by the share of floor area of each type of housing unit to the total floor area of all housing units.
The RREPI is used as an indicator for assessing the real estate and credit market conditions in the country. The
BSP has been releasing the report since Q1 2016.
25
Based on Collier’s Q4 2022 Property Market Report–Residential.
26
Under Section 363-A of the Manual of Regulations for Banks, a prudential limit is set for REEs. For this purpose, a
stress test will be undertaken on a UKB's REEs under an assumed write-off of 25 percent. For purposes of REST

Financial Supervision Sector

 Philippine Banking System

potential downturn in the real estate market. In particular, the post-shock capital
adequacy ratio (CAR) and common equity tier 1 (CET1) ratio of the UKB industry, as well as
subsidiary and stand-alone TBs, remained well above the 10 percent and the 6 percent
minimum thresholds, respectively, both on solo and consolidated bases.

…BUOYED BY CONSUMER LOANS’ DOUBLE-DIGIT EXPANSION

Figure 11
Consumer lending bounced back in 2022,
Consu er Loans o UKBs and TBs Solo
As of End-Periods Indicated In Billion₱ and Growth Rate in
Total
Consumer
growing by 13.0 percent to ₱2,233.9 billion
2,400.0
Loans
₱2,233.9 and reversing the 0.6 percent contraction
2,100.0 30.0 in 2021 (Figure 11).27 The expansion, which
1,800.0
20.0
was largely driven by salary loans and CCRs,
1,500.0

1,200.0
13.0 however remained far from the pre-
900.0
10.0
pandemic average of 15.7 percent.
600.0 0.0
300.0 By composition, residential RELs
0.0
De -1 De -1 De - continued to account for the biggest share
De - 1 De - p
(10.0)

Other Consumer Loans

at 42.0 percent (₱938.0 billion),28 followed
Salary-Based General-Purpose Consumption Loans
Credit Card Receivables
Motor Vehicle Loans by CCRs at 24.9 percent (₱555.4 billion),
Residential RELs
motor vehicle loans (MVLs) at 19.7 percent
Total Consumer Loans y-o-y Growth Rate (R S)

Source DSA p/ preliminary

(₱441.0 billion), SBGPCLs at 11.8 percent
(₱264.4 billion) and other consumer loans at 1.6 percent (₱35.1 billion).

Except for MVLs, all types of consumer loans grew in 2022. The substantial growth in
SBGPCLs and CCRs of 61.7 percent (up by ₱100.9 billion) and 26.0 percent (up by
₱114.6 billion), respectively, outpaced the 2.9 percent decline (down by ₱13.2 billion) in
MVLs. The growth of SBGPCLSs was reflective of consumers’ allocation of loan proceeds
for education and health-related expense, while CCRs continued to increase as consumers
availed of reasonable credit card pricing following the retention of existing credit card
transactions ceilings29 in consideration of evolving domestic and external developments.
1
Although a notable growth in CLs was recorded in 2022, recent surveys registered a more
pessimistic outlook from consumers due mainly to faster increase in the prices of goods
and higher household expenses. Consumers’ buying intentions was more downbeat for
motor vehicles, and houses and lots, but remained steady for consumer durables within
the next twelve months. Furthermore, Figure 1
UKBs and TBs E posure to So iali ed and Lo -Cost Housing
consumers indicated that loans used to Consolidated
As of End-Periods Indicated In Billion and Growth Rate in
purchase basic goods and for business 600.0
Total
Exposure 120.0

start-up/expansion accounted for a large 500.0

₱520.1
95.0
portion of their total loan proceeds and
400.0 70.0
total outstanding loans.30
300.0 45.0

Moreover, based on BSP’s monitoring, 200.0 20.0

UKBs and TBs lending to socialized and 100.0

0.4
-5.0

low-cost housing increased 0.4 percent to 0.0 -30.0

₱520.1 billion in 2022, on a consolidated Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 p/

basis (Figure 12).31 This was higher than the Commercial

Residential

₱518.0 billion recorded in 2021. Loans to

Total Socialized and Low-Cost ousing y-o-y Growth Rate (R S)

Source DSA p/ preliminary

limits, REEs, as prescribed under Circular No. 1093, exclude residential real estate loans to individual households
for occupancy, and other real estate property recorded under “Real and Other Properties Acquired (ROPA)” and
“Non-Current Assets eld for Sale (NCA S).”
27
Consumer loans of UKBs and TBs, on a solo basis. Consumer loans include residential RELs.
28
Residential RELs of UKBs and TBs on solo basis.
29
Circular No. 1098 dated 24 September 2020 imposed ceilings on interest or finance charges (1) up to a maximum
of 24 percent per annum or a monthly interest rate of up to two percent on all credit card transactions (2) the
monthly add-on rate that is used to derive interest on credit and installment loans should not exceed one percent
per month and (3) the upfront processing fees upon availment of credit card cash advance is subject to a cap of
P200 per transaction. The ceilings on credit card transactions was in effect until end-December 2022 subject to
review by the BSP every six months. In January 2023, the ceilings on credit card transactions was adjusted. The
monthly interest rate on revolving credit card purchases was increased to a maximum of 36 percent per annum
or a monthly interest rate of up to 3 percent while the monthly add-on rate on credit card installment loans and
the maximum processing fee when availing credit card cash advances of 1.0 percent and P 200, respectively, were
retained.
30
Based on the BSP’s Consumer Expectations Survey for Q4 2022.
31
The BSP monitors the exposure of banks to socialized and low-cost housing based on existing BSP data on real
estate loans, in accordance with the provisions of RA No. 7835, knows as the Comprehensive and Integrated
Shelter Financing Act of 1994.

Supervisory Policy and Research Department

 Philippine Banking System

individual households used to finance residential units for their occupancy accounted for
around 76.4 percent of these exposures.

LOANS TO MSME AND AGRI-AGRA SECTORS CONTINUED

In 2022, the banking system provided a total of ₱493.5 billion credit (up by 6.6 percent) to
micro, small and medium enterprises or MSMEs, higher than the ₱463.1 billion in 2021.32
By banking group, UKBs extended the largest credit to MSMEs at 79.2 percent share
(₱390.9 billion), followed by RCBs 10.7 percent (₱52.7 billion). The banking system’s total
credit allocation to micro and small enterprises, and medium enterprises reached ₱190.5
billion (38.6 percent share) and ₱303.0 billion (61.4 percent share), respectively.

The BSP continues to foster a regulatory environment supportive of MSMEs. Amid the
winding down of the BSPs’ temporary relief measures introduced during the COVID-19,
some initiatives were extended particularly those that incentivize lending to MSMEs.
These include the reduced credit risk weight of loans granted to MSMEs33 and the
utilization of peso-denominated loans to MSMEs and large enterprises as alternative
compliance with the reserve requirements against deposit liabilities and deposit
substitutes. The extension of these relief measures until end-June 2023 will encourage
banks to continue to support the financing requirements of creditworthy MSMEs.

For the reserve week ending 29 December 2022, the banking system allocated an average
of ₱263.1 billion of loans to MSMEs (or around 15.9 percent of total required reserves) as
alternative compliance with the reserve requirements. This was a substantial increase
from the ₱8.7 billion in MSME loans reported for the week ending 30 April 2020. Loans of
banks to eligible large enterprises used as alternative compliance with the reserve
requirements amounted to ₱72.9 billion or 4.4 percent of total required reserves for the
same reserve week.

Meanwhile, the latest data on mandatory credit to agri-agra34 showed that the banking
11 system set aside a total of ₱848.0 billion of its loanable funds for agriculture and agrarian
reform credit in June 2022, expanding by 7.4 percent from the ₱789.7 billion in June 2021.
However, the banking system still fell short of the mandated credit at 9.5 percent for other
agricultural and 0.8 percent for agrarian reform vis-à-vis the minimum required of 15
percent and 10 percent, respectively.

ith the passage of “The Agriculture, Fisheries and Rural Development Financing
Enhancement Act of 2022” or R.A. No. 11901 in July 2022, amending the R.A. No 10000, the
BSP expects that the new law will strengthen rural development and improve the well-
being of agricultural and rural community beneficiaries. Under the new law, banks will
no longer be required to set aside 10 percent and 15 percent of their loanable funds for
agrarian reform credit and other agricultural credit, respectively. Instead, banks shall set
aside at least 25 percent of their total loanable funds for agriculture, fisheries, and rural
development (AFRD) financing (see Box Article 1).35,

32
The BSP continues to monitor the credit allocation of banks to the MSME sector despite the lapse of the
mandatory credit allocation for MSMEs set forth in Republic Act (R.A.) No. 6977, as amended by R.A. Nos. 8289 and
9501.
33
The BSP reduced the credit risk weights of loans granted to MSMEs that are current in status to 50 percent from
75 percent for qualified MSME portfolio (i.e., diversified with at least 500 borrowers over a number of industries),
and from 100 percent for non-qualified MSME portfolio.
34
R.A. No. 10000 (The Agri-Agra Reform Credit Act of 2009).
35
The Implementing Rules and Regulations of R.A. No. 11901 were released under Circular No. 1159 dated 04
November 2022.

Financial Supervision Sector

 Philippine Banking System

LOAN QUALITY FURTHER IMPROVED, ACCOMPANIED BY AMPLE

PROVISIONS
Philippine banks’ operations continued to Figure 1
be driven by their deposit-taking and NPL Ratio and NPL Coverage Ratio
As of End-Periods Indicated, Ratio in
lending activities. As such, an important 10.0 130.0

financial soundness indicator of bank’s 8.0

1
104.0
asset quality is its ratio of non-performing
loans (NPLs) to total gross loans. 6.0 NPL ratio 78.0

NPL Coverage ratio (R S)

4.0 52.0

In 2022, the banking system’s NPL ratio 2.0 26.0

further eased to 3.2 percent from 4.0

0.0 0.0
percent in 2021. This was accompanied
by high NPL coverage ratio36 of 107.0
percent, increasing from the 87.7 percent Source DSA p/ preliminary

in 2021 (Figure 13).

For 2023, the BSP is confident that the NPL ratio will remain in single digit and will start
to return to pre-pandemic levels37. The results of the latest industry survey also show that
majority of respondent banks believe that the NPL ratio will remain relatively low, and this
will be accompanied by high loan-loss provisions.38

DOUBLE-DIGIT GROWTH IN INVESTMENTS, WITH NOTED SHIFT TO

SECURITIES MEASURED AT AMORTIZED COST
Investments continued to post double-digit growth although at a slower pace. In 2022,
investment in securities39 rose by 18.9 percent to ₱6,207.5 billion40, surpassing the 10.6
percent pre-pandemic average but remaining lower than the 21.2 percent recorded in
2021. The majority of these investments was issued by the National Government41 (NG)
and measured at amortized cost. Around 61.3 percent of investments in securities was
measured at amortized cost42 at ₱3,804.9 billion. This was followed by investments in 1
securities measured at fair value through other comprehensive income 43 (FVOCI) at
₱2,194.8 billion (35.4 percent share). The remaining minimal share of 3.3 percent was
measured at fair value through profit or loss (FVTPL) at ₱207.8 billion.

A shift in investment portfolio, particularly from investments in securities measured at

FVOCI to investments in securities measured at amortized cost, has been noted since
October 2021. Specifically, investments in securities measured at FVOCI dropped to 35.4
percent share in 2022 from the 44.8 percent share in 2021, contracting by 6.1 percent.
Meanwhile, the share of investments in securities measured at amortized cost
substantially increased to 61.3 percent in 2022 from the 50.3 percent share in 2021. The
observed shift is consistent with a rebalancing strategy that reduces mark-to-market
(MTM) losses amid increasing interest rate environment.

36
Ratio of allowance for credit losses – total loans to gross NPLs.
37
The NPL ratio of the banking system ranged between 1.7 percent and 2.5 percent from 2015 to 2019, prior to the
pandemic. hereas from 2020 to 2022, this ranged between 2.2 percent and 4.5 percent.
38
Based on BSP’s BSOS for the First Semester of 2022.
39
Gross of allowance for credit losses, as applicable excludes equity investments in subsidiaries/associates/joint
ventures.
40
Across banking groups, UKBs held the largest share of the industry’s total investment in securities at 96.4 percent
(up by 19.4 percent to ₱5,983.7 billion). Meanwhile, TBs and RCBs each held around 2.7 percent (up by 8.7 percent
to ₱740.9 billion) and 0.9 percent (down by 1.4 percent to ₱56.4 billion) share, respectively.
41
Investment in securities issued by the NG stood at ₱4,595.9 billion or around 74.0 percent share of the total
investments in securities.
42
By counterparty, debt securities issued by the NG accounted for 78.0 percent (P2,968.3 billion) of total investments
in securities measured at amortized cost.
43
These investments in securities were mostly debt securities (P2,145.0 billion, 97.7 percent share). By counterparty,
debt securities issued by the NG accounted for 70.7 percent (P1,552.1 billion) of total investments in securities
measured at FVOCI.

Supervisory Policy and Research Department

 Philippine Banking System

DEPOSITS SUSTAINED GROWTH, FUELED BY DOUBLE-DIGIT GROWTH IN

TIME DEPOSITS
ith the Philippine economy gradually Figure 14.
recovering from the COVID-19 pandemic Deposits By Type
As of End-Periods Indicated In Billion ₱, Growth Rate in Total
and the depositors’ desire to beef up 18,000.0
Deposits
₱17,770.4 18.0
savings in the face of future contingencies, 16,000.0
15.0
deposits of the banking system continued 14,000.0

to expand. In 2022, banks’ deposits grew

12,000.0 12.0

10,000.0 9.4

by 9.4 percent to ₱17,770.4 billion44, driven

9.0
8,000.0

mainly by the 24.2-percent expansion in 6,000.0

4,000.0
6.0

time certificates of deposit (TD). The 2,000.0

3.0

growth in deposits was faster than the 9.0 0.0 0.0

percent increase in 2021 but slower than

the 10.3 percent pre-pandemic average Savings Deposits
Time Certificates of Deposit
Demand and NO
LTNCDs

(Figure 14). Total Deposits y-o-y Growth Rate (R S)

Most deposits were savings deposits45 at 47.0 percent (up by 6.0 percent to ₱8,356.8
billion), followed by demand deposits and negotiable order of withdrawal (NO )
accounts at 28.6 percent (up by 5.9 percent to ₱5,090.8 billion) and TD at 23.5 percent (up
by 24.2 percent to ₱4,172.0 billion). Long-term negotiable certificates of deposit (LTNCDs)
comprised a minimal 0.8 percent share (down by 22.0 percent to ₱150.8 billion).

Importantly, the BSP remains committed to pursuing initiatives and regulatory reforms
that promote an inclusive financial system in the country. In 2022, there was a substantial
increase in small deposit accounts which may be attributed to BSP and banks’ joint efforts
to promote financial inclusion and onboard unserved and underserved Filipinos to the
banking system. In particular, deposit accounts with balance of ₱5,000 and below had the
highest number of accounts at 71,689,519 (up by 21.5 percent, 70.6 percent share) totaling
₱40.0 billion (up by 7.4 percent, 0.2 percent share). By contrast, deposits with balance of
over ₱5.0 million had the lowest number of accounts at 406,468 (up by 9.4 percent, 0.4
1 percent share) but took up a significant portion of total deposits (69.7 percent share) at
₱12,391.5 billion (up by 10.9 percent).

In terms of depositors, the banking

Figure 15
system’s deposits remained domestic- Deposits By Counterparty Total
oriented as these were mostly peso-
As of End-Periods Indicated In Billion and Growth Rate in Deposits
₱17,770.4
18,000.0 18.0
denominated at 84.8 percent share 16,000.0
15.0
(₱15,065.4 billion) and generated from 14,000.0

resident individuals and private 12,000.0

10,000.0
9.4
12.0

corporations, with share of 45.6 percent 8,000.0

9.0

(₱8,101.4 billion) and 33.4 percent 6,000.0 6.0

4,000.0
(₱5,927.1 billion), respectively (Figure 15). 2,000.0
3.0

Deposits from resident private 0.0 0.0

corporations (excluding banks) grew by

2.4 percent, slower than the 16.9 percent Individuals Resident Private Corporations
Government Trust Department
growth recorded in 2021, while those Resident Banks Non-Residents
Total Deposits y-o-y Growth Rate (R S)
from individuals accelerated to 9.6 Source DSA
p/ preliminary

percent from the 5.8 percent growth in

2021.

Notably, for smaller banks like TBs and RCBs, deposits from consumers and households
continued to fund most of their operations. In 2022, individuals contributed around
58.4 percent (₱432.7 billion) and 82.9 percent (₱223.5 billion) share, respectively of the TBs’
and RCBs’ total deposits. Meanwhile, deposits of private corporations (excluding banks)
comprised 29.9 percent (₱221.4 billion) and 14.4 percent (₱38.8 billion) share, respectively
of the total deposits of TBs and RCBs.

44
Across banking groups, UKBs held the largest share of the industry’s total deposits at 94.3 percent (up by 11.6
percent to ₱16,759.9 billion). Meanwhile, TBs and RCBs each held around 4.2 percent (down by 25.1 percent to
₱740.9 billion) and 1.5 percent (up by 15.9 percent to ₱269.6 billion) share, respectively.
45
Savings deposits were mainly comprised of regular savings (80.9 percent share, ₱6,762.5 billion), other savings (18.3
percent, ₱1,528.1 billion), kiddie and teen savings (0.6 percent, ₱54.2 billion), and basic deposit accounts (0.1
percent, ₱12.0 billion).
Other savings accounts refer to interest-bearing special savings account which offer tiered interest rates
depending on the size of the deposit and usually carries higher interest rate compared to the rate for regular
savings account

Financial Supervision Sector

 Philippine Banking System

Other funding sources remained minimal. In 2022, bills payable (up by 34.0 percent to
₱666.0 billion) and bonds payable (down by 5.8 percent to ₱578.2 billion) only accounted
around 3.3 percent and 2.8 percent share, respectively, of the banking system’s total
liabilities.

CAPITAL REMAINED ADEQUATE…

Strong capital position was sustained by

the banking system in 2022, rising by 5.1
percent to ₱2,706.4 billion albeit slower
than the 5.9 percent in 2021 (Figure 16)46.
Paid-up capital comprised the largest
share of total capital at 49.3 percent
(₱1,333.9 billion), recording a substantial
growth of 25.1 percent due to public
offering and additional stock issuances in
a bid to expand touchpoints and in line
with banks’ long-term business plan. This
was complemented by retained earnings
with 48.5 percent share (₱1,311.9 billion),
declining by 2.2 percent due mainly to
dividends payout.

In terms of banking group, UKBs still held the biggest portion of the banking system’s
capital at 92.1 percent (up by 6.0 percent to ₱2,493.8 billion). Meanwhile, TBs and RCBs
each accounted for around 5.3 percent (down by 13.4 percent to ₱142.8 billion)47 and 2.6
percent (up by 22.4 percent to ₱69.8 billion) share, respectively.

…WITH CAPITAL RATIOS THAT WERE WELL-ABOVE BSP AND 1

INTERNATIONAL STANDARDS
Both CAR48 and CET149 ratio of UKBs, on a Figure 1
consolidated basis, stood at 16.1 percent CAR and CET 1 Ratio o UKBs Consolidated
As of End-Periods Indicated, Ratio in
and 15.0 percent, respectively, in 202250 18.0
(Figure 17). These ratios continued to be 16 1
15.0
substantially higher than the minimum 15

requirements set by BSP at 10 percent 12.0

BSP 10 minimum CAR
and 6 percent and the Bank for 9.0

International Settlements at 8 and 4.5 6.0

BSP 6 minimum CET1ratio

percent. Importantly, the high capital

ratios indicate UKBs’ preparedness and 3.0

ability to withstand shocks to their

balance sheet, including those related to Source DSA
CAR CET1 Ratio
p/ preliminary

the COVID-19 pandemic.

Similarly, the banking system including smaller banks likewise recorded high capital
ratios in 2022. The CAR of the banking system stood at 15.7 and 16.3 percent, respectively,
on solo and consolidated bases51. Stand-alone TBs and RB and CBs52 reported their CARs
at 20.3 percent, 22.0 percent and 18.6 percent, respectively, as of the same reference
period. hile subsidiary TBs and RBs posted an 18.2 percent and 16.9 percent, respectively.
53

46
The pre-pandemic CAGR of capital was 11.3 percent.
47
The decline was due mainly to the merger of a TB with its parent UB in January 2022.
48
Regulatory capital to risk-weighted assets.
49
Regulatory CET1 Capital to R A. The CAR and CET1 ratios are the most common measures of capital adequacy
under the Basel Committee on Banking Supervision (BCBS) standards.
50
On solo basis, CAR and CET1 ratio of UKBs stood at 15.4 percent and 14.3 percent, respectively, in 2022.
51
Based on solo basis capital computation. Ratios are combination of Basel III and Basel 1.5 frameworks.
52
Under Basel 1.5 framework.
53
Under Basel III framework.

Supervisory Policy and Research Department

 Philippine Banking System

Another important capital adequacy indicator is the ratio of net NPLs 54 to total capital
which aims to identify potential weaknesses in asset quality that can become serious over
time.

Figure 1
Net NPL to Capital Ratio The strong growth momentum of the
As of End-Periods Indicated, Ratio in

12.0
economy in 2022 supported the expansion
of the manufacturing and services
10.0
industries, as well as enabled consumption
8.0 and investment activities to recover.55 This
6.0 6
has resulted in the improvement of NPLs
across all major types of loans to consumers
4.0
(e.g., auto loans and credit cards receivables),
2.0 real estate, transportation and storage, and
manufacturing sectors, and other loans,
Source DSA /p preliminary among others.

Net NPL to capital ratio of the banking system displayed a declining trend, reinforcing the
improving asset quality and strong capital of banks (Figure 18). In 2022, this ratio stood at
6.9 percent, a substantial improvement from the 9.3 percent recorded in 2021 but still far
Figure 1 from the pre-pandemic average of 3.8
Capital-to-Asset Ratio
As of End-Periods Indicated, Ratio in percent.
15.0

14.0 In terms of bank leverage, the BSP closely

13.0 monitors the banking system’s capital-to-
12.0
11 asset ratio and Basel III leverage ratio (BLR).
The capital-to-asset ratio56 determines the
11.0
extent to which assets are funded by the
10.0
banks’ own funds while the BLR57 relates
the level of a bank’s tier 1 capital against its
Source DSA p/ preliminary
total on-book and off-book exposures.
15 In 2022, the capital-to-asset ratio stood at 11.7 percent, down from the 12.4 percent in 2021
(Figure 19). This ratio remained relatively stable for the past years, an indication that banks
maintained a reasonable level of capital to fund their assets. Meanwhile, the UKBs’ BLR
stood at 8.8 and 9.3 percent, respectively, on solo and consolidated bases in 2022,
declining from the 9.4 and the 9.8 percent in 2021 but remaining well-above the 5.0
percent BSP and the 3.0 percent international thresholds. The drop in BLR was driven
mainly by the expansion in lending activity.

Figure
Li uid Asset Ratio and Li uid Assets to Deposits
AMPLE BUFFERS FOR LIQUIDITY Ratio
As of End-Periods Indicated, Ratio in
AND FUNDING REQUIREMENTS 62.0

54.0 5 6
Banks likewise maintained sufficient liquidity
position to meet liquidity and funding 46.0
5

requirements of their clients especially 38.0

during financial shocks. These liquidity 30.0

ratios58 remained high and well-above BSP’s

minimum thresholds. In 2022, liquid asset59 Liquid Asset ratio Liquid Assets to Deposits ratio
and liquid assets to deposit60 ratios of the Source DSA /p preliminary

54
Net of provisions.
55
The country’s real gross domestic product (GDP) posted a 7.6 percent full-year growth in 2022 as reported by the
Philippine Statistics Authority (PSA).
56
Pertains to ratio of total capital accounts to total assets.
57
The BLR is expressed as a percentage of Capital Measure (Tier 1 Capital) to Exposure Measure. The BLR is a simple,
transparent, and non-risk based “backstop” measure, which aims to “restrict the build-up of excessive leverage in
the banking sector to avoid destabilizing deleveraging processes that can damage the broader financial system
and the economy.” Source BCBS press release on Basel III Leverage Ratio Framework and Disclosure
Requirements, 12 January 2014.
58 Include liquid asset ratio, liquid assets to deposit ratio, net loans to deposit ratio, LCR, MLR, NSFR and intraday

liquidity, among others.

59
Ratio of liquid assets to total assets.
As compared with ASEAN counterparts (latest available data) Indonesia (Q4 2022 18.3 percent), Malaysia (Q1
2022 22.8 percent), Thailand (Q3 2022 19.5 percent), and Vietnam (Q2 2022 11.2 percent). Source IMF FSIs – Data
and Metadata Tables.
60
Ratio of liquid assets to deposits (a proxy for short-term liabilities), which indicates the deposits that would have
to be covered by asset sales if access to funding is lost.

Financial Supervision Sector

 Philippine Banking System

banking system stood at 40.5 percent and 52.6 percent, respectively, both declining from
the 42.1 percent and the 54.0 percent in 2021 (Figure 20).

The BSP likewise uses liquidity coverage ratio (LCR), minimum liquidity ratio (MLR) and
net stable funding ratio (NSFR) in monitoring liquidity of the banking system. 61 These
liquidity ratios are generally patterned after the Basel standards. Similarly, the BSP rolled
out the report on intraday liquidity for UKBs and their subsidiary TBs/quasi-banks in April
2022.62

Figure 1 In 2022, the LCR of U/KBs on a solo and

LCR o UKBs Solo
As of End-Periods Indicated, Ratio in consolidated bases stood at 185.7 percent
230.0
and 185.4 percent, respectively, lower than
200.0 1 5 the 200.9 percent and the 200.6 percent
170.0 recorded in 2021 but remained
140.0
LCR Minimum Requirement
significantly higher than the 100 percent
110.0 1 minimum threshold63 (Figure 21). Since the
LCR was implemented in 2018, covered
80.0
banks consistently surpassed the
50.0
Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 regulatory minimum, indicating high
Source DSA /p preliminary levels of high-quality liquid assets and the
industry’s resilience to potential short-
term liquidity disruptions even during crisis. For smaller banks64, the MLR of stand-alone
TBs, RBs, and CBs were favorably high at 29.9 percent, 63.7 percent, and 44.4 percent,
respectively, on solo basis, surpassing the 16 percent minimum requirement65 as of the
same reference period. These stand-alone banks’ MLR in 2021 was 37.0 percent, 62.1
percent, and 41.5 percent, respectively.

Meanwhile, the NFSR of UKBs in 2022 reached 137.4 percent and 138.1 percent on a solo
and consolidated bases, respectively, albeit lower than the 143.4 percent and the 145.1
percent posted in 2021 but well-above the minimum regulatory requirement of 100
percent.

Another indicator to monitor liquidity is the ratio of deposits to net loans66. This ratio stood 16
at 144.9 percent in 2022, declining from the 147.3 percent in 2021 but remaining well-above
the 100 percent mark. This denotes banks’ more than one-to-one correspondence
between deposits (source of funds) and loans (use of funds).

PROFITABLE OPERATIONS, SUPPORTED BY STRONG INTEREST INCOME

AND WELL-MANAGED OPERATING EXPENSES

Banks sustained their double-digit growth in net profit, growing by 38.0 percent to ₱310.1
billion in 2022, although slower than the 44.8 percent growth in 2021 (Figure 22). The
improvement was due mainly to the 17.3 percent growth in total interest income to ₱911.7
billion and the 281.7 percent growth in other income to ₱90.2 billion. Most of the interest
income was from lending to private corporations and households 67 and investment in
securities68, denoting that core activities continued to drive the bank’s operations.

61
Circular No. 1034 dated 15 March 2019, and Circular No. 1035 dated 15 March 2019.
62
The Report, which covered the month of January 2022 onwards, aims to appropriately monitor the intraday
liquidity position of supervised entities, their sources of intraday liquidity, and their ability to meet payment and
settlement obligations on a timely basis under both normal and stressed conditions. Based on Circular No. 1064
dated 03 December 2019
63
Under existing BSP rules and regulations, the minimum LCR requirement for UKBs was 90 percent beginning 01
January 2018 and 100 percent from 01 January 2019 onwards.
64
The BSP calibrates its banking regulations in such a way that these remain sensitive to the peculiarities and
conditions of different types of financial institutions operating in the country without compromising regulatory
objectives.
65
The reduced MLR of 16 percent was in effect until end-December 2022.
66
Net loans refer to total loans excluding interbank loan receivables. This also represents the core loans of the
banking system.
67
Bulk of the Interest income were earned from loans to private corporations and individuals for consumption
purposes with shares of 36.9 percent (₱336.7 billion) and 16.3 percent (₱148.7 billion), respectively.
68
Interest income from debt securities measured at amortized cost accounted for 14.2 percent (₱129.1 billion) of total
interest income (₱911.7 billion).

Supervisory Policy and Research Department

 Philippine Banking System

Amid the policy normalization, total Figure

interest expense increased by 36.0 percent Sour es o Net In o e
As of End-Periods Indicated In Billion and Growth Rate in

to ₱156.5 billion driven by the movement in 1,200.0 80.0

banks’ deposit mix, particularly TD Non-
Interest
1,000.0 60.0
outpacing the growth of savings deposits Income
259.9

which translated to higher interest 800.0

38.0
40.0

expense. As such, funding cost inched up 600.0 20.0

to 0.9 percent in 2022 from the 0.7 percent 400.0

Net Interest
Income 0.0

in 2021. Notwithstanding this, net interest 200.0

₱ 754.7
(20.0)

margin rose to 3.6 percent in 2022, better 0.0 (40.0)

than the 3.5 percent in 2021 as rate hike Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 p/

boosted banks’ interest income. Net Interest Income

Net Profit y-o-y Growth Rate (R S)
Non-Interest Income

Source DSA p/ preliminary

Non-core income likewise contributed to

the overall performance, rising by 25.2 percent to ₱259.9 billion, a reversal from the 5.3
percent contraction in 2021. The growth was driven by other income and fees and
commissions, increasing by 281.7 percent and 15.0 percent, respectively. Total trading
income also rose by 70.5 percent to ₱16.5 billion, comprised of ₱9.7 billion realized gains
from foreign exchange (FX) transactions and ₱9.6 billion from sales and/or redemption of
trading securities, offsetting the ₱2.9 billion unrealized mark-to-market losses incurred on
trading portfolio. On aggregate, banks were able to manage their trading portfolios as
they shifted investment mix amidst movements in interest and FX rates to protect profits.

As banks upgraded technology, developed personnel, and incurred higher administrative

costs in 2022, total operating expenses increased by 9.8 percent to ₱562.4 billion, higher
than the 4.2 percent growth in 2021. The increase in costs however was outpaced by the
growth in total operating income, bringing the cost-to-income (CTI) ratio down to 55.2
percent which was better than the 58.7 percent in 2021. The CTI ratio, which measures
efficiency in banking operations, has been maintained below 65 percent even prior to the
pandemic.

Other measures of bank profitability like return on equity (RoE) and return on Asset (RoA)
1
also improved, rising to 11.7 percent and 1.4 percent, respectively, from the 9.0 percent and
1.1 percent in 2021.69 The improvement in RoE and RoA may be attributed to improving
loan quality and banks’ efficient management of operating expenses.

MODEST LEVEL OF CONTINGENT ACCOUNTS SUSTAINED

Total off-balance sheet assets70 grew by
9.6 percent to ₱13,344.5 billion in 2022, Figure
Co position o Contingent A ounts Total
Contingent
decelerating from the 15.6 percent
As of End-Periods Indicated In Billion and Growth Rate in
Accounts
15,000.0 ₱13,344.5 18.0

growth in 2021 (Figure 23). The expansion 12,000.0

16.0

was driven by increase in derivative

14.0

12.0

instruments, trust department accounts 9,000.0

10.0
9.6
and bank guarantees, which grew by 18.5 6,000.0
8.0

6.0
percent (up by ₱735.4 billion), 3.9 percent 3,000.0 4.0

(up by ₱144.1 billion), and 21.0 percent (up 2.0

0.0 0.0
by ₱97.7 billion), respectively. Dec-18 Dec-19 Dec-20 Dec-21 Dec-22

Collectively, these accounts comprised Others

Bank Guarantees
Trade-Related Accounts
Commitments

majority of the banking system’s total Trust Department Accounts

Total Contingent Accounts y-o-y Growth Rate (R S)
Derivative Instruments

contingent assets, holding around 68.4 Source DSA p/ preliminary

percent (₱9,134.3 billion).

By composition, derivative instruments held the largest share at 35.3 percent share
(₱4,715.3 billion), followed by trust department accounts, others71 and commitments with

69
The RoA provides information on the supervised entities’ profitability relative to total assets and can be an
indicator of how efficiently the entities manage their assets to generate earnings. Meanwhile, the RoE is intended
to measure supervised entities’ efficiency in using capital. It also offers information on the ability of supervised
entities to internally generate capital through retained earnings, and the attractiveness of the sector to new equity
investment.
70
Accounted for around 57.9 percent share (₱13,344.5 billion) of total assets in 2022, declining from the 58.4 percent
share (₱12,171.3 billion) in 2021.
71
Comprised largely of securities held under custodianship by bank proper at 13.9 percent share (₱1,857.7 billion, up
by 7.8 percent) of total contingent assets in 2022.

Financial Supervision Sector

 Philippine Banking System

shares of 28.9 percent (₱3,856.2 billion), 16.2 percent (₱2,167.6 billion) and 13.9 percent
(₱1,853.2 billion), respectively. Bank guarantees and trade-related accounts remained
minimal with share of 4.2 percent (₱562.8 billion) and 1.4 percent (₱189.5 billion),
respectively. Further discussion of recent trends in the trust industry is provided in a
separate section of this report.

BANKS’ NET OPEN FX POSITION REMAINED MANAGEABLE

The BSP also monitors the ratio of net FX position to bank’s capital. In 2022, the net FX
position to regulatory capital of domestic UKBs remained low at 2.0 percent (overbought
position). Although the ratio went up from 1.2 percent in 2021, the ratio continued to be
manageable, shielding the industry from adverse impact in case of volatility in the FX
market. The low ratio may also denote that banks’ FX position is primarily used to serve
clients’ FX requirements.

LEANER AND STRONGER NETWORK, SUPPORTIVE OF BANK OPERATIONS

Figure In line with BSP’s mandate to maintain a

Total Ban ing Units
stable and resilient financial system, the
12,772
BSP continues to provide an enabling
policy enviroment for mergers,
consolidations and acquisitons in the
497
industry. In 2022, total number of bank
head offices declined to 49772 from 506 in
2021 in view of merger, voluntary surrender
of bank license and closure of some banks.
Nonetheless, the total number of branches
and branch-lite units (collectively referred
to as other offices) increased to 12,772 from
12,648 in 2021 (Figure 24). This resulted in 1
the establishment of additional touchpoints to deliver financial products and services to
unserved and underserved population of the country.

Across banking groups, UKBs held the largest number of other offices at 7,148 (up from
6,992) while TBs and RCBS each have 2,549 (down from 2,691) and 3,075 (up from 2,965),
respectively. As to number of head offices, RCBs constituted the majority at 403 (down
from 413), distantly followed by UKBs at 4473 (down from 45), TBs at 43 (down from 47),
digital banks at six (6), and Islamic bank at one (1).
Meanwhile, as to geographical distribution, bank offices74 remained heavily concentrated
in Luzon particularly in NCR (28.8 percent share,
3,803 offices), CALABARZON (14.4 percent, 1,906 Figure 5
Ele troni Pay ent and and Finan ial Servi es EPFS
offices), and Central Luzon (10.4 percent, 1,371 As of End-September 2022
offices). By contrast, the Bangsamoro PESONet

Autonomous Region in Muslim Mindanao Mobile Banking

ATM Facility
(BARMM) had the smallest number of offices at ATM Card

39 (0.3 percent share). EMIs

InstaPay
eK C-Online Onboarding
Amid the development in the financial Internet Banking - Retail

ecosystem in the country, banks continued to Internet Banking - Corporate

E-Money

invest in fintech and other technological QR Ph

Point of Sale Facility
innovations to adapt and remain competitive. Instapay Multi-Proxy Service

Based on latest data as of end-September 2022, Online/ Digital Loan Application

Type C EPFS

the use of automated teller machines or ATMs Agency Banking

(ATM card and facility) remained the leading

Credit Card
Others/Miscellaneous

electronic facility used by majority of Cash Accept Machine

Telephone Banking
supervised entities (167 users), followed by Payment Portal

PESOnet (102 users), mobile banking (100 Other Payment Cards

ith VASP Services

users), and electronic money issuers (EMIs, 72 Cash Recycling Machine

users), along with InstaPay (71 users) (Figure 25).

0 20 40 60 80 100 120
Source DSA

72
Includes six (6) digital banks.
73
Exclusive of 1 Islamic Bank. Meanwhile, the decline in UKB was due to a merger of 2 UBs.
74
There were 13,215 bank offices nationwide and 54 bank office overseas in 2022.

Supervisory Policy and Research Department

 Developments on the Implementation of the New Agri-Agra and
Rural Financing Law

Box Article 1

The Bangko Sentral ng Pilipinas (BSP) The BSP is currently finalizing the circular
supported the passage of Republic Act (RA) No. amending the earlier issued IRR which includes,
11901 or “The Agriculture, Fisheries and Rural among others, the proposed reporting template,
Development Financing Enhancement Act of and the extension of the timeline of submission
2022” which provides a broader and more of the said report. This will provide banks with
comprehensive financing framework for the sufficient time to make the necessary
development of the agriculture and fisheries adjustments in their systems to comply with the
sector, and the rural communities. The law new provisions under the law and its IRR.
became effective on 18 August 2022.

Coordination efforts among other

As required under the law, the BSP, in implementing agencies are likewise ongoing to
consultation with the industry, relevant operationalize other provisions of the law,
agencies and stakeholders, has issued the particularly on the development of the
implementing rules and regulations (IRR) of the implementing guidelines on the utilization of
mandatory agriculture, fisheries and rural penalties, capacity building programs, and the
development (AFRD) financing requirement as review framework of the Agricultural Credit
provided under Circular No. 1159 dated 04 Policy Council (ACPC).
November 2022.

Overall, the BSP remains committed to

The key enhancements in the new law the effective implementation of the new law
and its IRR include the expansion of the scope of that enhances the access of the agriculture and
rural community beneficiaries and the activities fisheries sector, and the rural communities to
for AFRD financing, introduction of new modes financial services and programs which will
of compliance and the removal of the distinction strengthen agricultural productivity and
on the credit allocation of 15 percent to support inclusive growth and development of
agriculture and 10 percent to agrarian reform the rural areas.
beneficiaries.

In view of the significant enhancements,

the BSP will issue a revised reporting template
on the compliance with the AFRD financing
requirement. The enhanced AFRD report will
provide the BSP with relevant data in
monitoring banks’ compliance with the
mandatory credit requirement and in the
imposition of applicable penalties to be
collected and remitted to the implementing
agencies as prescribed under the law.

O
requirem
ability o
quickly
19 minimiz
custome
 FOREIGN BANK
BRANCHES AND
SUBSIDIARIES

OVERVIEW
Foreign banks sustained their strong financial performance amid global uncertainties,
inflationary pressures, and policy normalization. Total assets, net income, and capital
continued to grow while loan quality further improved as evident in the easing of their
non-performing loans. Importantly, capital standards remained sufficient to absorb
potential losses and withstand shocks.

Assets Investments Loans Deposits Net Capital

₱1,417.6 ₱339.8 ₱660.2 Profit
₱874.5 ₱261.3
billion billion billion billion billion
₱41.8
NPL and billion
NPL CAR*
Coverage
Ratio
1.3% 29.0%
149.0%

*Based on end-September 2022

6 4

20
 Foreign Bank Branches and Subsidiaries

ASSET GROWTH SLOWED DOWN, DUE TO CONTRACTION IN INVESTMENTS

AND LENDING ACTIVITIES
Total assets of foreign bank branches (FBBs) and F 1
foreign bank subsidiaries, which accounted for T A
As of End-Periods Indicated In Billion₱ and Growth Rate in Total
6.2 percent of the Philippine banking system’s Assets
₱1,417.6

total resources, grew at a slower pace in 2022,

1,500.0 7.0

6.0

increasing by 1.5 percent year-on-year1 (y-o-y) to

1,200.0
5.0

₱1,417.6 billion from the 6.2 percent growth in

900.0
4.0

3.0

2021. The decelerated growth was mainly due to

600.0
2.0

decline in growth of investments and reverse 300.0

1.5 1.0

repurchase (repo) transactions of these banks.2 0.0 -

Foreign banks in the country, however, Others

Cash and Due from Banks

continued to support the financial requirements Total Investments, net

Total Loans (inclusive of IBL and RRP), net
of their clients. In terms of asset mix (Figure 1), Total Assets y-o-y Growth Rate (R S)
Source DSA p preliminary
loans3 continued to hold the largest share at
45.7 percent (₱647.9 billion). Investments in securities and cash and due from banks followed
with a share of 23.6 percent (₱335.0 billion) and 23.4 percent (₱331.3 billion), respectively.
Collectively, these accounts comprised around 92.7 percent (₱1,314.2 billion) of the total assets of
FBBs and foreign bank subsidiaries.

In 2022, loans4 posted minimal growth of 0.6 percent rising by ₱3.0 billion to ₱511.6 billion. This
growth was lower than the 4.4 percent recorded in 2021. By contrast, interbank loans receivable
(IBL), while modest in terms of share to total loans, substantially expanded by 27.7 percent to
₱29.1 billion, reversing the 2.7 percent contraction in 2021. As to loan quality, the gross non-
performing loan (NPL) ratio5 of FBBs and foreign bank subsidiaries eased to 1.3 percent, better
than the 1.8 percent in 2021. The improvement was due to the substantial decline in NPLs by 31.6
percent (down by ₱3.8 billion) to ₱8.3 billion. Alongside the easing of NPL ratio, FBBs and foreign
bank subsidiaries maintained ample provisions to cover for potential credit losses. NPL coverage
ratio stood at 149.0 percent in 2022, higher than the 134.8 percent in 2021.
21 2
Meanwhile, investment in securities contracted by 6.3 percent to ₱339.8 billion, a reversal of the
5.0 percent growth in 2021. These investments were comprised of securities measured at fair
value through other comprehensive income (FVOCI, 59.3 percent share), securities measured at
amortized cost (22.4 percent share) and securities measured at fair value through profit or loss
(FVTPL, 18.3 percent share). Both securities measured at FVTPL and FVOCI contracted by 38.5
percent (to ₱62.1 billion) and 0.1 percent (to ₱201.6 billion), respectively, in 2022. By contrast,
securities measured at amortized cost rose by 27.3 percent to ₱76.1 billion.

In 2022, the total number of head offices stood at 29, comprising of 24 FBBs and five (5) foreign
bank subsidiaries, relatively unchanged from 2021 (Table 1). The issuance of the implementing
guidelines of Republic Act (R.A.) No. 10641 in November 2014 further contributed to the increase
in the number of foreign banks in the country. Since its implementation, 12 foreign bank
applications6 have been approved by BSP through the Monetary Board.
Table 1
FBBs and Subsidiaries
Network
As of End-December 2022
Branch Subsidiary Total
By Bank Category
Universal banks (UBs) 6 2 8
Commercial banks (KBs) 18 3 21
Total 24 5 29
By Mode of Entry
R.A. No. 337 4 0 4
R.A. No. 7721 10 3 13
R.A. No. 10641 10 2 12
Total 24 5 29
Source: DSA

1
All discussed growth rates and report period pertain to y-o-y and end-December 2022, unless otherwise stated.
2
In 2022, reverse repo with BSP and other banks declined by 15.4 percent to ₱119.5 billion from ₱141.2 billion in 2021.
3
Net of allowance for credit losses. Include IBL and reverse repo agreements.
4
Gross of allowance for credit losses. Exclude IBL and RRP.
5
Gross NPL to Total Loans (inclusive of IBL) stood at 1.25 percent while NPL Ratio (exclusive of IBL) was 1.31 percent in 2022,
lower than the 1.8 percent and 1.9 percent, respectively, in 2021.
6
Comprised of approved bank applications from Taiwan (1 TB and 4 KBs), South Korea (2 KBs and 1 TB), Japan (1 KB),
Singapore (1 KB), Malaysia (1 KB) and China (1 KB).

Financial Supervision Sector

 Foreign Bank Branches and Subsidiaries

The country’s sound macroeconomic fundamentals and stable growth prospects continued to
attract foreign players, especially in Asia. Most of the foreign banks in the country came from the
Asia-Pacific region, particularly from Taiwan and South Korea.7

DEPOSITS CONTRACTED DUE TO DECLINE IN PESO-DENOMINATED

DEPOSITS

Deposits remained the principal funding source of foreign banks’ operations at 75.6 percent of
total liabilities. These declined by 1.5 percent to ₱874.5 billion in 2022, a reversal of the 6.6
percent growth in 2021. Notwithstanding this, the deposit structure of foreign banks remained
domestic-oriented as most deposits were peso-denominated (₱522.9 billion, 59.8 percent share)
and sourced from resident individuals and private corporations(₱803.4 billion, 91.9 percent
share. Meanwhile, other sources of funding like bills payable remained minimal, accounting for
around 2.7 percent (₱31.7 billion) of the total liabilities. With this funding structure, foreign banks
in the country are shielded from external vulnerabilities and are less susceptible to capital flight.

EARNINGS SOARED, DRIVEN BY SUBSTANTIAL GROWTH IN OTHER INCOME

Net profit jumped to ₱41.8 billion in 2022, F

T O
2
I
increasing by 515.8 percent from the ₱6.8 billion As of ear-Ended Indicated In Billion ₱

recorded in 2021. This increase was largely due

to the recognition of one-time growth in other 75.0
Non-Interest
Income
₱ 67.6
income8 in 2022.
50.0
Net Interest
Interest income from lending and investing Income ₱ 40.5

activities also continued to increase by 25.5

25.0
percent in 2022, although lower than the 92.9
percent expansion in interest expenses amid
-
policy normalization. Net interest income rose Dec-18 Dec-19 Dec-20 Dec-21 Dec-22
22
by 17.2 percent to ₱40.5 billion in 2022, a reversal Net Interest Income Non-Interest Income

of the 20.5 percent contraction in 2021. This Source DSA p preliminary

improvement, likewise, generated higher

spread as net interest margin of the industry increased to 3.0 percent in 2022 from 2.6 percent
in 2021. Meanwhile, non-interest income soared by 240.6 percent to ₱67.6 billion, significantly
above the 0.5 percent growth in 2021 (Figure 2).

The strong key profitability indicators in 2022 may partly be attributed to the one-time gain
recorded under other income. Cost-to-income ratio was 45.6 percent, better than the 79.1
percent in 2021. Similarly, return on assets and return on equity registered higher ratios at 3.0
percent and 16.9 percent, respectively, when compared to the 0.5 percent and the 2.9 percent
recorded in 2021.

The results of the 2022 Survey on the Effects of Foreign Bank Entry into the Philippine Banking
System disclosed that foreign banks’ operations continued to support the growth of the
Philippine economy by, among others, facilitating the entry of foreign investments in the
country (Annex 2).

7
Around 73.3 percent came from Asia-Pacific region, while the remaining 16.7 percent and 10.0 percent were from Europe
and America, respectively.
8
Pertains to gain from sale of consumer banking business of a foreign bank to a UB. Other income of foreign banks reached
₱46.2 billion in 2022 from ₱2.1 billion in 2021.

Supervisory Policy and Research Department

 Foreign Bank Branches and Subsidiaries

ADEQUATE CAPITAL SUSTAINED

Total capital increased by 12.5 percent to F 3

C C
₱261.3 billion (Figure 3), reversing the 0.3 As of ear -Ended Indicated In Billion ₱, and Growth Rate in
Total
percent contraction in 2021. The strong capital 300.0
Capital
₱261.3
position was on account of higher retained 250.0

earnings and undivided profits, rising by 380.5 200.0

150.0
12.5

percent to ₱50.0 billion in 2022. 100.0

50.0
-
Total assigned capital9 comprised most of the Dec-18 Dec-19 Dec-20 Dec-21 Dec-22

total capital, accounting for 56.3 percent share Capital Stock

Assigned Capital

(₱147.0 billion) in 2022, albeit lower than the Deposit Subscription

Net Due to O, Branches and Agencies Accum. Earnings

62.8 percent share in 2021 (Figure 3).

Retained Earnings and Undivided Profits
Source DSA Total Capital y-o-y Growth Rate (R S) p preliminary

Similarly, both capital adequacy ratio (CAR) and common equity tier 1 ratio of the industry, on a
solo basis, stood at 29.0 percent and 28.2 percent, respectively, as of end-September 2022. These
ratios continued to be substantially higher than the minimum thresholds set by the BSP at 10
percent and by the Bank for International Settlements at 8 percent. Importantly, the high capital
ratios indicate foreign banks’ capability to withstand shocks to their balance sheet.

23 2

9
Refers to the capital permanently assigned by a foreign bank to its branches operating in the Philippines pursuant to
Section 4 of Republic Act No. 7721 (An Act Liberalizing the Entry and Scope of Operations of Foreign Banks in the
Philippines and For Other Purposes).

Financial Supervision Sector

 FOREIGN CURRENCY
DEPOSIT UNIT
OPERATIONS

OVERVIEW
Total assets of banks’ foreign currency deposit units (FCDUs) expanded. Loans and
investments, which comprised mainly of total assets, likewise grew following the
economic recovery and improvement in credit activity in the country. This asset
expansion was largely funded by resident deposits, driven by strong remittance and
investment inflows.

Moreover, the improvement in asset quality through easing of non-performing loans

(NPLs) as well as efficient operations translated to higher profitability indicators than
that reported in the previous year.

Assets
US$61.9 billion (₱3,475.0 billion)

Investments
US$28.6 billion (₱1,602.6 billion)

Loans
US$21.7 billion (₱1,218.3 billion)

NPL and NPL Coverage Ratios

1.1 percent and 196.4 percent
FCDU
As of end-December 2022*

Deposit
US$47.9 billion (₱2,685.5 billion)

Net Profit

₱ US$1.1 billion (₱60.3 billion)

For period-ended December 2022

*Based on closing rate of ₱56.120 as of 29 December 2022

Classification: GENERAL 24
 Foreign Currency Deposit Unit Operations

ASSETS EXPANDED, DRIVEN BY LOANS TO REGULAR BANKING UNIT

Total assets1, which accounted for 15.1 percent of Fig re 1.

Asset Mi
the Philippine banking system’s total resources, As of End-Periods Indicated In Billion US$ and Growth Rate in
2 Cash
grew by 7.1 percent year-on-year (y-o-y) to Due from Banks
Investment in Securities Total
US$61.9 billion (₱3,475.0 billion), reversing the 1.2 Loans Assets
US$61.9
Other Assets
percent contraction in the same period last year 70.0 Total Assets y-o-y Growth Rate (RHS)
7.1 8.0
and exceeding the 6.6 percent average growth 60.0 6.0
rate prior to the pandemic.3 Both loans and 50.0
40.0 4.0
investments grew by 4.8 percent (to US$17.2 30.0
2.0
billion) and 0.9 percent (to US$28.6 billion), 20.0
respectively, as of the same period. Banks also 10.0 0.0

took advantage of regulatory flexibility which 0.0 -2.0

gives banks the option to use excess funds in the

FCDU to support lending/funding requirements Source DSA p/ preliminary

of the regular banking unit (RBU). Loans to RBU , which is reported under other assets increased
4

substantially by 1,791.3 percent to US$6.6 billion from US$0.4 billion in 2021.

In terms of asset mix, investment in securities5 and loans6 continued to account for majority of
the assets with share of around 44.6 percent (US$27.6 billion) and 34.5 percent (US$21.4 billion),
respectively (Figure 1). This was followed by other assets with 11.9 percent share (US$7.4 billion),
and cash and due from banks with 9.0 percent share (US$5.6 billion). The strong growth of other
assets, particularly loans to RBU, in 2022 translated to a double-digit share to total assets vis-à-
vis the minimal 1.7 percent share (US$970.0 million) in 2021. By contrast, the 14.8 percent decline
in cash and due from banks in 2022 signal increased FCDU lending and investment activities.

A streamlined but stronger network supported the asset expansion. As of end-2022, there were
76 banks with FCDU/Expanded FCDU (EFCDU) licenses, a drop from the 77 banks in 2021 due to
the merger of two domestic banks with EFCDU license. Across banking groups, universal and
commercial banks held the largest number of FCDU/EFCDU licenses at 45 (3 FCDU and 42
EFCDU). Meanwhile, thrift banks, and rural and cooperative banks each have 21 and 10 FCDU
25 2
licenses, respectively, as of the same reference period.

DOUBLE-DIGIT GROWTH IN INVESTMENT IN SECURITIES MEASURED AT

AMORTIZED COST WAS OFFSET BY THE SHARP DECLINE IN OTHER TYPES OF
INVESTMENT PORTFOLIOS
Gross investment in securities inched up by 0.9 Fig re 2.
Composition of Investments
percent y-o-y to US$28.6 billion (₱1,602.6 billion) As of End-Periods Indicated In Billion US$ and Growth Rate in
Securities designated at fair value throug profit or loss

in 2022, reversing the 1.1 percent contraction in Held-for-trading securities

Others
Total
2021 (Figure 2).7 This investment growth was 35.0 Securities measured at amortized cost
Investments
Securities measured through FVOCI
US$28.6
25.0
Total Investments y-o-y Growth Rate (RHS)
due to double-digit increase in securities 30.0 20.0

measured at amortized cost. Securities 25.0 15.0

measured at amortized cost increased by 21.9 20.0 10.0

15.0
percent to US$16.6 billion (₱933.3 billion) and 5.0
10.0
held the largest portion of total investments at 5.0 0.9
0.0
around 58.2 percent share. All other types of 0.0 -5.0
investment in securities declined. Investment in
securities measured at fair value through other Source DSA p/ preliminary

comprehensive income (FVOCI) with 38.0

percent share dropped sharply by 14.9 percent to US$10.8 billion (₱608.5 billion), larger than the
1.5 percent decline in 2021.

1
Net of due from head office, branches, and agencies as well as due from FCDU and regular banking unit (RBU).
2
All discussed growth rates and report period pertain to y-o-y and end-December 2022, unless otherwise stated.
3
Pre-pandemic compounded annual growth rate (CAGR) is computed using end-December 2015 to end-December 2019
data.
4
Refer to FCDU/EFCDU funds lent to RBU solely for the purpose of funding RBU’s net fund outflow on its on-balance sheet
foreign exchange transactions, as allowed under existing regulations.
5
Net of allowance for credit losses and accumulated market gains or losses. Investment in debt securities accounted for
the largest share of the total investments at around 99.4 percent or US$28.4 billion (₱1,593.5 billion).
6
Net of allowance for credit losses. Inclusive of Interbank Loans Receivables (IBL) and loans to the BSP.
7
Under the Financial Reporting Standards (PFRS) 9. Financial assets measured at FVOCI, and financial assets measured at
amortized cost were previously classified as available-for-sale (AFS) and held-to-maturity (HTM) securities, respectively.

Financial Supervision Sector

 Foreign Currency Deposit Unit Operations

Since 2021, the share of securities measured at Fig re 3.

Investments b Iss er
amortized cost has been gradually increasing As of End-Periods Indicated, In Billion US$
vis-à-vis investment in securities measured 35.0 Total
Investments
through FVOCI. The observed shift in 30.0
US$28.6

investment mix may be attributed to 25.0

rebalancing strategy of banks to manage the 20.0
impact of mark-to-market losses arising from 15.0
market volatilities. 10.0

5.0
By counterparty, majority of investments in 0.0
securities was issued by non-residents8 and Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 p/

National Government (NG) at 48.7 percent Government Resident Corporates

Non-Residents Resident Individuals p/ preliminary
share or US$13.9 billion (₱780.3 billion) and 37.2 Source DSA
percent share or U$10.6 billion (₱595.4 billion), respectively (Figure 3) as of end-December 2022.9
In 2022, banks expanded their investments in issuances of the NG which grew by 12.4 percent.10

LENDING CONTINUED AND REMAINED BROAD-BASED ACROSS PRODUCTIVE

SECTORS
Fig re 4.
Gross total loans11 rose by 5.0 percent to US$17.2 Ind str Recipients of Loans*
billion (₱967.7 billion) in 2022 following the As of End-Periods Indicated, In Billion US$
and Growth Rate in
s
double-digit increase in loans to non-residents Non s i n s

(up by 10.2 percent to US$5.5 billion) and

i ni n a n a in
n o a tion a n Co ni ca tion

financial and insurance activities (up by 35.3

a ns o a tion a n oa
Total Loans
i na nci a l a n ns a nc Acti i ti s US$17.2

percent to US$2.8 billion). The loan expansion a n a c in

El c i ci Ga s a a n Ai Con i tioni n l

may be attributed to efforts of banks to take o a l Loa ns o G o Ra R

advantage of credit opportunities outside the 5.0

country and in the domestic financial sector.

Lending remained diversified and continued to c

* Excludes IBL and loans to BSP
c c c c
26
support key economic activities in the country Source DSA p/ preliminary

(Figure 4). 12 In 2022, almost half or around 49.3

percent (US$8.5 billion, ₱477.5 billion) of total loans to residents went to electricity, gas, steam,
and air-conditioning supply industry (19.0 percent share or US$3.3 billion), financial and
insurance activities (16.1 percent or US$2.8 billion), and manufacturing industry (14.2 percent or
US$2.5 billion). Notably, loans to non-residents remained significant, accounting for around 32.2
percent and growing by 10.2 percent y-o-y to US$5.5 billion (₱311.1 billion), an improvement from
the 3.7 percent contraction in 2021.

8
Non-resident issuers of securities held by banks in their FCDU were comprised of central banks and central governments
(58.5 percent share, US$8.1 billion), non-financial corporations (29.0 percent share, US$4.0 billion), banks (9.7 percent
share, US$1.3 billion), public sector entities (2.6 percent share, US$364.9 million), and multilateral agencies (0.2 percent
share, US$30.3 million).
By type of investment, securities measured at amortized cost accounted for 53.3 percent (US$7.4 billion) while investment
in securities measured at FVOCI made up 40.9 percent (US$5.7 billion) of the total securities issued by non-residents.
9
Government issuers were comprised of the NG (91.1 percent share, US$10.6 billion), government owned and controlled
corporations (8.0 percent share, US$930.2 million), and BSP (0.9 percent share, US$109.3 million).
10
Investments in issuances of non-residents contracted by 5.8 percent as of end-December 2022. Meanwhile, investment in
securities issued by resident private corporations (composed of banks and non-banks) remained modest, holding around
10.5 percent share as of end-December 2022. Said securities declined by 0.7 percent to US$3.0 billion (₱168.4 billion) as
of the same period.
11
Excludes IBL and loans to BSP.
12
Refers to loans and receivable-others and loans and receivables arising from repurchase agreements, certificates of
assignment/participation with recourse, and securities lending and borrowing transactions.

Supervisory Policy and Research Department

 Foreign Currency Deposit Unit Operations

ASSET QUALITY REMAINED SATISFACTORY WITH ADEQUATE LOSS BUFFER

Loan quality continued to improve as the non-
Fig re 5.
performing loan (NPL) ratio eased to 1.1 percent Loan Q alit NPL and NPL Coverage Ratios
in 2022, relatively better than the 3.6 percent in As of End -Period Indicated Ratio in
2021 (Figure 5). The improvement was due to 4.0 NPL Ratio 900.0

significant decrease in total NPLs by 69.5 NPL Coverage Ratio (RHS) 750.0

percent or US$0.4 billion (₱23.3 billion), a reversal 3.0 600.0

from the 55.1 growth in the previous year. The
2.0 450.0
recovery of the economy contributed to the
improvement in the overall quality of loans 1.0 300.0

particularly those extended to manufacturing, 150.0

and transportation and storage sectors and non- 0.0 -

residents. These sectors’ NPLs went down by 81.6 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 p/

percent (by US$223.3 million), 100.0 percent (by Source DSA p/ preliminary

US$153.1 million) and 96.2 percent (by US$136.6

million), respectively. By economic activity, non-performing loans to agriculture, forestry and
fishing sector had the biggest share to total NPLs at 47.7 percent (US$86.8 million), followed by
manufacturing and wholesale and retail trade with share at 27.6 percent (US$50.2 million) and
10.1 percent (US$18.4 million), respectively. Moreover, the easing of NPLs was matched with
adequate provisioning as NPL coverage ratio stood at 196.4 percent as of the same reference
period, relatively higher than the 109.9 percent in 2021.

DEPOSITS GREW DUE TO STEADY REMITTANCE AND INVESTMENT INFLOWS

Deposits continued to expand, growing by 3.8 Fig re 6.

F nding So rces
percent to US$47.9 billion (₱2,685.5 billion) from As of End-Periods Indicated In Billion US$ and Growth Rate in

the 2.3 percent in 2021.13 The growth was due to Capital

Other Liabilities Total
steady inflows from overseas Filipino Borrowings*
Deposits
Funding
US$61.9

remittances14 and foreign investments.15 In terms 70.0 Total Funding y-o-y Growth Rate (RHS) 7.1 8.0

27 of deposit mix, the majority of deposits was held

60.0
6.0 2
50.0
by residents (97.2 percent share or US$46.5 40.0 4.0

billion) thus, shielding the industry from possible 30.0 2.0

funding withdrawals by common lenders in the 20.0
0.0
global financial markets. 10.0

0.0 -2.0
Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 p/
Other sources of funding like bills payable and *Bills Payable and Bonds Payable
Source DSA p/ preliminary
bonds payable remained modest with share to
total liabilities of 9.2 percent (up by 76.1 percent to US$5.7 billion) and 8.1 percent (up by 1.7
percent to US$5.0 billion), respectively. Other liabilities16 went up by 17.5 percent to
US$3.1 billion (₱171.4 billion) following the US$0.6 billion (₱31.5 billion) y-o-y increase in net due
to FCDU/RBU corresponding to the amount of eligible foreign currency assets transferred from
the RBU book to the FCDU/EFCDU book representing “Net Realized/Unrealized Losses
Recognized in Profit or Loss and in Equity‟ in the FCDU/EFCDU book. Capital which stood at
US$0.4 billion (₱21.7 billion) dropped by 61.5 percent owing largely to net unrealized losses on
investment in securities measured at FVOCI (Figure 6).

13
Deposits recorded a pre-pandemic CAGR of 6.1 percent.
14
The full-year 2022 personal remittances reached US$36.1 billion, up by 3.6 percent from the US$34.9 billion remittance
flows in 2021. Of the personal remittances from OFs, cash remittances coursed through banks grew by 5.8 percent to
US$3.2 billion in December 2022, from US$3.0 billion registered in the same month in 2021. Source BSP Press Release
dated 15 February 2023.
15
Foreign investments registered with the BSP, through Authorized Agent Banks (AABs) yielded net inflows of US$887.0
million from January to December 2022, a turnaround from the US$574.0 million net outflows noted for the same period
last year. Source BSP Press Release dated 26 January 2022
16
The total other liabilities refer to the sum of other liabilities, net due to head offices, branches, and agencies and net due
to FCDU/RBU, due to other banks, and financial liabilities HFT and financial liabilities DFVPL.

Financial Supervision Sector

 Foreign Currency Deposit Unit Operations

OPERATIONS SUSTAINED POSITIVE BOTTOMLINE

Net profit rose by 33.0 percent to US$1.1 billion Fig re 7.
(₱60.3 billion) in 2022, reversing the 31.4 percent Income Acco nts
As of End-Periods Indicated In Billion US$ and Growth Rate in

contraction in 2021 (Figure 7).17 The satisfactory Net Interest Income

F Gains
performance was driven mainly by the double- Gains on non-trading financial assets
Trading Gains
Other Income
digit increase in interest income from lending 1.6 Net Income y-o-y Growth Rate (RHS)

and investing activities (up by 28.1 percent to 1.4 1.2

33.0

US$1.5 billion) and supplemented by non- 1.0

interest income particularly from account 0.8
0.6
collections/recovery (up by 3,226.5 percent to 0.4
US$162.7 million), fees and commissions (up by 0.2
15.4 percent to US$87.4 million), trading gains 0.0 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 p/
on investment in securities (up by 203.1 percent Source DSA p/ preliminary

to US$68.2 million), and other income (up by

307.8 percent to US$59.5 million). Lower write-offs and provision for the period also improved
the FCDU’s overall performance.

Fig re 8. The profitable operations translated to strong

Profitabilit Ratios
As of End -Period Indicated Ratio in
performance indicators. For 2022, the net
interest margin improved to 1.7 percent, higher
5.0 Return on assets 20.0 than the 1.4 percent in 2021 and an indication of
Net interest margin
good operating margin. A healthy return on
4.0 Cost-to-Income Ratio (RHS)
14.5 15.0 assets can also be seen as it improved to 1.8
3.0 percent from the 1.4 percent in 2021. Cost-to-
10.0 income ratio disclosed a relatively stable trend
2.0 1.8
1.7
at 14.5 percent, the same ratio from the previous
1.0
5.0
year (Figure 8).

0.0 0.0
Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 p/
Source DSA p/ preliminary

28

17
Net income recorded a pre-pandemic CAGR of 10.1 percent.

Supervisory Policy and Research Department

 TRUST OPERATIONS

OVERVIEW
Total assets of the trust industry continued to be domestic-oriented, growing at a slower pace.
The decline in total assets was due to drop in discretionary funds particularly unit investment
trust funds or UITFs amidst market volatility and clients’ preference towards higher yielding
investments. Asset mix remained heavy on investments in debt securities and deposits in
banks. In terms of total accountabilities, agency accounts sustained double-digit growth and
countered the contraction in trust accounts particularly from UITFs. Meanwhile, Personal
Equity and Retirement Account continued to draw new participants and generate additional
contributions although slowing down vis-à-vis the previous year’s performance.

Overall, operations continued to be profitable albeit on a declining trend due to higher

operating expenses, outpacing the growth in total trust income.

Assets Investments in Agency Accounts

₱2,708.6 billion
Securities
₱5,345.9 billion
₱3,534.1 billion Trust Accounts
₱2,043.4 billion

UITFs PERA Net Income

₱955.1 billion ₱329.5 million ₱7.2 billion

For period-ended December 2022
5,100 Contributors

As of End-December 2022

29
 Trust Operations

ASSETS SLOWED DOWN AMID MARKET VOLATILITY

Total assets1, which accounted for Figure 1.

Asset Composition

23.2 percent of the Philippine 6,000.0 ₱

As of End-Periods Indicated In Billion
Total Assets 20.0
banking system’s total resources,
₱5,345.9
18.0

grew by 5.7 percent year-on-year

5,000.0
16.0

(y-o-y) to ₱5,345.9 billion in 2022

2 4,000.0
14.0

12.0
(Figure 1). Following the decline in 3,000.0 10.0

discretionary funds particularly UITF 2,000.0 8.0

accounts, growth in trust assets 5.7

6.0

4.0
slowed in 2022 from 9.2 percent in 1,000.0 2.0

2021. The lingering uncertainty in 0.0 0.0

Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 p
the global markets and investors’ Cash and Due from Banks Deposits in Banks
Investment in securities, net Loans, net
preference for liquidity preservation Other assets Total Assets y-o-y Growth Rate (RHS)

and maximization of profits

p preliminary
Source: DSA

through guaranteed returns caused the decline in UITF.

Notwithstanding this, the industry is optimistic considering the untapped

opportunities available in the market. Digitalization initiatives including
application of deep learning and artificial intelligence in trust operations, and the
growing interest in new instruments by trust clients such as real estate
investment trusts (REITs) are expected to improve the growth momentum of the
trust industry.3

Investments in securities4 and deposits in banks continued to account for

majority of the industry’s total assets with share of around 66.1 percent (₱3,534.1
billion) and 22.1 percent (₱1,181.0 billion), respectively (Figure 1). These assets rose
by 2.8 percent (down from 11.8 percent in 2021)5 and 8.7 percent (up from 2.6
percent in 2021), respectively. The industry maintained liquid assets consisting of 30
highly marketable securities and due from banks which stood at ₱3,560.1 billion
or around 66.6 percent of the total assets and trust accountabilities. Meanwhile,
other assets held around 9.4 percent share and increased by 37.6 percent to
₱502.4 billion. Loans remained minimal, comprising about 2.4 percent share and
grew by 15.0 percent to ₱127.8 billion as of the same reference period.6

In terms of network, there were 32 trust entities with active trust operations7 in
the country consisting of 24 trust departments8 (TDs) of banks and eight (8)
non-bank financial institutions9 (NBFIs). TDs of banks held the larger portion of
the industry’s total assets with 72.1 percent share (₱3,856.2 billion).10 The
remaining 27.9 percent was held by NBFIs particularly trust corporations (TCs)
and investment houses (IHs) with share of 26.4 percent (₱1,411.4 billion) and 1.5
percent (₱78.3 billion), respectively.

1
Assets recorded a pre-pandemic compounded annual growth rate (CAGR) of 10.4 percent. CAGR is computed
using end-December 2015 to end-December 2019 data.
2
All discussed growth rates and report period pertain to y-o-y and end-December 2022, unless otherwise stated.
3
Source: Trust Officers Association of the Philippines (TOAP) and Fund Managers Association of the Philippines
(FMAP)
4
Net of amortization and allowance for credit losses, as applicable. Includes equity investments,
5
Gross of amortization and allowance for credit losses. Includes equity investments,
6
Loan quality remained manageable as non-performing loan (NPL) ratio stood at 1.7 percent in 2022. This was
matched with high NPL coverage ratio of 285.4 percent.
According to TOAP and FMAP, lending activity remained low given the trust clients’ requirements (i.e., liquid
investments) and the greater effort required on the part of the trustees to establish, service and secure loans.
7
The number of financial institutions with trust license remained at 37 in 2022, same number from a year ago. Out
of this number, there were five (5) trust entities with inactive operations.
8
Comprised of 20 TDs of universal and commercial banks (UKBs) and 4 TDs of thrift banks (TBs). This does not
include the 4 TDs with inactive operations i.e., 3 UKBs and 1 TB.
9
Comprised of 2 IHs and 6 TCs. The 8 NBFIs does not include 1 IH with inactive operations.
10
TDs of UKBs held 71.6 percent share (₱3,828.4 billion) of the total assets, while TDs of TBs held a minimal portion
at 0.5 percent (₱27.8 billion).

Supervisory Policy and Research Department

 Trust Operations

INVESTORS PREFERENCE TOWARDS DEBT SECURITIES

Investment in debt securities, long considered as a safe haven by investors,

increased to 67.2 percent share (₱2,375,7 billion) in 2022 from 63.1 percent (₱2,207
billion) in 2021. By contrast, the share of investments in equity securities dropped
to 32.8 percent (₱1,158.2 billion) in 2022 from 36.9 percent (₱1,288.4 billion) a year
ago. The 7.6 percent growth in investment in debt securities, coupled with the
10.1 percent contraction in investments in equity securities, indicates an
increasingly risk-averse profile on the part of investors amidst market volatility.11

By issuer, investments in securities Figure 2.

issued by resident private Investments in Debt nd E uity Securities- By Counterp rty

As of End-Periods Indicated In Billion ₱, Growth Rate in

corporations12 remained heavily 2,700.0

₱2,356.1
30.0

favored by investors with 66.7

2,400.0
25.0
2,100.0

percent share (₱2,356.1 billion) over 1,800.0 20.0

investments in government 1,500.0

1,200.0 ₱1,113.5
15.0

securities13 and debt securities issued 900.0 10.0

by other corporations14 with share of 600.0

5.0
300.0 1.1
around 31.5 percent (₱1,113.5 billion) 0.0
₱64.4
0.0

and 1.8 percent (₱64.4 billion),

Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 p
National Government and Other Agencies Banks and Private Corporations

respectively (Figure 2). However, in

Others Total Investments y-o-y Growth Rate (RHS)

Source: DSA p preliminary

terms of growth, investment in

government securities recorded the highest, expanding by 17.1 percent while
investments in corporate securities contracted by 7.0 percent in 2022.15 The
strong growth in investments in government securities may be attributed to
investors’ more cautious stance to manage risk.16

As to investment classification, investment in securities measured at fair value

31 through profit or loss (FVPTL) continued to comprise the bulk of total investment
in securities with 72.5 percent share (₱2,562.9 billion). This was followed by
investment in securities measured at fair value through other comprehensive
income (FVOCI) with 23.1 percent share (₱817.6 billion). The sizeable share of
investment in securities measured at FVTPL was due to most trust entities having
UITFs and retirement funds as their main products. The industry experts likewise
disclosed that some trust clients prefer their portfolios to be recorded at fair value
for ease of monitoring should they want to sell the securities before maturity.17
The 3.6 percent contraction in investment in securities measured at FVTPL in
2022 may be attributed to anticipated hike in interest rates amid policy
normalization as these investments are subject to market fluctuation.

Overall, the industry’s total investments remained domestic-oriented with 91.9

percent share (₱3,246.4 billion) of securities issued by residents.

Across trust entities, TDs of UKBs held the largest share of investments in
securities at 65.2 percent (₱2,303.0 billion), followed by TCs at 33.5 percent
(₱1,184.4 billion). The remaining 1.3 percent share came from IHs with trust license
and TDs of TBs at 0.9 percent (₱31.4 billion) and 0.4 percent (₱15.2 billion),
respectively.

11
According to TOAP and FMAP, the high interest rate environment resulted in investors de-risking their portfolio
away from equity securities and increasing their exposures to corporate bonds.
12
Include securities issued by banks and other private corporations.
13
Include securities issued by the National Government and BSP.
14
Include securities issued by non-resident central banks government agencies, multilateral agencies, and public
sector entities.
15
The 17.1 percent growth in investment in government securities in 2022 was higher than the 8.5 percent growth
in 2021, while the 7.0 percent contraction in investment in corporate securities was a reversal from the 12.3 percent
growth recorded the previous year.
16
Source: TOAP and FMAP.
17
Source: TOAP and FMAP

Financial Supervision Sector

 Trust Operations

TRUST ACCOUNTABILITIES EXPANDED, DRIVEN BY DOUBLE-DIGIT

GROWTH IN AGENCY ACCOUNTS

Total accountabilities rose by 5.7 Figure 3.

Composition o Account bilities
percent to ₱5,345.9 billion in 2022, As of End-Periods Indicated In Billion
6,000.0
Growth Rate in Total
Accountabilities 25.0
owing to double-digit growth in ₱5,345.9

5,000.0
agency accounts (Figure 3). 20.0

4,000.0
15.0

Agency accounts comprised the

3,000.0
10.0

largest share of total accountabilities

2,000.0

5.0
at 50.7 percent, growing by 22.7 1,000.0 5.7

percent to ₱2,708.6 billion in 2022. 0.0

Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 p
0.0

This growth18 was higher than the Special Purpose Trust

Agency
Other Fiduciary Services
Trust

12.6 percent recorded in 2021 and

Total Trust Accountabilities y-o-y Growth Rate (RHS)
p preliminary
Source: DSA

mainly driven by increase in other-

individual agency accounts19 (up by 29.4 percent to ₱282.8 billion) and other-
institutional agency accounts20 (up by 18.2 percent to ₱216.0 billion), respectively.
Meanwhile, trust accounts, which held around 38.2 percent share (₱2,043.4
billion), declined by 14.7 percent in 2022.21 The drop was largely attributed to the
27.9 percent and 4.9 percent decline, respectively, in UITFs and Personal Trust
accounts. The UITFs accounted for 46.0 percent (₱940.7 billion) of the trust
accounts, followed by employee benefit and personal trust with share of 22.8
percent (₱465.9 billion) and 19.6 percent (₱399.9 billion), respectively.

The continued increase in agency accounts, particularly investment

management activities (IMA), was due to the amendment on the IMA
regulations22 as well as the shift in consumers’ preference amid market
uncertainties. The ongoing geo-political pressure from the Russia-Ukraine war
and rising inflation on a global scale have caused investors to retain liquidity over 32
their own funds as well as invest in agency accounts, particularly IMA. IMA offers
clients access to high-yielding securities as compared to UITF that are subject to
possible daily marked-to-market losses.23

UITF PARTICIPANTS INCREASED AS TRUST ENTITIES LEVERAGED ON

TECHNOLOGY AND OFFERED SMALL-VALUE RETAIL UITF PRODUCTS

With the continuous efforts of trust entities24 and BSP25,26 to increase UITF
participation, the total number of UITF participants climbed by 65.8 percent to
3,531,167 in 2022 from 2,129,176 the previous year. The substantial increase in UITF

18
The pre-pandemic CAGR of agency accounts was 23.0 percent.
19
Other individual agency accounts refer to accounts other than personal pension fund and personal retirement
fund accounts.
20
Other institutional agency accounts refer to accounts other than employee benefit accounts and pre-need
accounts.
21
The 14.7 percent contraction in trust accounts in 2022 was a reversal of the 6.8 percent growth in 2021.
22
Circular No. 1109 dated 04 February 2021 (Amendments to the regulation on Investment Management Activities
(IMA). This regulation reduced the minimum amount for opening an IMA from ₱1 million to any lower amount,
subject to a floor of ₱100,000. Moreover, the required investment of each IMA in a commingled fund was reduced
to ₱100,000. Under the regulations, corporate accounts were allowed to participate in commingled funds.
23
Source: TOAP and FMAP
24
According to TOAP and FMAP, trust entities are working on increasing the UITF participation rate, especially
among retail clients from the middle-income sector and younger age bracket.
25
Circular No. 1152 dated 05 September 2022 (Amendments to the Regulations on Unit Investment Trust Funds
(UITFs). The amended UITF regulations streamline the approval process for the creation of UITFs to accord trust
entities with greater flexibility to create funds that are responsive to the needs of their clients. In addition, this
regulation redefines the classification of UITFs to align with international terminologies and standards and
improve the comparability of UITFs' risk-return profiles across the industry. This regulation also provides
guidelines on the treatment of REITs as an investment outlet for UITFs.
26
Circular No. 1157 dated 14 October 2022 (Amendments to the Manual of Regulations for Banks and Manual of
Regulations for Non-Bank Financial Institutions pertaining to Bangko Sentral Issued Securities Eligible
Counterparties). This regulation allows trust entities to invest UITFs with minimal participation from non-residents
in the BSP Securities Facility. Trust entities are allowed to purchase BSP Securities in the secondary market for
any UITF in which the share of net assets of non-residents does not exceed ten percent of the net assets of the
fund.

Supervisory Policy and Research Department

 Trust Operations

accounts mainly came from TCs with trust entities leveraging on technology and
promoting small-value retail UITF products to encourage more Filipinos to open
UITF accounts.27

Notwithstanding the continued Figure 4.

UITF by Fin nci l Institution
increase in participants, the level of As of End-Periods Indicated In Billion , Growth Rate in

UITFs dropped by 27.6 percent to 1,400.0 50.0

₱955.1 billion in 2022, a turnaround 1,200.0 Total

40.0

UITF
from the 10.5 percent growth in 2021 1,000.0 ₱955.1
30.0

20.0
(Figure 4). The decline was due to 800.0 10.0
combined effect of lower principal 600.0 0.0

and lower accumulated income from 400.0 (10.0)

UITF placements.28 The decline in (20.0)

200.0
principal of UITF accounts of big-value (27.6 )
(30.0)

retail participants reversed the effect 0.0

Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 p
(40.0)

of new UITF accounts of small-value UKBs TBs

Source: DSA
NBFIs Total UITF y-o-y Growth Rate (RHS)
p preliminary

retail participants. Meanwhile, the

lower accumulated income was a result of foreign exchange fluctuations and
rising interest rates following the US Federal Reserve rate hikes and tightening in
financial markets.29

Apart from accommodative investment environment for UITF participants

through more risk-based regulations and streamlined UITF processes, the
availability of various types of UITFs 30 in the market which include sustainability-
linked products is also seen to improve UITF participation rate. Among the
different UITF products, the money market funds remained the top choice,
indicating the investors preference for holding short-term securities. In 2022,
money market funds accounted for 64.4 percent (₱615.4 billion, with 1,519,176
33 participants) of the total UITFs.31 Equity funds, bond funds, and balanced funds
held the remaining portion at 26.0 percent (₱248.1 billion, with 1,418,836
participants), 6.7 percent (₱63.8 billion, with 563,070 participants) and 2.9 percent
(₱27.8 billion, with 30,052 participants), respectively.

By type of assets, financial assets booked at FVTPL accounted for the largest share
of the industry’s total UITF assets at 56.6 percent (₱540.8 billion), followed by
deposits in banks at 42.9 percent (₱409.7 billion) as of end-December 2022. This
was a shift from the 47.1 percent (₱620.7 billion) and 42.7 percent (₱509.5 billion)
share held by financial assets booked at FVTPL as of end-December 2021 and
end-December 2020, respectively, vis-à-vis the 52.6 percent (₱693.6 billion) and
57.0 percent (₱680.0 billion) share held by deposits in banks as of end-December
2021 and end-December 2020, respectively. Majority of the financial assets
booked at FVTPL were in the form of equity securities issued by resident private
corporations (26.5 percent, ₱143.3 billion), and debt securities issued by the
national government (19.5 percent, ₱105.4 billion) and BSP (17.2 percent, ₱93.3
billion).

The number of financial institutions with UITF license dropped to 24 in 2022 from
25 a year ago, owing to a merger. TDs of UKBs held the largest number of UITF

27 In 2022, 1 TC contributed an additional 1.4 million new accounts after partnering with various online channels to
offer small-value retail investment products.
28
UITF principal declined by 26.9 percent to ₱901.3 billion in 2022, a reversal from the 10.3 percent growth in 2021.
Likewise, accumulated income dropped by 37.4 percent to ₱51.5 billion as of the same reference period, a
turnaround from the 14.1 percent growth in 2021.
29
The UITF portfolio, being marked-to-market, is affected by changes in interest rates and foreign exchange rates,
thereby affecting the amount of net asset value per unit (NAVPU) across different types of UITFs.
30
Include feeder funds, multi-class UITFs, and UITFs with unit playing feature allowing for a non-guaranteed stream
of income to its participants, among others.
31
These funds were largely deposited in banks (64.9 percent share) and invested in financial assets measured at
FVTPL (34.7 percent share).

Financial Supervision Sector

 Trust Operations

license at 16 and accounted the biggest share in UITFs at 64.8 percent (₱610.0
billion). 32

PERA SUSTAINED DOUBLE-DIGIT GROWTH ALTHOUGH AT A SLOWER

PACE

Personal Equity and Retirement Account or PERA continued to attract new

contributors and gain additional contributions. The positive sentiments towards
PERA may be attributed to the BSP’s proactive public awareness campaign and
information drive including accessibility of PERA through online platform.
Despite the growth slowdown in the number of contributors and the total
contributions in 2022, PERA managed to record double-digit growth rising by
16.4 percent to 5,100 contributors and by 30.1 percent to ₱329.5 million total
contributions. These figures however were lower than the 64.1 percent
(contributor) and the 45.0 percent (contributions), respectively, from the previous
year.

By type of contributor, employed individuals continued to hold the top spot with
3,594 contributors (70.5 percent share) in 2022. This was followed by self-
employed individuals and overseas Filipino workers (OFWs), with 785 (15.4
percent) and 721 (14.1 percent) contributors, respectively. As to total
contributions, employed individuals also contributed the majority of the total
PERA contributions at 67.9 percent share (₱223.7 million). OFWs, despite having
a smaller number of contributors, provided about 18.4 percent (₱60.6 million) of
the total PERA contributions, higher than the 13.7 percent (₱45.3 million) share of
self-employed contributors (Table 1).

T ble 1. 34
Outst nding PERA - Contributors nd Contributions
As of End-Periods Indicated In Million ₱, Growth Rate in

2022 2021 y-o-y Growth Rate

Type of No. of Total No. of Total No. of Total
Contributors Contributors Contribution Contributors Contribution Contributors Contribution
Employee 3,594 223.7 3,091 172.0 16.3 30.0
OFW 721 60.6 628 47.1 14.8 28.6
Self-employed 785 45.3 663 34.2 18.4 32.2
Tot l 5,100 329.5 4,382 253.3 16.4% 30.1%
Source: BSP PERA TWG

Employee, OFW and self-employed contributors and their respective

contributions sustained double-digit growth, with the number of contributors
rising by 16.3 percent, 14.8 percent, and 18.4 percent, respectively, and
contributions expanding by 30.0 percent, 28.6 percent, and 32.2 percent. These
growth rates however were slower than the 65.7 percent, 48.8 percent and 72.7
percent contributor surge and the 46.5 percent, 33.4 percent, and 55.8 percent
contribution expansion in 2021.

Filipinos’ personal finances were not spared from the COVID-19 economic
disruptions, and thus may have deterred Filipinos from savings for retirement.
The opening of economy and easing health restrictions further challenged
Filipinos from savings for retirement as most engaged in “revenge spending” on
travel, food and dining, and recreations. Apart from curtailed savings, Filipinos
need continuing financial education on savings and investments to ensure an

32
Among the financial institutions with UITF license, UKBs held the largest number at 16 (down from 17 in 2021 due
to a merger of 2 UBs). TBs and NBFIs with UITF license each stood at 3 and 5, respectively, and were both
unchanged from a year ago.
TDs of UKBs likewise held the biggest portion of UITFs (63.9 percent, ₱610.0 billion), followed by NBFIs (36.0
percent, ₱344.3 billion). TDs of TBs held a minute share at 0.1 percent (₱0.9 billion). Both UITFs of TDs of UKBs and
NBFIs, declined by 33.5 percent and 14.1 percent, respectively, a reversal of the 9.4 percent and the 13.0 percent
growth in 2021. Meanwhile, UITFs of TDs of TBs further dropped by 17.8 percent from the 14.8 percent contraction
in 2021.

Supervisory Policy and Research Department

 Trust Operations

adequate income stream as well as avoid excessive indebtedness during

retirement.

Notwithstanding this, the BSP is confident that the growth momentum of PERA
investments will continue due to increased awareness of Filipinos on the long-
term benefits of retirement savings and the corresponding incentives33 from
investing in PERA.

In line with this, the BSP introduced PERA reforms like increase in the annual
contribution limit across all types of contributors beginning January 2023, and
removal of the basic security deposit for the faithful performance of a PERA
Administrator’s duties. The latter is expected to lower the cost of administering
PERA assets and thus, encourage more financial institutions to participate in the
PERA ecosystem. Moreover, the BSP is drafting a proposal to facilitate expansion
in pool of potential PERA contributors.34

PROFITABLE OPERATIONS, TEMPERED BY HIGHER OPERATING COSTS

Net income stood at ₱7.2 billion in 2022, declining by 2.2 percent and reversing
the 17.3 percent growth in 2021. The drop was mainly due to the higher trust
expenses, growing by 13.1 percent (₱0.8 billion) and outpacing the increase in
trust income which rose by 4.9 percent (₱0.7 billion). The main driver of high trust
expenses were other administrative expenses and compensation and fringe
benefits which went up by 35.7 percent (up by ₱0.4 billion) and 11.6 percent (up
by ₱0.3 billion), respectively. Collectively, these expense items accounted for 60.1
percent share (₱4.3 billion) of the total expenses.35

35 Meanwhile, fees and commissions income increased alongside the expansion in

trust assets, rising by 3.5 percent to ₱13.7 billion in 2022 and accounting for about
95.3 percent of the total income. By type, fees and commissions income from
agency accounts, albeit comprising only 30.5 percent (₱4.4 billion) of the total
income, drove the total income growth and countered the contraction in fees
and commissions income from other contractual relationships. Fees and
commissions income from trust accounts, which contributed around 59.2
percent (₱8.5 billion) of the total income, declined by 2.6 percent.

Other key measures of performance like efficiency ratio36 climbed to 49.7 percent
for the same period, higher than the 46.1 percent recorded in 2021 due to higher
growth in total expenses vis-à-vis the total income.

33
Incentives include exemption from final withholding tax, capital gains tax and regular income tax, as well as the
eligibility of PERA investments to a 5 percent tax credit on contributions for the year which may be used to pay
or cover part of the contributor’s annual income tax.
34 Such as young professionals, practitioners, small business, and low-income communities.
35
Other administrative expenses and compensation and fringe benefits accounted for 45.1 percent (₱0.4 billion) and
36.1 percent (₱0.3 billion), respectively, of the ₱0.8 billion total increase in trust expenses. According to TOAP and
FMAP, more banks have adopted benchmark licensing, increasing the other administrative expenses in 2022.
36
Efficiency ratio measures the ability of the bank to generate income using its assets. it is measured as total
expenses as a percentage of total revenue.

Financial Supervision Sector

 NON-BANK
POLICY FINANCIAL
INITIATIVES
NON-BANK FINANCIAL
INSTITUTIONS
AND DIRECTIONPdas
INSTITUTIONS

OVERVIEW
The BSP-supervised non-bank financial institution (NBFI) industry, as represented by NBFIs with quasi-
banking functions (NBQBs), non-stock savings and loan associations (NSSLAs), pawnshops and money
service businesses remained supportive of BSP’s financial inclusion agenda by delivering financial
products and services to their clients through their extensive network nationwide. The industry,
particularly NBQBs also provided relief to their borrowers through extension and/or modification in loan
terms. In terms of loan quality, both NBQBs and NSSLAs have manageable non-performing loan (NPL)
ratio with ample provisions. Moreover, the NBQB and NSSLA industries sustained their double-digit
growth in net profit, although at a slower pace than the previous year. Notwithstanding this, the
profitable operations of both NBQBs and NSSLAs translated to higher return on assets and equity.

Assets
₱450.9 billion
₱151.3 billion (NBQBs) and ₱299.6 billion (NSSLAs)

Total Offices 23,796* Net Profit

(1,978 Head Offices and
21,818 Other Offices)
₱26.8 billion
RoA 1.1% (NBQBs) and 8.6% (NSSLAs)
*Include pawnshops and money service business.
RoE 7.7% (NBQBs) and 13.4% (NSSLAs)

Gross Loans ₱383.9 billion

NPL Ratio 5.9% (NBQBs) and

8.1% (NSSLAs)
NPL Coverage Ratio 36.2% )NBQBs)
and 115.4% (NSSLAs)

36
 Non-Bank Financial Institutions

ASSET GROWTH IMPROVED AND NETWORK REMAINED EXTENSIVE

F e 1.
Total Assets NBQBs and NSSLAs Total assets of BSP-supervised non-bank-
financial
As of End-Periods Indicated; In Billion₱; Growth Rate in %
institutions1 (NBFIs), as
represented by NBFIs with quasi-banking
Total Assets 20.0
₱450.9

400.0 Total Assets

NSSLAs
functions (NBQBs) and non-stock savings 15.0

₱299.6 and loan associations (NSSLAs), declined 10.0

by 0.3 percent year-on-year2 (y-o-y) to

5.0
Total Assets
NBQBs
billion in 2022, a slight
-
200.0
₱151.3 ₱450.9
(0.3)%
(5.0)
improvement from the 1.7 percent (10.0)

0.0
contraction in 2021 (Figure 1). Loans3 (15.0)

continued to account for most of the assets

Dec-22 p/ of the industry at 79.3 percent share (₱357.5
billion), followed by cash and due from
Total Loans, net Total Investments, net
Cash and Due from Banks Others

banks at 8.6 percent (₱38.9 billion).

Total Assets y-o-y Growth Rate (RHS)
Source DSA p/ preliminary

Meanwhile, investments4 and other assets,

each held around 6.9 percent (₱31.0 billion) and 5.2 percent (₱23.5 billion) share,
respectively.

NSSLAs held close to two-thirds of the total assets at 66.5 percent share or ₱299.6 billion,
higher by 5.6 percent from last year’s ₱283.8 billion. Meanwhile, NBQBs held the remaining
33.5 percent at ₱151.3 billion (down by 10.1 percent from ₱168.3 billion). The decline in
NBQBs' total assets may be attributed to the voluntary surrender of license of an NBQB
(Table 1).

Table 1.
Assets of NBQBs and NSSLAs
As of End-Periods Indicated; In Billion ₱, Ratio in %
2022
Share y-o-y
Particulars 2022 2021 to Total growth

1. NBQBs 151.3 168.3 33.5% (10.1%)

37 2. NSSLAs 299.6 283.8 66.5% 5.6%

.
Source: DSA

Amid the decline in total assets, the FMa o eF nan .

al A ess Po nts Pa ns o Mone Se e B s ness NSSLAs and NBQBs

network of BSP-supervised NBFIs

As of End -Periods Indicated

Pawnshop

continued to expand in 2022 with 23,796 18,000

Money Service Business
NSSLAs
1
NBQBs
total offices nationwide (1,978 head offices 16,000
14,000
and 21,818 other offices) as of end- 12,000

December 2022. Apart from NBQBs with 10,000

7
network of 19 (5 head offices and 14 other 8,000
6,000
offices) and NSSLAs with network of 194 (58 4,000

head offices and 136 other offices), 2,000

1
0
pawnshops also add to the BSP-supervised Dec-19 Dec-20 Dec-21 Dec-22

NBFIs’ total network with 15,999 total

Source DSA and FSD I

offices nationwide (1,172 head offices and 14,827 other offices), an increase of 4.0 percent
from 15,388 in 2021 (Figure 2). Money service businesses also contributed to BSFI’s
expanded footprint, growing by 1.8 percent to 7,584 total offices (743 head offices and 6,841
other offices) from 7,449 in 2021. Moreover, some pawnshops and money service
businesses are leveraging on technology, offering their products and services through
online platforms, enabling them to further expand their reach in the country.

1
Collectively, total assets of NBQBs and NSSLAs, represented around 1.6 percent of the Philippine Financial
System’s total resources in 2022.
2
All discussed growth rates and report period pertain to y-o-y and end-December 2022, unless otherwise stated.
3
Loans, net of allowance for credit losses. Inclusive of Interbank Loans Receivable (IBL).
4
Net of allowance for credit losses, as applicable, and accumulated market gain/(losses).

Financial Supervision Sector

 Non-Bank Financial Institutions

By regional distribution (Figure 3), NCR

F e 3.
Re onal D st b t on of Pa ns o and Mone
As of End-December 2022
Se e B s ness leads the Top 5 regions with the greatest
number of pawnshops and money service
Pawnshop businesses combined at 4,566 or around
2,500
Money Service Business 33
19.4 percent share of total offices of
2,000
pawnshops and MSBs nationwide. Other
1,500
regions that registered hefty shares were
1,000
CALABARZON (3,486, 14.8 percent share),
500
Central Luzon (2,831, 12.0 percent share),
0
Central Visayas (2,284, 9.7 percent share)
and Western Visayas (1,711, 7.3 percent
share). Collectively, these regions had 63.1
percent share of the total pawnshop and
Source DSA and FSDI
MSB network nationwide.

LOANS CATERED LARGELY TO NSSLA MEMBERS

Total loans5 dropped by 1.1 percent to ₱383.9 F e .

Total Loans NBQBs and NSSLAs

billion in 2022, a reversal of the 3.5 percent As of End-Periods Indicated; In Billion₱; Growth Rate in %

recorded in 2021 (Figure 4). Across groups, 500.0 25.0

NSSLAs remained as the primary provider of

Total Loans
₱383.9 19.0
400.0

loans, holding around 65.9 percent share (up Total Loans

NSSLAs
13.0

by 2.7 percent to ₱252.9 billion) of the 300.0 ₱252.9

7.0

Total Loans
industry’s total portfolio while NBQBs held 200.0
(1.1)%
NBQBs
₱131.0
1.0

34.1 percent share (down by 7.7 percent to 100.0

(5.0)

₱131.0 billion). The contraction in lending (11.0)

activity of NBQBs was due to the 0.0 (17.0)

surrendered QB license in 2022. Dec-22 p/

Gross Total Loans (inclusive of IBL) Total Loans y-o-y Growth Rate (RHS)
Source DSA p/ preliminary

The industry likewise remained supportive of

their borrowers as they continued to provide relief through extension and/or modification 3
in loan terms. In 2022, total restructured loans of NBQBs reached ₱2.8 billion, accounting
around 0.7 percent of total loans of the industry and increasing substantially by 30.7
percent. NSSLAs had no restructured loans in 2022.

MANAGEABLE NPL RATIO6 WITH PROVISIONS FOR CREDIT LOSSES

Loan quality of NBQBs improved as non- F e .

NPL Rat o and NPL Co e a e Rat o NBQBs and NSSLAs
performing loans (NPL) dropped As of End-Periods Indicated, Ratio in %
substantially by 45.2 percent (down by 140.0 12.0

₱6.4 billion) to ₱7.7 billion from the 120.0

11 . 10.0
previous year’s ₱14.1 billion. This 100.0
translated to lower NPL ratio of 5.9 .1
8.0

percent, better than the 9.9 percent in 80.0

.
6.0

2021. The overall improvement in NPL 60.0

ratio however may be attributed to 40.0

NPL Coverage Ratio - NBQBs 36.
4.0

modification in the industry's loan 20.0

NPL Coverage Ratio - NSSLAs
NPL Ratio - NBQBs (RHS)
2.0

portfolio in view of surrendered QB -

NPL Ratio - NSSLAs (RHS)
-
license in 2022. Meanwhile, the NPL ratio
of NSSLAs inched up to 8.1 percent from p/ preliminary
Source DSA

8.0 percent in 2021 due to corresponding

increase in NPLs which went up by 4.0 percent to ₱20.4 billion from ₱19.6 billion in 2021
(Figure 5).

Notwithstanding this, NSSLAs’ maintained high provisions as NPL coverage stood at 115.4
percent while NBQBs provided a smaller coverage at 36.2 percent.

5
Loans, gross of allowance for credit losses. Inclusive of IBL.
6
NPL ratio (inclusive of IBL).

Supervisory Policy and Research Department

 Non-Bank Financial Institutions

CAPITAL EXPANDED AND CONTINUED TO FUND MOST OF THE

INDUSTRY'S OPERATIONS

F
So
e 6.
es of F nd n NBQBs and NSSLAs
In 2022, total capital of the industry, which
As of End-Periods Indicated; In Billion₱; Growth Rate in %
funded around 47.3 percent share of the
250.0
Total Capital ₱213.4
Total Deposits ₱86.4
Total Bills Payable ₱108.0 NSSLAs
11.0
total assets, rose by 1.6 percent to ₱213.4
200.0
Capital ₱192.1
Deposits ₱86.4 8.0 billion, reversing the 2.6 percent
5.0
contraction in 2021 (Figure 6).
150.0 NBQBs
Bills Payable ₱106.2
Capital 21.3 2.0
NSSLAs had the biggest portion of the
1.6 %
100.0
(1.0)
industry’s total capital at 90.0 percent
share (up by 6.4 percent to ₱192.1 billion).
50.0
(4.0)

0.0 (7.0) NBQBs’ capital, which held the remaining

10.0 percent share, had a double-digit
Dec-22 p/
Capital Deposits Bills Payable Total Capital y-o-y Growth Rate (RHS)
decline of 27.8 percent (down to ₱21.3
Source DSA p/ preliminary
billion) due to surrendered QB license.

Bills payable and deposits, as other sources of funding of the industry, each held around
24.0 percent (down by 4.2 percent to ₱108.0 billion) and 19.2 percent (up by 7.2 percent to
₱86.4 billion), respectively, share to total assets. Deposit substitutes which were issued by
NBQBs made up the most of the industry’s total bills payable at around 96.5 percent share
(₱104.2 billion). In terms of the industry’s total deposits, these were all peso-denominated
and held by NSSLAs. Savings deposits accounted for most of the deposits at 77.0 percent
share (₱66.5 billion) and the remaining 23.0 percent (₱19.9 billion) was time deposits.

On a per industry basis, bills payable continued to comprise the majority of NBQBs’ source
of funding particularly deposit substitutes (68.9 percent share of NBQBs’ total assets)
followed by capital (14.1 percent share of NBQBs' total assets). Meanwhile, NSSLAs’ funding
was provided mainly by their members’ capital (64.1 percent share of NSSLAs’ total assets)
and deposits (28.8 percent share of NSSLAs’ total assets).
3
OPERATIONS REMAINED PROFITABLE DRIVEN BY CORE EARNINGS
F
So
e 7.
es of Net In o e NBQBs and NSSLAs
Net income of the industry sustained
For the Periods-Ended Indicated; In Billion ₱; Growth Rate in %
double-digit growth, increasing by 13.3
60.0 Total
Net Profit 35.0
percent to ₱26.8 billion in 2022, although at
50.0 ₱26.8
NSSLAs 20.0
a slower pace when compared with the
40.0 Net Profit
₱24.95 29.9 percent growth in 2021. The strong
13.3 % 5.0
30.0
performance was on account of higher
20.0 NBQBs
Net Profit
-10.0
income generated from core activities like
10.0
₱1.8 -25.0
lending and leasing finance,
0.0 -40.0 complemented by lower operating costs.
Dec-22 p/
Both NSSLAs and NBQBs posted double-
Net Interest Income Non-Interest Income Net Profit y-o-y Growth Rate (RHS) digit growth in net income of 11.7 percent
Source DSA
p/ preliminary (to ₱24.95 billion) and 40.1 percent (to ₱1.8
billion), respectively, (Figure 7).

Interest income of the industry increased by 4.3 percent to ₱35.8 billion, albeit slower than
the 30.9 percent growth recorded in 2021. Leasing income however, contracted by 11.4
percent to ₱11.4 billion, reversing the 4.7 percent growth (to ₱12.8 billion) in 2021. The
decline in both interest and leasing income was on account of surrendered NBQB license
in 2022.

Collectively, net interest income, which includes leasing income, had the largest share of
the industry’s total operating income at 95.0 percent share (up by 2.9 percent to ₱38.3
billion). NSSLAs contributed 99.2 percent share (up by 4.8 percent to ₱35.6 billion) of the
industry’s total interest income while NBQBs had minimal share at 0.8 percent (down by
32.7 percent to ₱0.3 billion).

Fee-based income and other non-interest income each accounted for around 3.1 percent
(down by 34.7 percent to ₱1.3 billion), and 2.0 percent (down by 14.9 percent to ₱0.8 billion),
respectively, of the industry’s total operating income.

Financial Supervision Sector

 Non-Bank Financial Institutions

In terms of operating expenses, the industry recorded a 19.4-percent decline (to ₱13.2
billion) in 2022, an improvement from the 22.5 percent growth in 2021. The lower
expenses were due mainly to lower overhead costs, dropping by 17.2 percent (to ₱5.9
billion), better than the 7.8 percent increase in 2021. These expenses accounted for almost
half of the total operating expenses in 2022 at 44.7 percent share. Both NBQBs and NSSLAs
managed to reduce their total operating expenses which dropped by 36.2 percent (to ₱4.5
billion) and 6.3 percent (to ₱8.6 billion), respectively, in 2022.

The strong performance of the industry was also evident in return on assets (RoA) and
return on equity (RoE). NSSLAs posted RoA and RoE at 8.6 percent (from 8.1 percent) and
13.4 percent (from 12.6 percent), respectively. Meanwhile, NBQBs had RoA and RoE of 1.1
percent and 7.7 percent, respectively, higher than the 0.7 percent and the 3.8 percent
recorded in 2021.

Supervisory Policy and Research Department

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POLICY REFORM
AGENDA

OVERVIEW

The implementation of strategic, calibrated and timely financial sector reforms in 2022 supported the
continued growth and solid performance of the Philippine financial system. Cognizant of lingering
vulnerabilities from the COVID-19 pandemic, the BSP will continue to build on its existing regulatory
and supervisory frameworks with emphasis on further upgrading risk governance standards of banks,
enhancing digital transformation, strengthening cybersecurity-related initiatives, and mainstreaming
of sustainability agenda in line with international standards and best practices while remaining
responsive to domestic conditions.

STANDARDS

LAW
The BSP
Supervisory and
Regulatory
Framework

RULES
SUPERVISION

Classification: GENERAL 41
 Policy Reform Agenda

Overview of BSP’s Key Reforms and Policy Initiatives in 2022

In 2022, promoting the safety, soundness, and resilience of the financial system remained
at the forefront of BSP’s policy priorities. In line with this, a number of regulations were
issued to strengthen corporate and risk governance, mainstream sustainable finance, and
promote responsible digital innovation.

Strengthen Corporate and Risk Governance

On promoting good governance and effective risk management standards and best
practices, the BSP issued various policy reforms reinforcing the culture and conduct of
BSP-supervised financial institutions (BSFIs), ensuring the financial soundness and
viability of BSFIs through improved capitalization framework, and integrating
sustainability principles in their strategic objectives and operations. In adopting policy
reforms, the BSP is guided by the principle of proportionality for purposes of tailoring
these to domestic conditions.

First, the BSP implemented the prudential framework1 for large exposure monitoring
threshold provides guidance for universal and commercial banks (UKBs) and their
subsidiary banks/quasi-banks (QBs) in complying with large exposures monitoring
threshold of 25 percent of Tier 1 capital, on solo and consolidated basis. This threshold
intends to protect covered banks’/QBs’ from a sudden failure or default of a counterparty
or group of connected counterparties and to facilitate monitoring by the BSP of
concentration risk in the financial system.2

The guidelines on recovery plans of banks3 were likewise amended to reduce risk posed
by a bank’s distress or disorderly failure to the stability of the financial system. The recovery
planning requirements were expanded to not only cover domestic systemically important
banks but all other banks, subject to proportionality. A bank is expected to develop a
concrete and reasonable recovery plan that is linked to its risk management framework,
internal capital adequacy assessment process or capital planning, liquidity plans, and
business contingency plans. Details of this reform are further discussed in Box Article 3.
42
Further, the BSP launched the Rural Bank Strengthening Program4 (RBSP) which was
developed through an inter-agency collaboration. The RBSP aims to enhance the
operations, capacity, and competitiveness of rural banks (RBs) in view of their vital role in
promoting countryside development and inclusive economic growth. This will reinforce
the RBs’ resiliency and enable them to respond to the evolving socio-economic conditions
and regulatory environment with the increasing digitalization across economic sectors. In
line with this, the BSP amended the minimum capitalization requirements of RBs5 to
enable them to enhance their risk management systems, upgrade resources and manage
operational costs, meet prudential standards, and accelerate digital transformation.

On improving financial operations, the BSP allowed BSFIs to defer up to a maximum of

five years the reporting of losses from the sale and transfer of non-performing assets under
the Financial Institutions Strategic Transfer or FIST Act as part of prudential reporting
purposes, subject to prior BSP approval and compliance with certain conditions. The BSP
also amended the implementing guidelines of the FIST Act 6 to clarify prudential
treatment of banks’ holdings of investment unit instruments issued by a FIST Corporation.

Parallel to this, the BSP continues to assess the effectiveness of its temporary relief
measures given evolving developments and will adopt the necessary reforms to ensure
continued delivery of financial services and liquidity support to vulnerable sectors. Related
to this, the BSP monitors the banking system’s provision of credit to critical development
sectors of the economy such as the micro, small and medium enterprises (MSMEs)
including barangay micro, small and medium enterprises or BMBEs7, and agri-agra sectors

1
Circular No. 1150 dated 23 August 2022 (Prudential Framework for Large Exposures Monitoring Threshold)
2
The BSP also amended the regulations on single borrower’s limit (SBL) in early part of 2023.
Circular No. 1164 dated 05 January 2023 (Amendments to the Regulations on Credit Exposure Limits to a Single
Borrower and Definition of Capital).
3
Circular No. 1158 dated 18 October 2022 (Guidelines on the Recovery Plan of Banks)
4
Memorandum No. M-2022-024 dated 05 May 2022
5
Circular No. 1151 dated 24 August 2022 (Amendments to the Minimum Capitalization of Rural Banks).
6
Circular No. 1147 dated 10 June 2022 (Amendment to the Guidelines Implementing Republic Act No. 11523,
otherwise known as the “Financial Institutions Strategic Transfer Act”)
7
Refers to BMBEs where the credit window and related financing are monitored by the BSP pursuant to the
provisions of the BMBE Law or R.A. No. 9178 (Barangay Micro Business Enterprises Act of 2002).

Supervisory Policy and Research Department

 Policy Reform Agenda

in 2022. The BSP expects that the passage of “The Agriculture, Fisheries and Rural
Development Financing Enhancement Act of 2022” or Republic Act (R.A.) No. 11901 in July
2022 will strengthen rural development and improve the well-being of agricultural and
rural community beneficiaries. Under the new law, banks will no longer be required to set
aside 10 percent and 15 percent of their loanable funds for agrarian reform credit and other
agricultural credit, respectively. Instead, banks shall set aside at least 25 percent of their
total loanable funds for agriculture, fisheries, and rural development financing. Details of
the legislative reform and its implementation were summarized in Box Article 1.

Meanwhile, to further promote growth of the trust industry while underscoring the
importance of good governance, effective risk management, and strong consumer
protection, the BSP issued the second phase of the Trust Business Model which amended
the regulations on unit investment trust funds (UITFs). The guidelines provide that trust
entities must have the competence and appropriate processes, systems, and
infrastructure to administer and market UITFs and to manage the related risks. Trust
entities shall likewise have in place a sound client suitability assessment process and a
system for the adequate disclosure of risks to clients. Complementary to this, the BSP
simplified the licensing framework on the creation of UITFs.

The BSP also expanded its eligible counterparties in the case of BSP-issued securities to
include trust entities. This will improve the BSP’s ability to absorb cash in the financial
system allowing for better price transparency and monetary transmission.

Promote Digital Transformation and Conducive Regulatory and Supervisory Environment

The BSP has taken a proactive stance in guiding the market towards the fulfillment of
digital transformation, while ensuring that the financial system remains secure and
resilient.

Cognizant of the role of digital platforms in driving greater efficiency in the delivery of
financial products and services and in expanding reach into the unserved and
underserved areas in the country, the BSP issued the second set of regulations for digital
43
banking framework8 which intends to clarify the applicability of regulations on capital and
liquidity, corporate and risk governance, and risk management to digital banks.

To counter the evolving IT and cybersecurity threats as well as foster responsible digital
innovation, the BSP has developed a Cybersecurity Roadmap covering three key areas;
namely, capacity building, collaborative engagements and continuing policy framework
and supervisory enhancements to institutionalize cyber-resilience in the financial services
industry. Parallel to this, the BSP amended key regulations on outsourcing and
information technology and technology risk management to promote a risk-based
supervisory approach on outsourcing activities of banks, consistent with recent industry
developments and international practices, Key amendments include the adoption of risk-
based supervisory approach, expansion of classification of service providers from Cloud
Service Providers to Technology Service Providers, and relaxation of regulatory
requirements for cloud outsourcing of core systems.9 The BSP also issued guidelines which
require BSFIs to adopt a robust fraud management system as well as consumer education
and awareness program to strengthen the financial system’s cybersecurity posture as well
as minimize losses arising from fraud and cyber-criminal activities.10 Likewise, the BSP
constantly engages with BSFIs and other stakeholders to ensure that cyber resilience
strategies remain effective vis-à-vis evolving threats.11

Other digitalization-related issuances released in 2022 include institutionalization of the

BSP’s Regulatory Sandbox Framework or "test-and-learn" approach.12 The Regulatory
Sandbox Framework aims to promote a more active. evidence-based, and results-driven
assessment of new and emerging financial solutions.

8
Circular No. 1154 dated 14 September 2022 (Prudential Requirements Applicable to Digital Banks, and
Amendments to Relevant Provisions of the Manual of Regulations for Banks and Non-Bank Financial Institutions
and Manual of Regulations on Foreign Exchange Transactions).
9
Circular No. 1137 dated 18 February 2022 and Circular No. 1140 dated 24 March 2022 (Amendments to Regulations
on Outsourcing and IT Risk Management).
10
Circular No. 1140 dated 24 March 2022 (Amendments to Regulations on Information Technology Risk
Management).
11
Memorandum No. M-2022-15 dated 22 March 2022 (Recommended Control Measures Against Cyber Fraud and
Attacks on Retail Electronic Payments and Financial Services (EPFS)).
12
Circular No. 1153 dated 05 September 2022 (Regulatory Sandbox Framework).

Financial Supervision Sector

 Policy Reform Agenda

Corollary to this, the BSP adopted several business improvements for its regulatory and
supervisory technologies such as the Advanced Supervisory Technology Engine for Risk-
based Compliance (ASTERisC*), and the Visualization Tool for Analytics (VisTA), among
others. Through Project ASTERisC*, regulatory supervision, reporting and compliance
assessment of BSFIs’ cybersecurity risk management can be done seamlessly. In particular,
the adoption of VisTA, an interactive analytics tool and supervision technology or SupTech,
provides quick data-driven insights to internal and external stakeholders through the
application of data analytics and business intelligence for reporting and policy making.
Details of VisTA implementation was summarized in Box Article 2.

The BSP likewise issued adjustments13 on the licensing approach for Virtual Asset Service
Providers (VASPs), shifting focus towards the assessment of existing BSP-registered
VASPs. The overall performance, risk management systems, their impact on financial
services and financial inclusion agenda, are weighed towards their contribution to the
success of the BSP’s Digital Payments Transformation Roadmap’s objectives.

Mainstream Sustainable Finance

On mainstreaming of sustainability agenda, the BSP, as enabler, fosters a conducive policy

and regulatory environment that enables BFSIs to take a balanced and proportionate
approach on the adoption of key sustainability reforms in 2022.

As part of the phased approach in introducing sustainability related guidelines in the

country, the BSP issued the third phase of its key regulations to provide the expectations
on the integration of sustainability principles in investment activities of banks14,
particularly in the banking book. Banks shall consider their sustainability strategic
objectives and risk appetite in their investment activities as well as ensure that such
investment does not contribute to sectors considered to have harmful effects to the
environment or society. It also issued guidance15 to inform banks on the initial steps or
approaches that may be considered in developing the environmental and social risk
management (ESRM) system. It describes the BSP’s minimum expectations as embodied
in the issued Circulars and provides information and reference to publications of the
44
Network for Greening the Financial System (NGFS) and the Basel Committee on Banking
Supervision (BCBS), among others, to support the development of an ESRM System.

The BSP’s Reform Agenda and Policy Direction: 2022 and Beyond

Toward this end, the BSP remains committed to implementing and pursuing strategic
reforms, namely: (i) advancing the digital transformation of the banking system and
leveraging on technologies to enhance surveillance and supervisory processes; (ii)
mainstreaming sustainable finance; and (iii) strengthening the operational resilience of
BSFIs.

On digital transformation, the BSP is exploring the adoption of a marketplace banking

model. The proposed guidelines on the adoption of a digital financial marketplace model
will spell out the criteria for the grant of authority for an eligible BSFI to engage in
marketplace operations and the supervisory expectations on the governance and
management of attendant risks. Such a platform-based business model will enable
ecosystem partnerships between UKBs, digital banks, or electronic money issuers (EMIs)
and other financial service providers. Under such partnerships, qualified parties may use
the digital marketplace owned and operated by the bank or EMI to offer select products
and services to its clients, for a fee or commission. Other forthcoming regulations include
enhancement of VASP guidelines and central bank digital currencies.

On sustainable finance, the BSP will soon issue regulations covering the following areas:
(i) conduct of climate risk stress testing by banks; (ii) disclosure requirements; (ii)
prudential reports for data collection and surveillance analysis; and (iv) development of
sustainable finance taxonomy. Related to the conduct of climate stress test and
vulnerability assessment, the BSP is working with development partners to better

13
Memorandum No. M-2022-035 dated 10 August 2022 (Modified Approach in the Grant of VASP Licenses)
14
Circular No. 1149 dated 23 August 2022 (Guidelines on the Integration of Sustainability Principles in Investment
Activities of Banks)
15
Memorandum No. M-2022-042 dated 29 September 2022 (Guidance on the Implementation of the Environmental
and Social Risk Management (ESRM) System)

Supervisory Policy and Research Department

 Policy Reform Agenda

understand climate and other environmental-related risks and estimate its potential
impact on the banking system.

To further build the banks’ capacity and strengthen their risk governance, the BSP will
issue guidance on the adoption of revised Basel III capital standards related to credit and
operational risks, operational resilience, and model risk management system.

The BSP also aims to introduce further reforms in the trust business with upcoming
issuances on Trust Business Model Initiative (third phase) involving guidelines on the use
of benchmarks performance measurement of UITFs based on the principles of fair
representation and full disclosure, comprehensive investment guidelines and
amendments to the regulations on periodic review of accounts. Similarly, to further
promote Personal Equity and Retirement Account (PERA) and encourage more Filipinos
to prepare for retirement through the PERA investment, the BSP PERA Technical Working
Group will work on expanding the profile of PERA contributors to other segments of the
population such as young professionals, practitioners, small business, and low-income
communities by conducting face-to-face roadshows and webinars, tapping financial
advisors to promote PERA in their respective talks and platforms, and engaging other
BSFIs to join the PERA ecosystem.

For BSP-supervised NBFIs, the BSP has ongoing amendments to regulations on Reporting
Governance for Pawnshops. This sets forth the BSP's expectations for pawnshops on the
establishment of an effective reporting system, with an adequate governance process that
enables the generation and timely submission of reports in accordance with the BPS’s
reporting standards. Meanwhile, following the implementation of Enhanced Corporate
Governance Framework for Non-stock Savings and Loan Associations (NSSLAs) in 2021, the
BSP is also pursuing the adoption of regulations on well-defined group of NSSLAs that
aims to provide a broader definition of the industry’s membership in accordance with
Section 4 of R.A. No. 8367.

On the legislative front, the BSP will remain proactive and work closely with both the
House of Representatives and the Senate as well with government agencies and relevant
45
stakeholders to push for key legislation that will support economic recovery and growth
as well as improve the financial system's competitive and responsive position.

These legislative reforms include the amendments to the laws on secrecy of bank
deposits, namely: R.A. Nos. 1405 (Law on Secrecy of Bank Deposits) and 6426 (Foreign
Currency Deposit Act). The proposed bills aim to address the call of the global community
for a more transparent financial system environment while ensuring ample safeguards to
protect the rights of bank depositors from unwarranted intrusion. Moreover, such
legislative reform could help the Philippines comply with key recommendations of the
Financial Action Task Force (FATF), the global anti-money laundering watchdog,
particularly the enactment of legislation that allow competent authorities such as the BSP
to access relevant information held by banks. The bill’s approval will hasten the
Philippines’ exit from the FATF Grey List.

In summary, the inherent soundness, stability and sustainability of the Philippine financial
system has been supported by BSP’s commitment to pursue meaningful and strategic
reforms for the financial sector and establish partnerships with its various stakeholders.
Moving forward, the BSP will continue to pursue reforms that are consistent with
international standards and best practices while also responsive to the increasing
sophistication of the domestic financial system for the benefit of more Filipinos.

Financial Supervision Sector

 Visualization Tool for Analytics (VisTA)
Box Article No. 2

As new technologies are rapidly Through the VisTA project, massive

changing the landscape of banking and amounts of financial data are extracted from the
finance, there is a need to transform and prudential reports submitted by BSP-supervised
improve the financial supervision process to entities, aggregated, and synthesized to support
make it more adaptive to the new environment. generation of supervisory analytics. The dataset
This transformation involves the enhancement is also transformed into visual format to
of provision and delivery of data and facilitate the off-site monitoring of the changing
strengthening of supervisory tools and risk profile of banks. This Microsoft Power BI-
processes to ensure effective monitoring, based platform performs historical trend
supervision, and regulation of financial analysis of key financial accounts and is
institutions. embedded with machine learning algorithms to
further advance the analysis of data. It also
SupTech or supervisory technology is features geographical visualization of accounts
now used by supervisory agencies to support based on branch level supervisory data that can
supervision. SupTech helps supervisory provide location-based insights to policymakers
agencies gather prudential information and and bank supervisors.
perform regulatory processes in a more efficient
and proactive manner using innovative The project consists of several
technology. Its adoption around the world dashboards and visualization reports intended
concentrates primarily in two areas, namely, to be shared to different stakeholders. The VisTA
data collection and data analytics. – Financial Industry Surveillance (FIS) is the
publicly available data visualization platform
The VisTA which is aligned with the which displays the aggregate-level data for bank
SupTech strategy of the Financial Supervision industry categories like universal and
Sector (FSS) of the BSP, is an interactive commercial banks, thrift banks, and rural and
analytics tool that aims to provide quick data- cooperative banks. The VisTA-FIS is available on
driven insights to internal and external the BSP website under the Statistics section1.
stakeholders. With the application of data The VisTA enables the BSP to fulfill its
analytics and business intelligence, relevant financial stability mandate in an effective and
information pertaining to the financial efficient manner. It also provides other BSP
condition of the Philippine Banking System can stakeholders such as BSP-supervised entities
be swiftly analyzed. The use of VisTA promotes and the general public with a means to generate
robust financial industry surveillance consistent valuable insights on the banking system to
with the sector’s mandate of maintaining a support their analysis and decision-making.
strong and resilient financial system.

1
https://www.bsp.gov.ph/sites/FIS.

46
 Building Resiliency of Banks through Enhancements of the Recovery
Planning Requirements

Box Article 3

The changing financial system Thus, all banks are now required to have
landscape, and evolving trends present banks a realistic and reasonable recovery plan that is
with both opportunities and challenges. Banks linked to their risk management framework and
should be able to leverage on their strengths is integrated into their business continuity and
and opportunities to ensure long-term viability, contingency plans. The recovery plan should
and contribute to the broader economic also be commensurate with the bank’s size,
recovery and stability. nature, complexity of operations, overall risk
profile and systemic importance.

It is in this light that the BSP recognizes

the critical role of building the resilience of The BSP requires banks to establish a set
banks through the enhancements to recovery of indicators that works as a traffic light system
planning requirements as provided under to alert bank management and the BSP of the
Circular No. 1158 dated 18 October 2022. need for early-stage preventive or corrective
actions. First are early warning indicators which
serve as the “yellow light” that signal an early-
Recovery planning is a critical aspect of stage alert to possible future breaches of
a bank’s enterprise-wide risk management triggers. Second are the establishment of
system. This process prepares a bank for internal triggers which should be above the
unexpected situations that could harm the minimum prudential requirements set by the
business and helps to restore a bank to financial BSP. These triggers serve as the “red light” that
soundness within the shortest possible time. In signal potential activation of the recovery plan
line with this, a recovery plan is a document that and adoption of possible corrective actions.
sets out the guidelines and measures that must Third are the restoration points which may be
be followed and undertaken by a bank in depicted by the “green light” or the desired state
responding to stress events and in restoring when bank’s operations are considered fully
itself to a going concern status. restored following a financial shock and
activation of the recovery plan.

Considering the importance of recovery

planning, the BSP has expanded the scope of
application of the regulations to cover all banks,
not just the Domestic Systemically Important
Banks (D-SIBs). This is because all banks,
regardless of whether they are considered “too
big to fail” or have significant influence in the
financial system, should have the ability to
restore themselves to financial soundness in an
orderly manner.

47
 Building Resiliency of Banks through Enhancements of the Recovery
Planning Requirements

Box Article 3

Anchored on the existing BSP stress Overall, the enhanced recovery planning
testing guidelines, banks should assess the requirements are directed on strengthening the
impact of stress scenarios on their financial ability of banks to restore their operations as
health and ability to withstand market shocks. quickly and efficiently as possible, while also
Banks are expected to include stress scenarios minimizing the impact of disruptions on
that are bank-specific or those that are internal customers, stakeholders, and the broader
to them, system-wide or those that are market- financial system.
wide and systemic, or a combination of both.
These provide important context in refining the
recovery options or step-by-step measures that
must be implemented in case a stress event
materializes.

Banks must also regularly test their

recovery plans to ensure that they remain
effective in the face of changing market
conditions and emerging risks. The testing can
be in the form of a regular desktop exercise to
assess certain components of the recovery plan;
a live simulation exercise conducted at least
once every five (5) years to test the entirety of the
recovery plan; and regular independent review
performed by internal or external units
independent from those involved in the recovery
planning process.

48
 x 1.

OV RV W 6 4

In line with Republic Act (R.A.) No. 9178 or the “Barangay Micro Business Enterprises (BMBEs) Act of
2002”, the Philippine banking system, together with other government financial institutions,
continued to serve the financing needs of BMBEs in 2022. This was complemented by enabling
regulatory policies and regulations released by the BSP which aim to promote improved financial
services delivery to BMBEs and other micro enterprises.

49
 Annex 1. Implementation of the Barangay Micro
Business Enterprises Act
CONT NU D CR D T S RV C TO
RA No. 9178 encourages the formation and growth of BMBEs through rationalization of
bureaucratic restrictions,1 active government intervention and granting of incentives and
benefits. The Act primarily aims to integrate micro enterprises in the informal sector to the
mainstream economy. Strengthening BMBEs and supporting their credit needs are important
since these will help generate more jobs, provide livelihood, and hasten economic development
of the Filipinos in the micro, small and medium enterprises (MSMEs) sector.

Under Section 9 of the BMBEs Act and in line with BSP policies, rules and regulations, a special
credit window shall be set up for registered BMBEs by the following government financial
institutions (GFIs), namely, Land Bank of the Philippines (LBP), Development Bank of the
Philippines (DBP), Small Business Corporation (SBC)2 and People’s Credit and Finance
Corporation (PCFC). The law also mandates the BSP to formulate the implementing rules on
credit delivery, as well as establish incentive programs to encourage and improve credit delivery
to BMBEs. 50
The Government Service Insurance System (GSIS) and the Social Security System (SSS) are
likewise mandated under the law to set up special credit windows for the financing needs of
their members who wish to establish BMBEs. In the case of agribusiness activities, SBC is
required to set up a special guarantee window to provide the necessary credit guarantee to
BMBEs.

SP CLOS LY ON TORS TH PL NT T ON OF TH CT

The BSP, as financial regulator, ensures that concerned GFIs are compliant with the provisions
of Section 9 and the second paragraph of Section 13 of the BMBEs Act. Non-compliant GFIs are
subject to administrative sanctions and other penalties under Section 333 of the BSP’s Manual
of Regulations for Banks (MORB).3 Under the same regulatory framework, LBP, DBP, SBC and
PCFC are required to serve the credit requirements of BMBEs, either retail or wholesale through
special credit windows. Meanwhile, for GSIS and SSS members, they may avail their BMBEs
credit needs through a similar special credit window. For agri-BMBEs, SBC provides a credit
guaranteed under its guarantee program.

Other channels to extend credit to BMBEs are likewise available to further encourage banks and
other financial institutions to support the sector. All loans from whatever sources granted to
BMBEs under the law were considered part of the alternative compliance with the mandatory
credit allocation for MSMEs prescribed by R.A. No. 6977, as amended by R.A. Nos. 8289 and 9501

1
The BMBE registration procedure as mandated under Section 4 of the BMBEs Act, amended by RA No. 10644 (An Act
Promoting Job Generation and Inclusive Growth through the Development of Micro, Small and Medium Enterprises
[MSMEs]), otherwise known as the “Go Negosyo” Act, allows for a simpler BMBE registration process through Negosyo
Centers (one-stop shops for MSMEs including BMBEs) which are handled by the Department of Trade and Industry,
instead of the prior arrangement of registration under the local government unit where the BMBE operates.
2
Formerly the Small Business Guarantee and Finance Corporation.
3
The BSP has the power to impose administrative sanctions and other penalties on concerned GFIs that are non-compliant
with the provisions of Sections 9 and the second paragraph of Section 13 of the BMBEs Act. The BSP can also impose
administrative sanctions on GFIs for any violation of the said provisions of the BMBEs Act, subject to a fine of not less than
₱0.5 million to be made payable to the BMBE Development Fund. In the case of a bank, the penalty imposed will be
without prejudice to the imposition of administrative sanctions under Section 37 of RA No. 7653 (The New Central Bank
Act), as amended.

Supervisory Policy and Research Department

 Annex 1. Implementation of the Barangay Micro
Business Enterprises Act
(Magna Carta for MSMEs). The mandatory credit allocation for MSMEs set forth in the Magna
Carta for MSMEs, however, expired on 16 June 2018.

Bank’s loans to BMBEs may still form part of its compliance with the mandatory credit allocation
for agriculture and agrarian reform credit at 100 percent of their outstanding balance provided
that these credit allocations meet the qualification requirements for agri-agra compliance as
prescribed under Section 331 of the MORB.

Moreover, the BMBEs credit welfare is safeguarded as banks and other financial institutions that
lend to this sector are required to comply with the following conditions:

1. the interest on loans to BMBEs should be just and reasonable;

2. the schedule of loan amortization should take into consideration the projected cash
flow of the borrowers; and

3. registered BMBE borrowers shall be exempted from submission of income tax returns
as a condition for the grant of loans, considering that they are exempt from income tax
on earnings arising from their operations, provided that before grant of the loan, banks
shall undertake reasonable measures to determine the borrowers’ capability to pay.

NKS GR NT D R T L LO NS TO

Based on the Report on Loans Granted to BMBEs to BSP4, the banking system granted a total of
₱43.3 million retail loans to BMBEs in 2022, lower than the ₱67.2 million in 2021 (Table 1).

Retail loans were directly granted to 2,870 BMBE borrowers by 21 banks. Across banking groups,
rural and cooperative banks (RBs and CBs) continued to hold the largest share at 66.3 percent
(₱28.7 million) and 20.8 percent (₱9.0 million), respectively, of the banking system’s total loans
to BMBEs. Meanwhile, no wholesale loans5 were granted to BMBEs during the reference period.
51 5
T b 1.
P k S :L
Amount in Million ₱, Growth Rate in %

2022 2021 y-o-y Loan Growth

No. of No. of Outs. No. of No. of Outs.
Banks Banks Borrowers Loans Banks Borrowers Loans Amount %

UKBs 1 2 1.5 1 3 3.5 (2.0) (57.1%)

TBs 1 137 4.0 1 143 5.1 (1.1) (21.6%)
RBs 17 2,642 28.7 17 3,211 40.7 (12.0) (29.5%)
CBs 2 89 9.0 2 153 18.0 (9.0) (50.0%)

Total 21 2,870 43.3 21 3,510 67.2 (23.9) (35.6%)

Source: BSP

GF CO PL D W TH TH R QU R NTS OF TH CT

All GFIs, namely, LBP, DBP, SSS, GSIS, PCFC and SBC continued to implement the requirements
of the BMBEs Act by setting up special credit windows and facilities to serve the financing needs
of BMBEs. These GFIs regularly submit their annual reports on the status of the implementation
of the BMBEs Act to both houses of Congress as mandated by Section 9 of the BMBEs Act.

4
Report on Compliance with Mandatory Credit Allocation Required Under R.A. No. 6977, as amended. This report, which
forms part of the quarterly MSME Report to BSP, includes data on outstanding loans to BMBEs, number of borrowers and
corresponding loan amounts utilized as alternative compliance with the mandatory credit allocation for MSMEs.
As per BSP Memorandum No. M-2018-022 dated 10 August 2018, banks are required to submit their MSME reports to the
BSP even though the mandatory credit allocation for MSMEs already ended.
5
Wholesale funds that are lent to accredited private financial institutions including community-based organizations such
as cooperatives, non-government organizations and people’s organizations engaged in granting credit, for relending to
BMBEs

Financial Supervision Sector

 Annex 1. Implementation of the Barangay Micro
Business Enterprises Act
POL CY H GHL GHTS

With the continued recovery in the economy, the BSP has started to scale back the temporary
relief measures introduced during the COVID-19 crisis save for those that incentivize lending to
MSMEs, including BMBEs. The relief measures that were extended until end-June 2023 include
the reduced credit risk weight of loans granted to MSMEs and the utilization of loans to MSMEs
as alternative compliance with the reserve requirements. The extension of these relief measures
will encourage banks to continue to support financing requirements of creditworthy MSMEs,
including BMBEs.

Based on latest data, credit to MSMEs continues. As of end-December 2022, loans to MSME
sector of the banking system stood at ₱492.6 billion higher than the ₱470.1 billion recorded in
December 2021. In terms of new loans, the universal and commercial banks, granted a total of
₱37.7 billion new loans to MSMEs for the month of October 2022, an increase from the
₱33.6 billion recorded for the same period a year ago.6 In addition to providing new credit, banks
have also been restructuring loans of their MSME borrowers. As of end-December 2022, total
restructured MSME loans stood at ₱24.8 billion or about 5.0 percent of the total MSME loans.

52

6
Based on universal and commercial banks’ Enhanced Report on Interest Rates on Loans and Deposits (IRLD) to BSP.

Supervisory Policy and Research Department

 2022 S v
x 2. F
k
P
k S

OV RV W 6 4

Foreign banks continue to expand their core banking business alongside the robust recovery of the
Philippine economy. They remain an integral part of the Philippine financial system, connecting
retail and corporate customers to trade as well as cross-border lending and investment opportunities
across the globe. Even before the COVID-19 crisis, foreign banks have been offering a broad range of
innovative financial products and services to their clients, contributing to the healthy competition in
the country’s financial landscape. These banks, likewise, promote continuous enhancement of their
operations through digital solutions including development of employees’ skills and competencies,
among others.

53
 Annex 2. 2022 Survey on the Effects of Foreign Bank
Entry into the Philippine Banking System
O J CT V
The survey aims to determine the extent of foreign banks’ support to the policy objectives
embodied in Section 1 of Republic Act (RA) No. 7721, as amended by RA No. 10641, which
provides that:

“The State shall develop a self-reliant and independent national economy

effectively controlled by Filipinos and encourage, promote, and maintain a stable,
competitive, efficient, and dynamic banking and financial system that will
stimulate economic growth, attract foreign investments, provide a wider variety of
financial services to Philippine enterprises, households and individuals, strengthen
linkages with global financial centers, enhance the country's competitiveness in
the international market and serve as a channel for the flow of funds and
investments into the economy to promote industrialization.”

THODOLOGY
Survey questionnaires were sent out to the 29 foreign bank branches1 (FBBs) and foreign bank
subsidiaries to draw information on:

1. investment and trade activities undertaken to attract foreign investments in the

Philippines;

2. financial products and services provided to local residents or companies based in the
Philippines;

3. banking technology introduced for the benefit of local clients and depositors;

4. trainings and seminars conducted or extended to increase awareness and knowledge

on various banking practices;

5. number of Filipino officers and employees hired; and 54

6. impact of COVID-19 on the bank’s operations and relief measures implemented to

address the adverse consequences.

The survey was conducted from January to February 2023.

K Y F ND NGS

. NV ST NTS, TR D ND US N SS OPPORTUN T S

FBBs and foreign bank subsidiaries facilitated various trade transactions between the
country and foreign businesses, created business opportunities and promoted investments
in the Philippines. These include financing infrastructure and renewable energy projects,
promotion of trade and investments, as well as other related transactions.

. PR NT D T R LS

FBBs and foreign bank subsidiaries greatly contributed to attracting potential investors and
promoting the Philippine financial system through news articles and social media posts the
banks produce and share.

C. N W T CHNOLOGY

FBBs and foreign bank subsidiaries reported the implementation of the following financial
technology (fintech) tools to better serve the banking public as well as to improve the
efficiency of their operations:

1
29 out of the 29 FBBs and subsidiaries participated and submitted survey responses.

Supervisory Policy and Research Department

 Annex 2. 2022 Survey on the Effects of Foreign Bank
Entry into the Philippine Banking System
F T R k
C -C P
b dO A system that allows clients to manage their bank accounts and
k P * access other banking products and products and services via the
Internet and digital platforms. It offers convenience with 24/7
availability of access to banking and other financial services, even
in remote areas, and promotes automated payments and
settlement of clients’ various financial transactions.
An API solution that allows the integrated and flexible exchange
P of trade-related information between a bank and its clients –
( P )T * allowing for real time reporting of data when these are available in
the bank’s system.
kO S
C kC S A system that facilitates the electronic clearing of checks.
D S * A program that allows the preparation, signing and sending of
documents electronically in a secure manner.
C k S A back-end system that processes daily banking transactions and
posts updates to accounts and other financial records.
L P A system that automates loan application and evaluation.
S
R b P A system introduced in the settlements process to improve
efficiency and enhance accuracy in pre-settlement processes
which include check administration, and trade pre-matching and
FX reporting.
FX A back-office system for trading and FX processing with improved
security features and processing time.
R k dC
- L d An AML solution that enhances the capability of bank to comply
( L) T * with covered and suspicious transaction reporting as mandated
by the AML Act.
55 C dC b P 5
V C A platform that facilitates ease of coordination and collaboration
P * among the bank's different project teams to enable them to
effectively work together on common projects, regardless of their
physical location.
R v A virtual access solution that supports banks' implementation of
V P v work from home setup due to the global pandemic.
N w k*
* Same response from a year ago.

D. TR N NGS, S N RS ND R F NGS

FBBs and foreign bank subsidiaries disclosed the conduct and/or attendance to the following
trainings and seminars on risk governance and bank operations:

T
Anti-Money Know Your Customer (KYC)
Laundering and Fraud/Signature Verification and Forgery Detection
Combatting Terrorism Know Your Money and Counterfeit Detection
and Proliferation Anti-Money Laundering/Financial Crime Risk Management
Financing Real Estate Money Laundering
Risk Management Corporate Governance/ Operational Risk Management/Change
Management/Risk Management/Problem Management/
Reputational, Management, and Institutional Risks/Third Party
Risk Management
Basel III
Stress Testing Exercise
Cybersecurity/Cyber Risk, Cybercrime and Cyber Fraud
Detection
Environmental/Climate Risk Management/Environmental,
Social and Governance
Interest Rate Risk in the Banking Book
Compliance/Regulatory / Project Management/ Internal Controls
Business Continuity/ Disaster Preparedness/ Safety/
Occupational Safety & Health

Financial Supervision Sector

Annex 2. 2022 Survey on the Effects of Foreign Bank
Entry into the Philippine Banking System
T
Credit Risk
Liquidity Risk
Credit Operations Credit/Credit Analysis/ Related Party Transactions
Corporate Banking
Personal Property Security Registry/Condominium Management
Microfinance/Sustainable Finance
IT Operations and Digital Banking/Digitalization/Financial Technology/Financial
Digital Financial Modelling/Virtual Currency/Cryptocurrency/Blockchain/Big Data
Services Data Privacy/ Security/ Information Technology
Financial Market Investment, Trade and Treasury Operations/Treasury
Operations Certification/Trade Finance/Trust/Derivatives/Capital Markets/
Foreign Exchange Regulations/Interest Rates
Sustainable Finance
Shadow Banking
Ethics and Etiquette in the Financial Market
Reporting Standards Philippine Financial Reporting Standards 3 and 10 (PFRS 3 and
10)
Taxation and Accounting
Financial Consumer Financial Consumer Protection Framework
Protection
Leadership and HR/Personnel/Leadership Skills Development/KYE Program/
Management Stress Management/Mental Health Awareness/ Mentoring/
Negotiation and Conflict Resolution
Financial Management Compliance/Business Communication/
Business Writing
Operating Economic Briefings and Forums /CREATE Act/FIST Act
Developments Mandatory Continuing Legal Education/Philippine Immigration
Law/Competition Law

. P CT OF COV D-19 ON TH NK 56

FBBs and foreign bank subsidiaries shared their observations on the overall performance of
their operations with the recovery of the economy from the impact of the COVID-19 crisis.
These include:

1. Overall increase in business opportunities, due to the opening of the economy

alongside improvement in the country’s credit activity,

2. Growth in total assets due to expansion in loans and investments,

3. Higher net income due to the increase in interest income and improvement in
trade and financial transactions.

In addition, these banks disclosed that they continued to undertake the following:

1. Promoting and encouraging clients to use online and digital platforms as a more
convenient and secure way in doing their financial transactions, as well as in
conducting meetings and presentations.

2. Employing stringent credit risk management framework by implementing

comprehensive credit risk policies, identifying, and monitoring risk exposures, and
enforcing measures to mitigate risk in their portfolio.

3. Enhancing digital capabilities (i.e., platform, system) to maintain competitiveness

and operational efficiency.

4. Providing a healthy and conducive work environment for employees through the
adoption of hybrid work and training arrangements (i.e., work from home, flexible
work schedules, teleworking, online training), shuttle services and other incentives,
among others..

Supervisory Policy and Research Department

 Annex 2. 2022 Survey on the Effects of Foreign Bank
Entry into the Philippine Banking System
5. Strengthening their business continuity plans to ensure that services will not halt in
case of any business disruptions.

57 5

Financial Supervision Sector

 List of Appendices

Industry/ Appendix
Category No. Appendix Title
Philippine Banking 1 Financial Highlights and Growth Rates
System 2 Selected Performance Indicators
3 Number of Offices and Regional Profile
4 Number of Automated Teller Machines (ATMs)
5 Number of BSFIs with Authority to Provide Electronic
Payment and Financial Services (EPFS)
6 Profitability Indicators
7 Asset Quality Indicators
Foreign Currency 8 Financial Highlights and Growth Rates
Deposit Unit (FCDU) 9 Selected Performance Indicators
Operations
Trust Operations 10 Financial Highlights and Growth Rates
11 Selected Performance Indicators
Foreign Bank Branches 12 Financial Highlights and Growth Rates
and Foreign Bank 13 Selected Performance Indicators
Subsidiaries
Non-Banks with Quasi- 14 Financial Highlights and Growth Rates
Banking Functions 15 Selected Performance Indicators
(NBQBs) 16 Profitability Indicators
17 Asset Quality Indicators
Non-Stock Savings and 18 Financial Highlights and Growth Rates
Loans Associations 19 Selected Performance Indicators
(NSSLAs) 20 Profitability Indicators
21 Asset Quality Indicators
Financial Institutions 22 Physical Composition
Under BSP
Supervision/
Regulation
Philippine Banking 23 Comparative Statement of Condition (CSOC)
System 24 Comparative Statement of Income and Expenses (CSIE)
25 Selected Performance Indicators
26 Contingent Accounts
Trust Operations 27 Assets and Accountabilities -Banks and Non-Bank
Financial Institutions (NBFIs) (by Industry)
28 Assets and Accountabilities -Banks and NBFIs (by Trust
Type)
29 Income and Expenses - Banks and NBFIs
Foreign Bank Branches 30 CSOC-Foreign Banks
and Foreign Bank 31 CSIE-Foreign Banks
Subsidiaries

58
Appendix 1. Philippine Banking System: Financial Highlights and Growth Rates
As of End-Periods Indicated
Financial Highlights Growth Rates
End-December End-December
p/ p/
2020 2021 2022 2021 2022
In Billion ₱

Balance Sheet
1
Total Assets 19,457.1 20,828.1 23,047.7 7.0% 10.7 %
Cash and Due from Banks 3,584.1 3,571.5 3,271.7 (0.4%) (8.4 %)
Financial Assets, gross (Other than Loans) 4,307.8 5,221.0 6,207.5 21.2% 18.9 %
Financial Assets Held for Trading (HFT) 325.0 250.4 202.7 (22.9%) (19.1 %)
Financial Assets Designated at Fair Value through Profit
or Loss (DFVPL) 3.8 4.8 5.1 26.5% 6.6 %
Accumulated Market Gains/(Losses) 40.4 (4.5) (122.8) (111.0%) 2,653.0 %
Allowance for Credit Losses 19.5 20.7 17.7 5.9% (14.3 %)
Financial Assets, net (Other than Loans) 4,328.7 5,195.9 6,066.9 20.0% 16.8 %
Loans, gross (inclusive of IBL) 10,872.6 11,391.1 12,625.1 4.8% 10.8 %
Interbank Loans Receivable (IBL) 296.2 366.9 362.2 23.9% (1.3 %)
Loans, gross (exclusive of IBL) 10,576.4 11,024.2 12,262.9 4.2% 11.2 %
Reverse Repurchase (RRP) with BSP and Other Banks
367.9 375.9 356.0
2.2% (5.3 %)
Loans, gross (exclusive of IBL and RRP with BSP and Other 10,208.5 10,648.4 11,906.9 4.3% 11.8 %
Allowance for Probable Losses 367.2 396.8 426.7 8.1% 7.5 %
Loans, net (exclusive of IBL and RRP with BSP and Other 9,841.3 10,251.5 11,480.2 4.2% 12.0 %
Equity Investment in Subsidiaries, Associates and Joint 261.7 276.9 262.5 5.8% (5.2 %)
ROPA, net 92.7 95.9 104.3 3.4% 8.8 %
Other Assets, net 684.4 693.6 1,143.9 1.3% 64.9 %
Financial Liabilities Held for Trading 47.3 43.7 72.9 (7.5%) 66.7 %
Financial Liabilities DFVPL - - - (6.7%) 0.5 %
Deposits 14,895.0 16,241.1 17,770.4 9.0% 9.4 %
Peso Liabilities 12,702.2 13,857.9 15,065.4 9.1% 8.7 %
Foreign Currency 2,192.8 2,383.2 2,704.9 8.7% 13.5 %
Bills Payable 558.2 496.9 666.0 (11.0%) 34.0 %
Unsecured Subordinated Debt 27.5 22.6 19.3 (18.0%) (14.5 %)
Redeemable Preferred Shares 0.3 0.2 0.3 (0.5%) 19.3 %
Other Liabilities 1,497.7 1,449.6 1,812.5 (3.2%) 25.0 %
2
Total Capital Accounts 2,431.1 2,574.0 2,706.4 5.9% 5.1 %

Income Statement
Total Operating Income 893.3 869.4 1,014.5 (2.7%) 16.7 %
Net Interest Income 674.2 661.8 754.7 (1.8%) 14.0 %
Non-interest Income 219.1 207.6 259.9 (5.3%) 25.2 %
Non-Interest Expenses 491.5 512.4 562.4 4.2% 9.8 %
Losses/Recoveries on Financial Assets (214.2) (97.7) (88.6) (54.4%) (9.3 %)
Provision for Credit Losses on Loans & Other Fin'l Assets
(211.6) (106.4) (105.3)
(49.7%) (1.0 %)
Bad Debts Written Off (6.4) (7.5) (2.4) 18.0% (68.3 %)
Recovery on Charged-Off Assets 3.8 16.2 19.1 323.8% 17.6 %
Net Profit Before Share in the Profit/(Loss) of Unconsolidated
Subsidiaries, Associates and Joint Ventures 187.6 259.3 363.5 38.2% 40.2 %
Share in the Profit/(Loss) of Unconsolidated Subsidiaries,
Associates and Joint Ventures 11.9 20.7 23.8 73.7% 15.0 %
Total Profit/Loss Before Tax and Before Minority Interest 199.5 280.1 387.4 40.4% 38.3 %
Total Profit/Loss After Tax and Before Minority Interest 155.2 224.8 310.1 44.8% 38.0 %
Minority Interest in Profit/(Loss) of Subsidiaries - - -
Net Profit/(Loss) 155.2 224.8 310.1 44.8% 38.0 %

1
Adjusted to net off the account "Due from Head Office" with "Due to Head Office" of branches of foreign banks
2
Inclusive of the portion of the "Net Due to Head Office" which qualified as capital
p/
preliminary
Note: Figures may not add up due to rounding-off
Appendix 2. Philippine Banking System: Selected Performance Indicators
As of End-Periods Indicated
End-December
p/
2020 2021 2022
Profitability
1
Earning Asset Yield 4.8 % 4.1 % 4.4 %
2
Funding Cost 1.1 % 0.7 % 0.9 %
3
Interest Spread 3.7 % 3.4 % 3.5 %
4
Net Interest Margin 3.8 % 3.5 % 3.6 %
5
Non-Interest Income to Total Operating Income 24.5 % 23.9 % 25.6 %
6
Cost-to-Income 54.9 % 58.7 % 55.2 %
7
Return on Assets (RoA) 0.8 % 1.1 % 1.4 %
7
Return on Equity (RoE) 6.5 % 9.0 % 11.7 %
Liquidity
Cash and Due from Banks to Deposits 24.1 % 22.0 % 18.4 %
8
Liquid Assets to Deposits 53.1 % 54.0 % 52.6 %
Loans, gross to Deposits 73.0 % 70.1 % 71.0 %
Asset Quality
Restructured Loans to Total Loan Portfolio (TLP) 1.9 % 3.1 % 2.6 %
Allowance for Credit Losses (ACL) to TLP 3.4 % 3.5 % 3.4 %
Gross Non-Performing Loans (NPL) to TLP [NPL Ratio] 3.6 % 4.0 % 3.2 %
Net NPL to TLP 2.0 % 2.1 % 1.5 %
NPL Ratio (net of IBL) 3.7 % 4.1 % 3.2 %
NPL Coverage Ratio (ACL to Gross NPL) 93.0 % 87.7 % 107.0 %
Non-Performing Assets (NPA) to Gross Assets [NPA Ratio] 2.6 % 2.7 % 2.2 %
NPA Coverage Ratio (Allowance on NPA to NPA) 78.5 % 75.3 % 87.9 %
ROPA to Gross Assets Ratio 0.6 % 0.6 % 0.5 %
ROPA Coverage Ratio 29.0 % 28.5 % 28.2 %
Distressed Assets Ratio 6.2 % 7.2 % 6.0 %
Capital Adequacy
9
Total Capital Accounts to Total Assets 12.5 % 12.4 % 11.7 %
10, 11
Capital Adequacy Ratio (CAR, Solo) 16.6 % 16.5 % 15.4 %
Common Equity Tier 1 (CET1) Ratio 15.4 % 15.3 % 14.3 %
Capital Conservation Buffer 9.4 % 9.3 % 8.3 %
Tier 1 Ratio 15.6 % 15.5 % 14.5 %
10, 11
CAR (Consolidated) 17.1 % 17.1 % 16.1 %
CET1 Ratio 15.9 % 15.9 % 15.0 %
Capital Conservation Buffer 9.9 % 9.9 % 9.0 %
Tier 1 Ratio 16.0 % 16.1 % 15.2 %

1
Earning Asset Yield refers to the ratio of interest income to average earning assets.
2
Funding Cost refers to the ratio of interest expenses to average interest-bearing liabilities.
3
Interest Spread refers to the difference between earning asset yield and funding cost.
4
Net Interest Margin refers to the ratio of net interest income to average earning assets.
5
Non-Interest income includes dividends income.
6
Cost-to-Income Ratio refers to the ratio of non-interest expenses to total operating income.
7
RoA and RoE refer to the ratios of net profit to average assets and capital, respectively.
8
Liquid Assets refer to Cash and Due from Banks plus Financial Assets, net of amortization (net of financial assets in equity securities).
9
Total capital accounts includes redeemable preferred shares.
10
Refers to the ratio of qualifying capital to total risk-weighted assets.
11
CAR data are for universal and Commercial banks and subsidiary banks and quasi-banks; excludes stand-alone thrift, rural and cooperative banks
p/
preliminary
Appendix 3. Philippine Banking Offices: Number of Offices and Regional Profile
As of End-Periods Indicated

2022 p/

Universal Commercial Thrift Rural Cooperative Digital

TOTAL
Banks Banks Banks Banks Banks Banks

TOTAL 13,269 6,846 347 2,592 3,303 175 6

Head Offices 497 22 23 43 379 24 6

Branches/Other Offices 12,772 6,824 324 2,549 2,924 151 0
Regular Branch 9,921 6,553 306 1,606 1,337 119
Branch-Lite Unit 2,658 233 18 928 1,447 32
Microfinance-Oriented Branch 155 15 140
Representative Office 20 20
Remittance Desk Office 14 14
Marketing Office 2 2
Limited Purpose Branch 1 1
Sub-Branch 1 1

2022 p/
2021

Branches/
Head
TOTAL TOTAL Other
Offices
Offices

TOTAL 13,154 13,269 497 12,772

Nationwide 13,100 13,215 497 12,718

National Capital Region (NCR) 3,834 3,803 81 3,722

Luzon 5,497 5,559 269 5,290

Region I - Ilocos 674 684 31 653
Region II - Cagayan Valley 476 488 28 460
Region III - Central Luzon 1,359 1,371 70 1,301
Region IV-A - CALABARZON 1,912 1,906 85 1,821
Region IV-B - MIMAROPA 310 316 20 296
Region V - Bicol 564 588 20 568
Cordillera Administrative Region (CAR) 202 206 15 191

Visayas 1,962 2,003 85 1,918

Region VI - Western Visayas 761 777 40 737
Region VII - Central Visayas 906 921 31 890
Region VIII - Eastern Visayas 295 305 14 291
Mindanao 1,807 1,850 62 1,788
Region IX - Zamboanga Peninsula 276 279 13 266
Region X - Northern Mindanao 443 458 22 436
Region XI - Davao Region 504 517 13 504
Region XII - SOCCSKSARGEN 1/ 314 301 9 292
ARMM 18 - - -
CARAGA 252 256 5 251
BARMM - 39 0 39
Overseas 54 54 0 54
Asia-Pacific 21 21 0 21
Europe 5 5 0 5
North America 5 5 0 5
Middle East 23 23 0 23

1
Composed of the provinces of North Cotabato, South Cotabato, Sultan Kudarat and Sarangani, and the cities of General Santos, Koronadal, Tacurong and Kidapawan.
p/
preliminary
Appendix 4. Philippine Banking System: Number of Automated Teller Machines (ATMs)
As of End-Periods Indicated
On-site Off-site Total
p/ p/ p/
2021 2022 2021 2022 2021 2022

TOTAL 12,463 12,828 10,524 10,594 22,987 23,422

Universal Banks 9,841 10,283 9,399 9,563 19,240 19,846

Commercial Banks 592 369 546 411 1,138 780

Thrift Banks 1,350 1,392 476 504 1,826 1,896

Rural banks 650 749 103 116 753 865

Cooperative Banks 30 35 30 35

p/
preliminary
Appendix 5: Number of BSFIs with Authority to Provide Electronic Payment and Financial Services (EPFS)
As of End-September 2022 p/

Electronic
Money Issuers
No. of BSFIs with Other Internet Internet
(Prepaid E-Money Mobile
Authority to ATM Card Credit Card Payment Banking - Banking -
Card/Cash (E-Wallet) Banking
Provide EPFS Cards Retail Corporate
Card/
Remittance
Universal and Commercial Banks 42 26 16 18 4 5 26 37 27
Thrift Banks 31 29 1 7 - - 15 8 17
Rural and Cooperative Banks 54 24 - 5 2 - 6 1 12
Digital Banks 6 3 - - - - 1 1 4
Banks 133 82 17 30 6 5 48 47 60
EMIs 41 - - 41 31 - 2 1 30
Others 10 - 1 1 - - 6 - 10
TOTAL 184 82 18 72 37 5 56 48 100

Telephone Cash Accept Cash Recycling Point of Payment With VASP

ATM Facility InstaPay PESONet
Banking Machine Machine Sale Facility Portal Services

Universal and Commercial Banks 10 27 10 1 17 9 - 23 42

Thrift Banks 4 29 2 1 7 - - 17 17
Rural and Cooperative Banks - 26 - - 5 - - 14 33
Digital Banks - 3 1 - 1 - - 3 3
Banks 14 85 13 2 30 9 - 57 95
EMIs - - 1 - 2 1 5 14 7
Others - - - - - - - - -
TOTAL 14 85 14 2 32 10 5 71 102

Instapay Online/
Agency eKYC-Online E-Gov BIR
QR Ph Multi-Proxy Type C EPFS Digital Loan Others
Banking Onboarding Payments ePayments
Service Application

Universal and Commercial Banks 14 13 6 16 2 1 - 11 8

Thrift Banks 7 1 4 4 - - 4 2 -
Rural and Cooperative Banks 4 3 6 4 - - 19 7 2
Digital Banks - 3 2 5 - - - 2 3
Banks 25 20 18 29 2 1 23 22 13
EMIs 8 9 - 26 - - - - -
Others - - - 2 - - - 1 1
TOTAL 33 29 18 57 2 1 23 23 14

p/
preliminary
Appendix 6. Philippine Banking System: Profitability Indicators
For the Periods-Ended Indicated

Growth Rates
End-December End-December
2020 2021 2022 p/ 2021 2022 p/

In Billion ₱

Total Operating Income 893.3 869.4 1,014.5 (2.7%) 16.7%

Net Interest Income 674.2 661.8 754.7 (1.8%) 14.0%
Interest Income 851.2 777.2 911.7 (8.7%) 17.3%
Provision for Lossses on Accrued Interest Income from
Financial Assets 0.9 0.3 0.5 (62.2%) 54.3%
Interest Expenses 176.1 115.1 156.5 (34.7%) 36.0%
Non-interest Income 219.1 207.6 259.9 (5.3%) 25.2%
Dividend Income 3.2 2.0 2.4 (39.2%) 23.2%
Fee-based Income 89.5 107.3 123.4 19.8% 15.0%
Trading Income 20.2 9.7 16.5 (52.1%) 70.5%
FX Profit/(Loss) 6.6 5.3 12.4 (19.1%) 131.9%
Profit/(Loss) from Sale/Redemption/Derecognition of
Non-Trading Financial Assets and Liabilities 83.4 25.8 (0.8) (69.0%) (103.1%)
Profit/(Loss) from Sale/Derecognition of Non-Financial 5.5 41.2 30.7 652.9% (25.6%)
Profit/(Loss) on Financial Assets and Liabilities
Designated at Fair Value through Profit or Loss 0.5 0.3 (0.2) (47.4%) (168.2%)
Profit/(Loss) on Fair Value Adjustment in Hedge (2.8) (0.0) ... (99.5%) (152.4%)
Other Income 13.1 16.1 75.6 23.1% 370.1%
Non-Interest Expenses 491.5 512.4 562.4 4.2% 9.8%
Losses/Recoveries on Financial Assets (214.2) (97.7) (88.6) (54.4%) (9.3%)
Provision for Credit Losses on Loans & Other Fin'l Assets (211.6) (106.4) (105.3) (49.7%) (1.0%)
Bad Debts Written Off (6.4) (7.5) (2.4) 18.0% (68.3%)
Recovery on Charged-Off Assets 3.8 16.2 19.1 323.8% 17.6%
Net Profit Before Share in the Profit/(Loss) of Unconsolidated
Subsidiaries, Associates and Joint Ventures 187.6 259.3 363.5 38.2% 40.2%
Share in the Profit/(Loss) of Unconsolidated Subsidiaries,
Associates and Joint Ventures 11.9 20.7 23.8 73.7% 15.0%
Total Profit/Loss Before Tax and Before Minority Interest 199.5 280.1 387.4 40.4% 38.3%
Income Tax Expense 44.3 55.3 77.3 24.8% 39.7%
Total Profit/Loss After Tax and Before Minority Interest 155.2 224.8 310.1 44.8% 38.0%
Minority Interest in Profit/(Loss) of Subsidiaries - - -
Net Profit/(Loss) 155.2 224.8 310.1 44.8% 38.0%

p/
preliminary
Note: ". . ." denotes below ₱0.05 billion
"(0.0)" denotes less than negative ₱0.05 billion
Appendix 7. Philippine Banking System: Asset Quality Indicators
As of End-Periods Indicated
Growth Rates
End-December End-December
p/ p/
2020 2021 2022 2021 2022

In Billion ₱
Total Assets 19,457.1 20,828.1 23,047.7 7.0 % 10.7 %
1
Gross Assets 19,857.8 21,258.9 23,510.4 7.1 % 10.6 %
2
Total Loan Portfolio (TLP) 10,872.6 11,391.1 12,625.1 4.8 % 10.8 %
Interbank Loans Receivable (IBL) 296.2 366.9 362.2 23.9 % (1.3%)
2
TLP , net of IBL 10,576.4 11,024.2 12,262.9 4.2 % 11.2 %
TLP, net of Allowance for Credit Losses (ACL) 10,505.4 10,994.3 12,198.4 4.7 % 11.0 %
Gross Non-Performing Loans (NPL) 394.9 452.5 398.8 14.6 % (11.9%)
3
Net NPL 217.9 240.3 186.1 10.3 % (22.5%)
ACL 367.2 396.8 426.7 8.1 % 7.5 %
2, 4
ROPA 115.8 119.3 127.8 3.0 % 7.1 %
ROPA (inclusive of performing Sales Contract Receivable) 126.8 130.4 141.0 2.8 % 8.2 %
5
Provisions for ROPA 33.6 34.0 36.0 1.2 % 6.0 %
2/
Restructured Loans 208.9 356.7 329.7 70.8 % (7.6%)
Performing Restructured Loans 174.0 255.2 244.2 46.7 % (4.3%)
6
Distressed Assets 684.7 827.0 770.8 20.8 % (6.8%)
7
Non-Performing Assets (NPAs) 510.7 571.8 526.6 12.0 % (7.9%)
8
Allowance on NPA 400.8 430.8 462.7 7.5 % 7.4 %
Performing Sales Contract Receivables 10.9 11.0 13.2 1.0 % 20.1 %

1
Gross Assets refer to Total Assets plus Allowance on NPA.
2
Gross of Provisions
3
Net NPLs refer to gross NPLs less specific allowance for credit losses on NPLs.
4
Real and Other Properties Acquired; ROPA includes Non-Current Assets Held for Sale and Non-Performing Sales Contract Receivables (SCR).
5
Provisions for ROPA are inclusive of Accumulated Depreciation
6
Distressed Assets refer to NPAs plus performing RLs.
7
NPAs refer to Gross NPLs plus ROPA.
8
Allowance on NPA refers to ACL plus Provisions for ROPA.
p/
preliminary
Appendix 8. Foreign Currency Deposit Unit: Financial Highlights and Growth Rates
As of End-Periods Indicated

Financial Highlights Growth Rates

End-December End-December
2020 2021 2022 p/ 2021 2022 p/

In Million US$

Balance Sheet
Total Assets 1 58,515.1 57,796.1 61,920.0 (1.2 %) 7.1 %
Cash and Due from Banks 6,860.8 6,547.2 5,577.6 (4.6 %) (14.8 %)
Financial Assets, gross 28,616.9 28,302.2 28,557.3 (1.1 %) 0.9 %
Allowance for Credit Losses 44.1 43.7 47.7 (1.0 %) 9.1 %
Accumulated Market Gains/Losses 294.2 62.7 (903.6) (78.7 %) (1,540.9 %)
Financial Assets, net 28,867.0 28,321.2 27,606.0 (1.9 %) (2.5 %)
Interbank Loans Receivable (IBL), net 4,989.1 6,132.3 4,464.9 22.9 % (27.2 %)
Loans, gross (exclusive of IBL) 17,638.6 16,456.5 17,243.1 (6.7 %) 4.8 %
Allowance for Probable Losses 2 449.4 657.3 357.7 46.3 % (45.6 %)
Loans, net (exclusive of IBL) 17,189.2 15,799.2 16,885.5 (8.1 %) 6.9 %
ROPA, net 31.5 26.2 21.9 (16.7 %) (16.2 %)
Other Assets, net 577.5 970.0 7,364.2 68.0 % 659.2 %
Total Liabilities 56,862.9 56,792.4 61,533.2 (0.1 %) 8.3 %
Financial Liabilities Held for Trading 144.2 87.9 111.1 (39.0 %) 26.4 %
Deposit Liabilities 45,061.6 46,093.8 47,852.7 2.3 % 3.8 %
Due to Other Banks 713.4 698.9 741.5 (2.0 %) 6.1 %
Bills Payable 4,001.8 3,210.8 5,654.3 (19.8 %) 76.1 %
Bonds Payable, net 5,592.7 4,888.5 4,972.2 (12.6 %) 1.7 %
Other Liabilities 377.0 517.1 385.2 37.2 % (25.5 %)
3
Due to HO/Br./Agencies/FCDU/RBU, net 972.2 1,295.4 1,816.3 33.2 % 40.2 %
Total Capital Accounts 4 1,652.2 1,003.7 386.8 (39.3 %) (61.5 %)

Income Statement
Total Operating Income 1,530.3 1,277.4 1,141.5 (16.5 %) (10.6 %)
Net Interest Income 5 890.8 825.5 981.9 (7.3 %) 18.9 %
Non-interest Income 639.5 451.9 159.6 (29.3 %) (64.7 %)
Non-Interest Expenses 188.8 185.4 165.4 (1.8 %) (10.8 %)
Losses/Recoveries on Financial Assets (122.9) (240.2) 139.7 95.4 % (158.2 %)
Bad Debts/Provision for Credit Losses (125.3) (245.0) (23.0) 95.6 % (90.6 %)
Recovery on Charged-Off Assets 2.4 4.9 162.7 106.5 % 3,226.5 %
Net Profit Before Share in the Profit/(Loss) of
Unconsolidated Subs., Associates & Joint Ventures 1,218.6 851.8 1,115.9 (30.1 %) 31.0 %
Total Profit/Loss Before Tax & Before Minority Interest 1,218.6 851.8 1,115.9 (30.1 %) 31.0 %
Income Tax Expense 41.0 43.9 41.0 7.0 % (6.5 %)
Total Profit/Loss After Tax & Before Minority Interest 1,177.6 807.9 1,074.9 (31.4 %) 33.0 %
Net Profit or Loss 1,177.6 807.9 1,074.9 (31.4 %) 33.0 %

1
Adjusted to net off the account "Due from Head Office" with "Due to Head Office" of branches of foreign banks
2
Inclusive of General Loan Loss Provision
3
Net of Due from Head Office/Branches/Agencies (Philippine branches of foreign banks) and Due from FCDU/RBU
4
Revised based on the Financial Reporting Package (FRP) data
5
Net of interest expenses and provision for losses on accrued interest income from financial assets
p/
preliminary
Appendix 9. Foreign Currency Deposit Unit: Selected Performance Indicators
As of End-Periods Indicated
End-December
2020 2021 2022 p/

Liquidity
Liquid Assets to Deposits 1 (excl. of ROPs) 60.1% 55.2% 47.2%
Liquid Assets to Deposits 1 (incl. of ROPs) 79.3% 75.6% 69.3%
Loans, gross to Deposits 50.2% 49.0% 45.4%
Asset Quality
Non-Performing Loans (NPL) Ratio 2 2.2% 3.6% 1.1%
NPL Coverage Ratio 2 116.6% 109.9% 196.4%
Non-Performing Assets (NPA) to Gross Assets 2 0.7% 1.1% 0.3%
NPA Coverage Ratio 2 105.2% 103.7% 165.9%
Profitability
Cost-to-Income Ratio 12.3% 14.5% 14.5%
Return on Assets 2.0% 1.4% 1.8%
Net Interest Margin 1.6% 1.4% 1.7%

1
Liquid assets refers to Cash and Due from Banks plus Financial Assets, net of amortization
(net of Financial Assets in Equity Securities and Allowance For Credit Losses)
2
Exclusive of Interbank Loans Receivable
p/
preliminary
Appendix 10. Total Trust (Philippine Banks and NBFIs): Financial Highlights and Growth Rates
As of End-Periods Indicated
Financial Highlights Growth Rate
End-December End-December
p/ p/
2020 2021 2022 2021 2022

In Billion ₱

Total Assets 4,633.1 5,058.2 5,345.9 9.2 % 5.7 %

Cash and Due from banks 0.3 0.3 0.4 (2.9 %) 13.9 %
Deposits in Banks 1,058.4 1,086.2 1,181.0 2.6 % 8.7 %
Financial Assets, gross (net of amortization) 3,091.7 3,461.2 3,559.7 12.0 % 2.8 %
Accumulated Market Gains/Losses 46.6 31.7 (28.1) (32.0 %) (188.6 %)
Allowance for Credit Losses 0.9 0.2 0.5 (72.9 %) 104.4 %
Financial Assets, net 3,137.3 3,492.6 3,531.2 11.3 % 1.1 %
Loans, (gross) 100.0 118.6 134.2 18.6 % 13.1 %
Allowance for probable losses 3.1 7.5 6.4 143.6 % (14.8 %)
Loans, net 96.9 111.1 127.8 14.6 % 15.0 %
Equity Investments (gross) 8.1 5.5 5.4 (31.8 %) (2.4 %)
Allowance for probable losses 2.5 2.5 2.5 0.0 % (3.0 %)
Accumulated Market Gain/(Loss) - - -
Equity Investments (net) 5.5 3.0 2.9 (46.3 %) (1.9 %)
ROPA (net) 0.1 0.1 0.2 (17.0 %) 245.5 %
Other assets 334.5 365.0 502.4 9.1 % 37.6 %

Total Accountabilities 4,633.1 5,058.2 5,345.9 9.2 % 5.7 %

Wealth/Asset/Fund Management Accounts (Trust) 2,243.3 2,395.2 2,043.4 6.8 % (14.7 %)
UITF 1,180.2 1,305.3 940.7 10.6 % (27.9 %)
Employee Benefit 440.5 460.1 465.9 4.4 % 1.2 %
Pre-Need 125.0 127.9 125.3 2.4 % (2.1 %)
Other Institutional Trust Accounts 39.6 45.1 49.0 13.8 % 8.8 %
Personal Trust 432.5 420.7 399.9 (2.7 %) (4.9 %)
Personal Retirement Fund 0.1 0.1 0.1 0.1 % (30.9 %)
Other Individual Trust Accounts 25.4 36.0 62.5 41.8 % 73.6 %
Wealth/Asset/Fund Management Accounts (Agency) 1,959.4 2,207.0 2,708.6 12.6 % 22.7 %
Employee Benefit 57.9 56.3 59.0 (2.9 %) 4.9 %
Pre-Need 0.8 0.7 0.7 (2.1 %) (3.7 %)
Other Institutional Agency Accounts 1,013.3 1,189.5 1,405.5 17.4 % 18.2 %
Personal Retirement Fund 0.0 0.0 0.0 (0.1 %) (8.1 %)
Other Individual Agency Accounts 887.4 960.5 1,243.3 8.2 % 29.4 %
Other Fiduciary Services 429.4 455.3 593.2 6.0 % 30.3 %
UITF 13.7 13.6 14.5 (0.7 %) 6.3 %
Court Trusts 2.4 2.4 1.2 (0.4 %) (49.9 %)
Corporate Fiduciary Trust 51.3 47.7 44.1 (7.0 %) (7.5 %)
Escrow 45.1 47.8 45.2 6.1 % (5.5 %)
Custodianship 280.3 303.0 438.5 8.1 % 44.7 %
Safekeeping 0.0 0.0 0.0 2.8 % 1.9 %
Others 36.6 40.8 49.6 11.4 % 21.7 %
Advisory/Consultancy 0.0 0.0 0.0 2.6 % 0.0 %
Special Purpose Trust 1.0 0.6 0.8 (38.5 %) 26.3 %

Note: Figures may not add up due to rounding-off.

"0.0" denotes below ₱0.05 billion
Appendix 11. Total Trust (Philippine Banks and NBFIs) : Selected Performance Indicators
As of End-Periods Indicated

End-December
p/
2020 2021 2022
Liquidity
Cash and Due from Banks to Total Accountabilities 0.0% 0.0% 0.0%
Liquid Assets to Total Accountabilities 66.7% 68.4% 66.6%
Loans (gross) to Total Accountabilities 2.2% 2.3% 2.5%

Asset Quality
Non-Performing Loans (NPL) Ratio 1.0% 0.5% 1.7%
NPL Coverage Ratio 320.2% 1244.2% 285.4%
Non-Performing Assets (NPA) to Gross Assets 0.0% 0.0% 0.0%
NPA Coverage Ratio 283.9% 1068.5% 255.7%
Efficiency Ratio 47.2% 46.1% 49.7%

Note: "0.0%" denotes below 0.05%

p/
preliminary
 Appendix 12. Foreign Bank Branches and Subsidiaries: Financial Highlights and Growth Rates
As of End-Periods Indicated
Financial Highlights Growth Rates
End-December End-December
p/ p/
2020 2021 2022 2021 2022
In Billion ₱

Balance Sheet
Total Assets 1,314.9 1,396.6 1,417.6 6.2 % 1.5 %
Cash and Due from Banks 321.6 341.5 331.3 6.2 % (3.0 %)
Financial Assets, gross (Other than Loans) 345.3 362.5 339.8 5.0 % (6.3 %)
Financial Assets Held for Trading (HFT) 112.6 100.9 62.1 (10.4 %) (38.5 %)
Financial Assets Designated at Fair Value through
0.0 0.0 0.0 117.5 % 5.9 %
Profit and Loss (DFVPL)
Available-for-Sale (AFS) Financial Assets 210.4 201.7 201.6 (4.1 %) (0.1 %)
Held-to-Maturity (HTM) Financial Assets 22.2 59.8 76.1 169.0 % 27.3 %
Unquoted Debt Securities Classified as Loans - - - - -
Investments in Non-Marketable Equity Securities
- - - - -
(INMES)
Allowance for Credit Losses 0.0 0.1 0.1 146.0 % 1.8 %
Accumulated Market Gains/Losses 2.7 (0.5) (4.8) (117.4 %) 909.7 %
Financial Assets, net (Other than Loans) 348.0 362.0 335.0 4.0 % (7.5 %)
Interbank Loans Receivable (IBL) 23.4 22.8 29.1 (2.7 %) 27.7 %
Loans. Gross (inclusive of IBL) 629.8 672.6 660.2 6.8 % (1.8 %)
Loans, gross (exclusive of IBL) 606.4 649.8 631.1 7.2 % (2.9 %)
Reverse Repurchase (RRP) with BSP and Other Banks 119.1 141.2 119.5 18.5 % (15.4 %)
Loans, gross (exclusive of IBL and RRP with BSP and 487.3 508.6 511.6 4.4 % 0.6 %
Allowance for Probable Losses 25.1 16.3 12.3 (35.0 %) (24.4 %)
Loans, net (exclusive of IBL and RRP with BSP and Other 462.2 492.3 499.3 6.5 % 1.4 %
Equity Investment in Subsidiaries, Associates and Joint 2.6 2.4 2.8 (5.6 %) 13.2 %
ROPA, net 1.9 1.9 3.0 1.1 % 55.7 %
Other Assets, net 36.1 32.5 97.7 (9.9 %) 200.2 %
Total Liabilities 1,082.1 1,164.4 1,156.4 7.6 % (0.7 %)
Financial Liabilities Held for Trading 20.7 21.4 36.5 3.3 % 70.3 %
Financial Liabilities DFVPL - - - - -
Deposits 832.8 887.4 874.5 6.6 % (1.5 %)
Peso Liablities 532.8 555.7 522.9 4.3 % (5.9 %)
Foreign Currency 300.0 331.6 351.6 10.5 % 6.0 %
Due to Other Bank/BSP/PDIC/Head
Due to 161.4 170.2 100.2 5.5 % (41.1 %)
Office/Branch/Agency(Philippines)
Bills Payable 16.4 31.5 31.7 92.5 % 0.4 %
Other Liabilities 48.8 51.8 113.5 6.0 % 119.2 %
Unsecured Subordinated Debt 2.0 2.0 - 0.0 % (100.0 %)
Redeemable Preferred Shares - - - - -
Total Capital Accounts 232.9 232.2 261.3 (0.3 %) 12.5 %

Income Statement
Total Operating Income 63.2 54.4 108.1 (13.9 %) 98.7 %
Net Interest Income 43.4 34.5 40.5 (20.5 %) 17.2 %
Non-interest Income 19.8 19.9 67.6 0.5 % 240.6 %
Non-Interest Expenses 42.8 43.0 49.4 0.4 % 14.7 %
Losses/Recoveries on Financial Assets (18.9) 0.7 (2.6) (103.9 %) (449.7 %)
Bad Debts/Provisions for Credit Losses (20.2) (10.0) (6.6) (50.5 %) (34.2 %)
Recovery on Charged-Off Assets 1.4 10.8 4.0 691.3 % (62.4 %)
Net Profit Before Share in the Profit/(Loss) of 1.5 12.1 56.2 719.2 % 364.3 %
Share in the Profit/(Loss) of Unconsolidated Subsidiaries, (0.0) (0.0) 0.1 687.8 % (341.7 %)
Total Profit/Loss Before Tax and Before Minority Interest 1.5 12.1 56.3 719.3 % 366.6 %
Income Tax Expense 2.4 5.3 14.5 116.3 % 174.7 %
Total Profit/Loss After Tax and Before Minority Interest (1.0) 6.8 41.8 (801.8 %) 515.8 %
Minority Interest in Profit/(Loss) of Subsidiaries - - -
Net Profit or Loss (1.0) 6.8 41.8 (801.8 %) 515.8 %

p/
preliminary
Note: Figures may not add up due to rounding-off.
"0.0" denotes below ₱0.05 billion
Appendix 13. Foreign Bank Branches and Subsidiaries: Selected Performance Indicators
As of End-Periods Indicated
End-December
2020 2021 2022 p/

Liquidity
Cash and Due from Banks to Deposits 38.6 % 38.5 % 37.9 %
Liquid Assets to Deposits 1 80.4 % 79.3 % 76.2 %
Gross Loans to Deposits 75.6 % 75.8 % 75.5 %
Asset Quality 2
Allowance for Credit Losses to Total Loans 4.0 % 2.4 % 1.9 %
Gross Non-Performing Loans (NPL) to Total Loans 2.6 % 1.8 % 1.3 %
NPL Ratio 3 2.7 % 1.9 % 1.3 %
NPL Coverage Ratio 150.9 % 134.8 % 149.0 %
Non-Performing Assets (NPA) to Gross Assets 1.4 % 1.0 % 0.8 %
NPA Coverage Ratio 136.8 % 118.5 % 111.5 %
ROPA to Gross Assets 0.2 % 0.1 % 0.2 %
ROPA Coverage Ratio 25.2 % 24.3 % 17.2 %
Distressed Assets Ratio 3.3 % 2.6 % 2.2 %
Capital Adequacy
Total Capital Accounts to Total Assets 4 17.7 % 16.6 % 18.4 %
Capital Adequacy Ratio (Solo) 5 27.5 % 25.3 %
Profitability
Non-interest Income to Total Operating Income 6 31.3 % 36.5 % 62.6 %
Cost-to-Income 7 67.8 % 79.1 % 45.6 %
Return on Assets 8 (0.1 %) 0.5 % 3.0 %
Return on Equity 9 (0.4 %) 2.9 % 16.9 %

1
Liquid Assets refer to Cash and Due from Banks plus Financial Assets, net of amortization (net of Financial Assets in Equity Securities).
2
Ratios are computed in accordance with the NPL definition as prescribed under
3
Exclusive of Interbank Loans Receivable
4
Capital includes redeemable preferred shares
5
Refers to the ratio of qualifying capital to total risk-weighted assets. With the
6
Non-interest income includes dividend income
7
Refers to the ratio of non-interest expenses to total operating income
8
Refers to the ratio of annualized net profit to average assets.
9
Refers to the ratio of annualized net profit to average capital.
p/
preliminary
Appendix 14. Non-Banks with Quasi-Banking Functions (NBQBs)
Financial Highlights and Growth Rates
As of End-Periods Indicated
Financial Highlights Growth Rates
End-December End-December
2020 2021 r/ 2022 p/ 2021 r/ 2022 p/
In Billion ₱

Balance Sheet
Total Assets 193.0 168.3 151.3 (10.1 %) (12.8 %)
Cash and Due from Banks 27.1 15.8 8.8 (44.2 %) (41.7 %)
Interbank Loans Receivable (IBL) 0.0 0.0 0.0 (59.4 %) (40.1 %)
Loans, gross (inclusive of IBL) 140.9 142.0 131.0 (7.7 %) 0.7 %
Allowance for Probable Losses 4.4 5.6 2.8 (50.6 %) 27.5 %
Loans, net (inclusive of IBL) 136.5 136.3 128.2 (5.9 %) (0.1 %)
Investments, net 20.8 9.5 7.0 (26.4 %) (54.5 %)
ROPA, net 1.3 1.2 1.1 (11.0 %) (7.2 %)
Other Assets 8.6 6.7 7.2 8.2 % (22.2 %)
Total Liabilities 152.1 138.9 130.0 (6.4 %) (8.7 %)
Bills Payable 112.4 107.4 106.2 (1.1 %) (4.5 %)
Other Liabilities 39.7 31.5 23.8 (24.5 %) (20.6 %)
Total Capital Accounts 40.9 29.4 21.3 (27.8 %) (28.1 %)

Income Statement
Total Operating Income 8.4 8.6 6.8 (20.8 %) 2.7 %
Net Interest Income 6.6 7.0 6.4 (8.9 %) 6.0 %
Non-interest Income 1.8 1.6 0.5 (72.0 %) (9.1 %)
Operating Expenses 7.8 7.1 4.5 (36.2 %) (8.1 %)
Bad Debts/Provisions for Probable Losses 0.4 2.8 1.6 (41.1 %) 613.6 %
Other Operating Expenses 4.7 4.4 2.9 (33.2 %) (6.8 %)
Net Operating Income 0.6 1.5 2.3 54.0 % 137.5 %
Extraordinary Credits/(Charges) (0.0) 0.1 0.1 15.7 % (1,514.2 %)
Net Income Before Tax 0.6 1.6 2.4 51.0 % 162.0 %
Provisions for Income Tax (0.1) 0.3 0.6 99.0 % (650.9 %)
Net Income After Tax (NIAT) 0.7 1.3 1.8 40.1 % 96.6 %

r/
revised
p/
preliminary
Note: Figures may not add up due to rounding-off
"0.0" denotes less than ₱50 million
Appendix 15. Non-Banks with Quasi-Banking Functions (NBQBs)
Selected Performance Indicators
As of End-Periods Indicated
End-December
r/ p/
2020 2021 2022
Selected Ratios
Profitability
1/
Cost-to-Income 55.9 % 50.7 % 42.8 %
Return on Assets (ROA) 0.3 % 0.7 % 1.1 %
Return on Equity (ROE) 1.3 % 3.8 % 7.7 %
Asset Quality
Non-performing Loans (NPL) Ratio 9.6 % 9.9 % 5.9 %
NPL Coverage 32.8 % 40.1 % 36.2 %
Non-Performing Assets (NPA) to Gross Assets 7.6 % 8.9 % 5.9 %
NPA Coverage 30.9 % 37.7 % 34.2 %

1
Cost-to-Income Ratio refers to operating expenses, exclusive of bad debts and provisions to total operating income
r/
revised
p/
preliminary
Appendix 16. Non-Banks with Quasi-Banking Functions (NBQBs)
Profitability Indicators
For the Periods-Ended Indicated
End-December
r/ p/
2020 2021 2022
In Billion ₱

Total Operating Income 8.4 8.6 6.8

Net Interest Income 6.6 7.0 6.4
Interest Income 0.8 0.4 0.3
Interest Expenses 6.5 6.3 5.3
Non-interest Income 1.8 1.6 0.5
Fee-based Income 1.1 1.1 0.4
Trading Income 0.2 (0.0) (0.1)
Other Income 0.6 0.6 0.2
Operating Expenses 7.8 7.1 4.5
Bad Debts/Provisions for Probable Losses 0.4 2.8 1.6
Other Operating Expenses 4.7 4.4 2.9
Net Operating Income 0.6 1.5 2.3
Extraordinary Credits/(Charges) (0.0) 0.1 0.1
Net Income Before Tax 0.6 1.6 2.4
Provisions for Income Tax (0.1) 0.3 0.6
Net Income After Tax (NIAT) 0.7 1.3 1.8

Selected Ratios
1
Earning Asset Yield 0.4 % 0.3 % 0.2 %
2
Funding Cost 4.5 % 5.7 % 4.9 %
3
Interest Spread (4.0 %) (5.4 %) (4.7 %)
4
Net Interest Margin 3.4 % 4.8 % 4.5 %
Non-interest Income to Total Operating Income 21.3 % 18.8 % 6.7 %
5
Cost-to-Income 55.9 % 50.7 % 42.8 %
6
Return on Assets (RoA) 0.3 % 0.7 % 1.1 %
6
Return on Equity (RoE) 1.3 % 3.8 % 7.7 %

1 Earning Asset Yield refers to the ratio of interest income to average earning assets
2 Funding Cost refers to the ratio of interest expenses to average interest-bearing liabilities
3 Interest Spread refers to the difference between earning asset yield and funding cost
4 Net Interest Margin refers to the ratio of net interest income to average earning assets
5 Cost-to-Income Ratio refers to operating expenses, exclusive of bad debts and provisions to total

operating income
6 RoA and RoE refer to the ratio of annualized NIAT to average assets and capital, respectively.
r/
revised
p/
preliminary
Note: Figures may not add up due to rounding-off
Appendix 17. Non-Banks with Quasi-Banking Functions (NBQBs)
Asset Quality Indicators
As of End-Periods Indicated
Growth Rates
End-December End-December
r/ p/ r/ p/
2020 2021 2022 2021 2022
In Billion ₱

Total Assets 193.0 168.3 151.3 (12.8 %) (10.1 %)

1 197.7 174.1 154.4 (11.9 %) (11.3 %)
Gross Assets
Total Loan Portfolio (TLP) 140.9 142.0 131.0 0.7 % (7.7 %)
Interbank Loans Receivable (IBL) 0.0 0.0 0.0 (40.1 %) 0.0 %
TLP, net (inclusive of IBL) 136.5 136.3 128.2 (0.1 %) (5.9 %)
Non-Performing Loans (NPL) 13.5 14.1 7.7 4.1 % (45.2 %)
Loan Loss Reserves (LLR) 4.4 5.6 2.8 27.5 % (50.6 %)
ROPA, gross 1.5 1.4 1.4 (8.8 %) 1.7 %
Allowance for ROPA 0.2 0.2 0.3 (18.2 %) 90.6 %
Restructured Loans (RL), gross 1.3 2.1 2.8 67.1 % 30.7 %
RL, current 0.5 1.0 2.2 118.3 % 118.2 %
2 15.0 15.4 9.1 2.9 % (41.1 %)
Non-performing Assets (NPAs)
Allowance for Probable Losses on NPAs 4.6 5.8 3.1 25.4 % (46.4 %)

Selected Ratios
RL to TLP 0.3 % 1.5 % 2.1%
LLR to TLP 3.1 % 4.0 % 2.1%
NPL Ratio (inclusive of IBL) 9.6% 9.9% 5.9%
NPL Ratio (exclusive of IBL) 9.6% 9.9% 5.9%
3 32.8 % 40.1 % 36.2 %
NPL Coverage
NPA to Gross Assets 7.6 % 8.9 % 5.9 %
4 30.9 % 37.7 % 34.2 %
NPA Coverage

1
Gross Assets refer to Total Assets, net of reserves plus Loan Loss Reserves (LLR) plus provision for ROPA
2
NPA refers to NPLs plus ROPA, gross excluding performing sales contracts receivable per BSP Circular No. 380 dated 28 March 2003
3
NPL Coverage refers to the ratio of LLR to NPL
4
NPA Coverage refers to the ratio of valuation reserves (for Loans and ROPA) to NPAs
r/
revised
p/
preliminary
Appendix 18. Non-Stock Savings and Loans Associations (NSSLAs)
Financial Highlights and Growth Rates
As of End-Periods Indicated
Financial Highlights Growth Rates
End-December End-December
2020 2021 r/ 2022 p/ 2021
r/
2022
p/

In Billion ₱

Balance Sheet
Total Assets 266.9 283.8 299.6 6.3 % 5.6 %
Cash and Due from Banks 21.5 27.1 30.1 26.1 % 11.1 %
Loans, gross 234.2 246.3 252.9 5.1 % 2.7 %
Allowance for Probable Losses 20.9 24.3 23.5 16.1 % (3.1 %)
Loans, net (inclusive of IBL) 213.3 221.9 229.2 4.0 % 3.3 %
Investments, net 19.8 20.8 24.0 4.9 % 15.5 %
Other Assets 12.3 14.0 16.3 14.1 % 15.9 %
Total Liabilities 92.3 103.3 107.5 12.0 % 4.1 %
Deposit Liabilities 70.7 80.6 86.4 14.1 % 7.2 %
Bills Payable 12.4 5.4 1.8 (56.8 %) (66.7 %)
Other Liabilities 9.2 17.3 19.3 89.0 % 11.7 %
Total Capital Accounts 174.6 180.5 192.1 3.4 % 6.4 %

Income Statement
Total Operating Income 23.1 31.5 33.5 36.6 % 6.4 %
Net Interest Income 22.1 30.2 31.9 36.6 % 5.7 %
Non-interest Income 0.9 1.3 1.6 36.2 % 23.3 %
Operating Expenses 5.6 9.2 8.6 64.9 % (6.3 %)
Bad Debts/Provisions for Probable (1.1) (3.1) (2.1) 191.0 % (34.0 %)
Other Operating Expenses 4.5 6.1 6.6 35.0 % 7.9 %
Net Operating Income 17.5 22.3 24.9 27.5 % 11.6 %
Extraordinary Credits/(Charges) 0.1 0.1 0.1 (12.0 %) 54.2 %
Net Income Before Tax 17.5 22.3 25.0 27.4 % 11.7 %
Provisions for Income Tax 0.0 0.0 0.0 133.3 % 14.2 %
Net Income After Tax (NIAT) 17.5 22.3 24.9 27.3 % 11.7 %

r/
revised
p/
preliminary
Note: Figures may not add up due to rounding-off
"0.0" denotes less than ₱50 million
Appendix 19. Non-Stock Savings and Loan Associations (NSSLAs)
Selected Performance Indicators
As of End-Periods Indicated
End-December
r/ p/
2020 2021 2022

Profitability
1
Cost-to-Income 19.6 % 19.4 % 19.6 %
Return on Assets (RoA) 6.9 % 8.1 % 8.6 %
Return on Equity (RoE) 10.4% 12.6% 13.4%
Liquidity
Cash and Due from Banks to Deposits 30.4 % 33.6 % 34.8 %
2
Liquid Assets to Deposits 58.4 % 59.4 % 62.7 %
Loans, gross to Deposits 331.5 % 305.5 % 292.7 %
Asset Quality
Non-performing Loans (NPL) Ratio 7.9 % 8.0 % 8.1 %
NPL Coverage 112.8 % 123.9 % 115.4 %
Non-performing Assets (NPA) to Gross Assets 6.5 % 6.5 % 6.4 %
NPA Coverage 112.2 % 123.2 % 114.9 %
Capital Adequacy
Total Capital Accounts to Total Assets 65.4 % 63.6 % 64.1 %
Business Mix
Total Investments (gross) to Total Assets 7.4 % 7.3 % 8.0 %
Total Loans (gross) to Total Assets 87.8 % 86.8 % 84.4 %

1
Cost-to-Income Ratio refers to operating expenses, exclusive of bad debts and provisions to total operating income
2
Liquid Assets refers to Cash and Due from Banks plus Investments,net (less equity investments,net)
r/
revised
p/
preliminary
Note: Figures may not add up due to rounding-off
Appendix 20. Non-Stock Savings and Loan Associations (NSSLAs)
Profitability Indicators
For the Periods-Ended Indicated
Financial Highlights Growth Rates
End-December End-December
r/ p/ r/ p/
2020 2021 2022 2021 2022
In Billion ₱

Income Statement
Total Operating Income 23.1 31.5 33.5 36.6 % 6.4 %
Net Interest Income 22.1 30.2 31.9 36.6 % 5.7 %
Interest Income 25.4 33.9 35.6 33.4 % 4.8 %
Interest Expenses 3.3 3.7 3.6 12.0 % (2.4 %)
Non-interest Income 0.9 1.3 1.6 36.2 % 23.3 %
Fee-based Income 0.7 0.9 0.9 33.1 % 3.0 %
Trading Income 0.0 0.0 0.02 269.7 % 9.4 %
Other Income 0.3 0.4 0.6 40.0 % 72.1 %
Operating Expenses 5.6 9.2 8.6 64.9 % (6.3 %)
Bad Debts/Provisions for Probable Losses (1.1) (3.1) (2.1) 191.0 % (34.0 %)
Other Operating Expenses 4.5 6.1 6.6 35.0 % 7.9 %
Net Operating Income 17.5 22.3 24.9 27.5 % 11.6 %
Extraordinary Credits/(Charges) 0.1 0.1 0.1 (12.0 %) 54.2 %
Net Income Before Tax 17.5 22.3 25.0 27.4 % 11.7 %
Provisions for Income Tax 0.0 0.0 0.0 133.3 % 14.2 %
Net Income After Tax (NIAT) 17.5 22.3 24.9 27.3 % 11.7 %

Selected Ratios
1
Cost-to-Income 19.6 % 19.4 % 19.6 %
2
Return on Assets (RoA) 6.9 % 8.1 % 8.6 %
2
Return on Equity (RoE) 10.4 % 12.6 % 13.4 %

1
Cost-to-Income Ratio refers to operating expenses, exclusive of bad debts and provisions to total operating income
2
RoA and RoE refer to the ratio of annualized NIAT to average assets and capital, respectively.
r/
revised
revised
p/
preliminary
Note: Figures may not add up due to rounding-off
"0.0" denotes less than ₱50 million
Appendix 21. Non-Stock Savings and Loan Associations (NSSLAs)
Asset Quality Indicators
As of End-Periods Indicated
Growth Rates
End-December End-December
r/ p/ r/ p/
2020 2021 2022 2021 2022
In Billion ₱

Total Assets 266.9 283.8 299.6 6.3 % 5.6 %

1
Gross Assets 287.8 308.1 323.1 7.1 % 4.9 %
Total Loan Portfolio (TLP) 234.2 246.3 252.9 5.1 % 2.7 %
TLP, exclusive of IBL 234.2 246.3 252.9 5.1 % 2.7 %
TLP, net (inclusive of IBL) 213.3 221.9 229.2 4.0 % 3.3 %
Non-performing Loans (NPL) 18.5 19.6 20.4 5.7 % 4.0 %
Loan Loss Reserves (LLR) 20.9 24.3 23.5 16.1 % (3.1 %)
ROPA, gross 0.2 0.3 0.2 19.2 % (25.8 %)
2
Non-Performing Assets (NPAs) 18.8 19.9 20.6 5.9 % 3.5 %
Allowance for Probable Losses on NPAs 21.1 24.5 23.6 16.2 % (3.4 %)
Selected Ratios
LLR to TLP 8.9 % 9.9 % 9.3 %
NPL Ratio (inclusive of IBL) 7.9 % 8.0 % 8.1 %
3
NPL Coverage 112.8 % 123.9 % 115.4 %
NPA to Gross Assets 6.5 % 6.5 % 6.4 %
4
NPA Coverage 112.2 % 123.2 % 114.9 %

1 Gross Assets refer to Total Assets, net of reserves plus Loan Loss Reserves (LLR) plus provision for ROPA
2 NPA refers to NPLs plus ROPA, gross
3 NPL Coverage refers to the ratio of LLR to NPL
4 NPA Coverage refers to the ratio of Allowance for Probable Losses on NPAs to NPAs

r/ revised
p/ preliminary
Note: Figures may not add up due to rounding-off
"0.0" denotes less than ₱50 million
Appendix 22. Financial Institutions Under BSP Supervision/Regulation: Physical Composition
As of End-Periods Indicated

End-December 2021 End-December 2022 p/

TYPE OF FINANCIAL INSTITUTION (FI) Head Other
TOTAL Head Other
Offices Offices TOTAL
Offices Offices

BSP SUPERVISED/REGULATED FIs 1 36,471 2,579 33,892 37,327 2,589 34,738

I. BANKS 2 13,154 506 12,648 13,269 497 12,772

A. Universal and Commercial Banks 7,038 46 6,992 7,193 45 7,148

Universal Banks 6,456 21 6,435 6,846 22 6,824
Domestic
Private
Banks
Domestic Banks 5,803 12 5,791 5,995 13 5,982
Government Banks 643 3 640 841 3 838
Branches
Foreign
of Foreign
Bank Branches
Banks 10 6 4 10 6 4

Commercial Banks 582 25 557 347 23 324

Domestic
Private Banks
Domestic Banks 462 5 457 230 3 227
Foreign Bank Subsidiaries 98 2 96 98 2 96
Branches
Foreign
of Foreign
Bank Branches
Banks 22 18 4 19 18 1

B. Thrift Banks 2,738 47 2,691 2,592 43 2,549

Financial Institution-Linked Banks 1,301 13 1,288 1,154 11 1,143
Domestic Bank-Controlled 1,263 10 1,253 1,121 8 1,113
Foreign Bank-Controlled 38 3 35 33 3 30
Domestic NBFI-Controlled
Foreign NBFI-Controlled

Non-Linked 1,437 34 1,403 1,438 32 1,406

C. Rural and Cooperative Banks 3,378 413 2,965 3,478 403 3,075
Rural Banks 2,290 383 1,907 2,386 374 2,012
Microfinance-oriented Rural Banks 917 6 911 917 5 912
Cooperative Banks 171 24 147 175 24 151

D. Digital Banks 6 6

NON-BANK FINANCIAL INSTITUTIONS (NBFIs) 23,316 2,072 21,244 24,057 2,091 21,966

A. With Quasi-Banking Function 127 6 121 19 5 14

Investment Houses 1 1 1 1
Financing Companies 125 4 121 17 3 14
Other Non-Bank with QBF Function 1 1 1 1

B. Without Quasi-Banking Function 23,189 2,066 21,123 24,038 2,086 21,952

AAB - Forex Corporation 2 2 2 2
Credit Card Companies 4 4 4 4
Credit Granting Entities 9 9 9 9
Electronic Money Issuer - Others 53 36 17 62 43 19
Financing Companies 51 21 30 149 21 128
Government Non-Bank Financial Institutions 2 2 2 2
Investment Companies 1 1 1 1
Investment Houses 13 12 1 13 12 1
Lending Investors 1 1 1 1
Non-Stock Savings and Loan Associations 198 60 138 194 58 136
Pawnshops 15,388 1,152 14,236 15,999 1,172 14,827
Money Service Businesses 3 7,449 748 6,701 7,584 743 6,841
Remittance Agent (Subsidiary of a Bank)
Securities Dealers/Brokers 13 13 12 12
Trust Corporation 5 5 6 6

III.
III. OFFSHORE
OFFSHOREBANKING
BANKINGUNITS
UNITS(OBUs)
(OBUs) 1 1 1 1

P/1 Preliminary
Excludes Foreign Banks' Representative Offices (ROs) in the Philippines; Includes Money Service Businesses (MSBs)
2
Includes ROs abroad of domestic banks
3
Excludes Pawnshops multi-functioning as MSBs
p/
Preliminary
 Appendix 23. Philippine Banking System: Comparative Statement of Condition
As of End-Periods Indicated
In Billion ₱

1 Universal and Commercial

TOTAL 1, 2 Thrift Banks Rural and Cooperative Banks
Selected Accounts Banks
p/ p/ p/ p/
2021 2022 2021 2022 2021 2022 2021 2022
ASSETS 20,828.1 23,047.7 19,250.7 21,706.9 1,265.4 968.3 312.0 372.5
Cash and Due from Banks 3,571.5 3,271.7 3,213.2 3,031.9 286.6 156.6 71.7 83.2
3
Loan Portfolio (net) 10,994.3 12,198.4 10,112.3 11,419.6 729.5 578.9 152.5 199.9
Financial Assets (net) 5,195.9 6,066.9 4,985.7 5,846.3 153.1 164.9 57.1 55.8
Equity Investments (net) 276.9 262.5 274.1 259.4 2.4 2.5 0.5 0.6
ROPA (net) 95.9 104.3 69.5 78.0 17.1 16.3 9.3 10.1
Other Assets 693.6 1,143.9 596.0 1,071.8 76.7 49.2 20.9 23.0
LIABILITIES AND CAPITAL 20,828.1 23,047.7 19,250.7 21,706.9 1,265.4 968.3 312.0 372.5
Liabilities 18,254.2 20,341.3 16,898.7 19,213.1 1,100.5 825.5 255.0 302.7
Financial Liabilities Held for Trading 43.7 72.9 43.7 72.9 0.0 - - -
Financial Liabilities DFVPL - - - - - - - -
Deposit Liabilities 16,241.1 17,770.4 15,018.9 16,759.9 989.7 740.9 232.5 269.6
Residents 16,093.7 17,599.5 14,875.9 16,592.9 985.4 737.3 232.5 269.4
Peso Liabilities 13,789.0 14,980.6 12,621.0 14,009.5 935.8 701.9 232.3 269.2
Demand and NOW 4,706.3 4,977.2 4,544.6 4,840.5 155.6 130.1 6.0 6.6
Savings 6,502.0 6,875.1 6,043.2 6,501.6 287.2 183.4 171.6 190.1
Time 2,387.5 2,977.5 1,848.3 2,521.8 484.5 383.2 54.7 72.5
LTNCD 193.3 150.8 184.8 145.7 8.5 5.1 - -
Foreign Currency 2,304.7 2,618.9 2,254.9 2,583.3 49.6 35.4 0.2 0.2
Demand and NOW 73.2 83.8 73.1 83.7 0.0 0.1 - -
Savings 1,296.5 1,386.3 1,266.9 1,369.0 29.4 17.1 0.2 0.1
Time 935.0 1,148.8 914.9 1,130.6 20.1 18.2 0.0 0.0
LTNCD - - - - - - - -
Non-Residents 147.4 170.9 143.0 167.1 4.3 3.6 0.1 0.2
Peso Liabilities 68.9 84.8 66.3 82.2 2.5 2.4 0.1 0.2
Demand and NOW 24.1 26.1 23.6 25.7 0.4 0.4 0.0 0.0
Savings 38.7 49.6 36.7 47.7 2.0 1.9 0.1 0.1
Time 6.1 9.0 5.9 8.8 0.1 0.1 0.0 0.1
LTNCD - - - - - - - -
Foreign Currency 78.5 86.1 76.7 84.9 1.8 1.2 - -
Demand and NOW 2.5 3.7 2.5 3.7 0.0 0.0 - -
Savings 45.4 45.8 43.7 44.6 1.8 1.2 - -
Time 30.6 36.6 30.6 36.6 0.0 0.0 - -
LTNCD - - - - - - - -
Bills Payable 496.9 666.0 458.2 601.2 30.1 46.8 8.6 18.0
BSP 0.0 0.0 0.0 0.0 - - 0.0 -
Interbank Loans Payable 151.2 189.2 118.9 141.5 28.7 42.3 3.6 5.5
Other Deposits Substitutes 252.8 384.6 252.6 382.2 0.2 2.4 - -
Others 92.9 92.1 86.7 77.5 1.2 2.1 5.0 12.6
Unsecured Subordinated Debt 22.6 19.3 20.0 17.9 1.3 1.3 1.3 0.1
Redeemable Preferred Shares 0.2 0.3 0.0 0.0 0.0 0.0 0.2 0.3
Other Liabilities 1,449.6 1,812.5 1,357.9 1,761.2 79.3 36.5 12.3 14.8
Capital Accounts 2,574.0 2,706.4 2,352.0 2,493.8 164.9 142.8 57.1 69.8
Capital Stock 1,066.0 1,333.9 955.6 1,210.3 75.4 76.4 35.1 47.3
Assigned Capital 145.8 147.0 145.8 147.0 - - - -
Net Due to HO, Br & Ags / Accum Earnings 49.7 47.2 49.7 47.2 - - - -
4
Other Equity Instruments 16.4 16.0 14.5 14.5 0.7 1.1 1.2 0.5
5
Retained Earnings & Undivided Profits 1,296.1 1,162.2 1,186.5 1,074.8 88.9 65.4 20.8 22.1
1
Total assets adjusted to net off the account "Due From Head Office" with "Due to Head Office" of branches of foreign banks
2
Inclusive of branches of foreign banks with universal banking license, other foreign bank branches and subsidiaries, and 3 government banks, namely, Development Bank of the Philippines,
Land Bank of the Philippines, and Al Amanah Islamic Bank
3
Inclusive of Interbank Loans Receivable
4
Inclusive of Deposits for Stock Subscription
5
Inclusive of Other Comprehensive Income and Appraisal Increment Reserve
p/
preliminary
Note: “0.0” denotes a value below ₱0.05 billion
Figures may not add up due to rounding-off
 Appendix 24. Philippine Banking System: Comparative Statement of Income and Expenses
For the Periods-Ended Indicated
In Billion ₱

Universal and Rural and Cooperative

TOTAL Thrift Banks
Selected Accounts Commercial Banks 1 Banks
p/ p/ p/
2021 2022 2021 2022 2021 2022 2021 2022 p/

Operating Income 869.4 1,014.5 756.1 902.9 79.2 70.6 34.2 41.1

Net Interest Income 661.8 754.7 567.1 663.5 67.8 59.6 27.0 31.6
Interest Income 777.2 911.7 665.0 803.0 81.5 72.0 30.7 36.7
Provision for Losses on Accrued Interest 0.3 0.5 0.2 0.3 0.1 0.1 0.0 0.1
Less: Interest Expenses 115.1 156.5 97.7 139.2 13.6 12.3 3.7 5.0

Non-interest Income 207.6 259.9 189.0 239.4 11.4 11.0 7.2 9.5
Dividend Income 2.0 2.4 2.0 2.4 0.0 0.0 0.0 0.0
Fee-based Income 107.3 123.4 95.2 110.9 7.5 5.6 4.5 6.9
Trading Income/(Loss) 9.7 16.5 9.9 16.8 (0.2) (0.3) 0.0 0.0
Foreign Exchange Income/(Loss) 5.3 12.4 5.2 12.3 0.1 0.1 0.0 0.0
Other Income/(Loss) 83.4 105.2 76.7 97.0 4.0 5.7 2.7 2.5

Non-Interest Expenses 512.4 562.4 435.9 489.5 50.3 43.1 26.2 29.9

Losses/Recoveries on Financial Assets (97.7) (88.6) (85.5) (79.8) (10.1) (6.4) (2.1) (2.5)

Net Profit Before Share in the Profit/(Loss) of

Unconsolidated Subsidiaries, Associates and Joint 259.3 363.5 234.7 333.6 18.8 21.2 5.9 8.8
Ventures Accounted for Using the Equity Method

Share in the Profit/(Loss) of Unconsolidated

Subsidiaries, Associates and Joint Ventures 20.7 23.8 20.6 23.6 0.1 0.2 0.0 0.1
Accounted for Using the Equity Method

Total Profit/Loss Before Tax and Before Minority

280.1 387.4 255.3 357.2 18.8 21.4 5.9 8.8
Interest

Income Tax Expense 55.3 77.3 47.9 69.8 6.0 5.1 1.4 2.3
Total Profit/Loss After Tax and Before Minority
224.8 310.1 207.4 287.3 12.8 16.3 4.5 6.5
Interest
Minority Interest in Profit/(Loss) of Subsidiaries - - - - -

NET PROFIT/(LOSS) 224.8 310.1 207.4 287.3 12.8 16.3 4.5 6.5

Selected Ratio
Profitability
Return on Assets 1.1% 1.4% 1.1% 1.4% 1.1% 1.5% 1.5% 1.9%
Return on Equity 9.0% 11.7% 9.1% 11.9% 7.8% 10.6% 8.1% 10.2%

1
Inclusive of branches of foreign banks with universal banking license, other foreign bank branches and subsidiaries, and 3 government banks, namely, Development Bank of the Philippines,
Land Bank of the Philippines, and Al Amanah Islamic Bank
p/
preliminary
Note: “0.0” denotes a value below ₱0.05 billion
Figures may not add up due to rounding-off
Appendix 25. Philippine Banking System: Selected Performance Indicators
As of End-Periods Indicated

Universal and Commercial

TOTAL Thrift Banks Rural and Cooperative Banks
Selected Ratios Banks
p/ p/
2021 2022 2021 2022 p/ 2021 2022 2021 2022 p/
Profitability
Earning Asset Yield 1 4.1% 4.4% 3.8% 4.2% 7.2% 6.8% 11.2% 11.6%
Funding Cost 2 0.7% 0.9% 0.6% 0.8% 1.4% 1.3% 1.6% 1.9%
Interest Spread 3 3.4% 3.5% 3.1% 3.3% 5.8% 5.5% 9.6% 9.7%
Net Interest Margin 4 3.5% 3.6% 3.2% 3.4% 6.0% 5.6% 9.9% 10.0%
5
Non-Interest Income to Total Operating Income 23.9% 25.6% 25.0% 26.5% 14.4% 15.6% 21.1% 23.1%
Cost-to-Income 6 58.7% 55.2% 57.5% 54.0% 62.5% 60.0% 76.4% 67.1%
Return on Assets (RoA) 7 1.1% 1.4% 1.1% 1.4% 1.1% 1.5% 1.5% 1.9%
Return on Equity (RoE) 7 9.0% 11.7% 9.1% 11.9% 7.8% 10.6% 8.1% 10.2%
Liquidity 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Cash and Due from Banks to Deposits 22.0% 18.4% 21.4% 18.1% 29.0% 21.1% 30.8% 30.9%
Liquid Assets to Deposits 8 54.0% 52.6% 54.6% 53.0% 44.4% 43.4% 55.4% 51.6%
Loans, gross to Deposits 70.1% 71.0% 69.6% 70.4% 77.5% 82.0% 71.7% 79.7%
Asset Quality 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Restructured Loans to Total Loan Portfolio (TLP) 3.1% 2.6% 3.2% 2.6% 1.9% 2.2% 3.3% 2.6%
Allowance for Credit Losses (ACL) to TLP 3.5% 3.4% 3.3% 3.2% 4.9% 4.7% 8.5% 7.0%
Gross Non-Performing Loans (NPL) to TLP 4.0% 3.2% 3.6% 2.9% 7.7% 7.1% 12.8% 8.9%
Net NPL to TLP 2.1% 1.5% 1.8% 1.3% 4.7% 3.9% 6.3% 3.7%
NPL Ratio net of IBL 4.1% 3.2% 3.7% 2.9% 7.7% 7.1% 12.8% 8.9%
NPL Coverage (ACL to Gross NPL) 87.7% 107.0% 92.8% 113.8% 63.6% 66.4% 66.3% 79.0%
Non-Performing Assets (NPA) to Gross Assets 2.7% 2.2% 2.4% 2.0% 6.1% 6.2% 9.3% 7.4%
NPA Coverage (Allowance on NPA to NPA) 75.3% 87.9% 80.7% 94.8% 53.4% 53.2% 51.1% 57.1%
ROPA to Gross Assets Ratio 0.6% 0.5% 0.5% 0.5% 1.6% 1.8% 2.7% 2.5%
ROPA Coverage Ratio 28.5% 28.2% 30.9% 30.7% 23.9% 22.1% 14.6% 14.3%
Distressed Assets Ratio 7.2% 6.0% 6.7% 5.6% 11.3% 11.1% 18.8% 14.1%
Capital Adequacy 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total Capital Accounts to Total Assets 9 12.4% 11.7% 12.2% 11.5% 13.0% 14.8% 18.354% 18.8%
Capital Adequacy Ratio (Solo) 10 16.7% 15.7% 16.5% 15.4% 18.5% 19.2% 19.1% 20.0%

1
Earning Asset Yield refers to the ratio of interest income to average earning assets.
2
Funding Cost refers to the ratio of interest expenses to average interest-bearing liabilities.
3
Interest Spread refers to the difference between earning asset yield and funding cost.
4
Net Interest Margin refers to the ratio of net interest income to average earning assets.
5
Non-Interest income includes dividends income.
6
Cost-to-Income Ratio refers to the ratio of non-interest expenses to total operating income.
7
RoA and RoE refer to the ratios of net profit to average assets and capital, respectively.
8
Liquid Assets refer to Cash and Due from Banks plus Financial Assets, net of amortization (net of financial assets in equity securities).
9
Total capital accounts includes redeemable preferred shares.
10
Refers to the ratio of qualifying capital to total risk-weighted assets.
p/
preliminary
 Appendix 26. Philippine Banking System: Contingent Accounts
As of End-Periods
COMPARATIVE Indicated
STATEMENT OF CONDITION
In
AsBillion ₱
of Semesters-Indicated

Universal and Commercial

TOTAL Thrift Banks
Banks
Selected Accounts
p/ p/ p/
2021 2022 2021 2022 2021 2022

TRADE-RELATED ACCOUNTS 172.3 189.5 171.6 188.2 0.7 1.3

Domestic Commercial Letters of Credit Outstanding 12.6 4.0 12.5 4.0 0.0 0.0

Foreign Commercial Letters of Credit Outstanding 124.5 150.5 124.1 149.4 0.5 1.2

LCs - Confirmed 12.1 20.7 12.1 20.7 - -

Shipside Bonds/Airway Bills 23.1 14.2 22.9 14.1 0.2 0.1

BANK GUARANTEES 465.0 562.8 464.6 562.3 0.4 0.5

Stand-by Letters of Credit 372.6 462.8 372.2 462.3 0.4 0.5

Outstanding Guarantees Issued 92.4 100.0 92.4 100.0 0.0 0.0

COMMITMENTS 1,841.0 1,853.2 1,838.0 1,851.2 2.9 1.8

Underwritten Accounts Unsold - - - - - -

Committed Credit Lines for CPs Issued 0.7 0.4 0.6 0.3 0.1 0.1

Credit Card Lines 1,223.9 1,205.5 1,221.8 1,205.5 2.1 -

Others 616.4 647.3 615.5 645.4 0.8 1.8

DERIVATIVES INSTRUMENTS * 3,759.4 4,345.4 3,759.3 4,345.3 0.2 0.1

Interest Rate Contracts 785.6 800.1 785.6 800.1 - -

Foreign Exchange Contracts 2,972.9 3,541.0 2,972.7 3,540.9 0.2 0.1

Equity Contracts - - - - - -

Credit Derivatives 1.0 4.3 1.0 4.3 - -

TRUST DEPARTMENT ACCOUNTS 3,712.1 3,856.2 3,684.1 3,828.4 28.0 27.8

* Notional Amounts of Derivatives Held For Trading (Stand-Alone and Embedded)

p/
preliminary
Note: Figures may not add up due to rounding-off
Appendix 27. Total Trust (Philippine Banks and NBFIs): Assets and Accountabilities by Industry
As of End-Periods Indicated
In Billion
As of end-December
₱ 2009

Non-Bank Financial Institutions

TOTAL Universal and Commercial Banks Thrift Banks
Selected Accounts (NBFIs)

2021 2022 p/ 2021 2022 p/ 2021 2022 p/ 2021 2022 p/

Total Assets 5,058.2 5,345.9 3,684.1 3,828.4 28.0 27.8 1,346.1 1,489.7

Peso / Regular Assets 4,132.5 4,280.7 2,920.8 2,908.7 26.4 25.7 1,185.3 1,346.3
Cash and Due from banks 0.3 0.4 0.3 0.4 0.0 - 0.0 0.0
Deposits in Banks 941.7 1,041.8 787.3 871.6 3.3 4.6 151.1 165.6
Financial Assets, net 2,999.5 3,033.7 2,005.2 1,912.5 15.9 13.9 978.4 1,107.3
Loans, net 109.8 126.5 68.1 71.4 4.1 4.0 37.6 51.1
Equity Investments (net) 3.0 2.9 3.0 2.9 0.0 0.0 0.0 0.0
ROPA (net) 0.1 0.2 0.1 0.2 - - 0.0 0.0
Other assets 78.1 75.1 56.9 49.7 3.1 3.1 18.2 22.3
- -
FCDU/EFCDU Assets 925.7 1,065.2 763.3 919.7 1.6 2.1 160.8 143.4
Cash and Due from banks - - - - - - - -
Deposits in Banks 144.5 139.2 110.9 104.8 0.5 0.7 33.1 33.7
Financial Assets, net 493.1 497.5 365.6 387.6 0.9 1.3 126.6 108.5
Loans, net 1.3 1.3 1.1 1.2 0.2 0.1 - -
Equity Investments (net) 0.0 0.0 0.0 0.0 - - - -
ROPA (net) - - - - - - - -
Other assets 286.9 427.3 285.7 426.1 0.0 0.0 1.1 1.2

Total Accountabilities 5,058.2 5,345.9 3,684.1 3,828.4 28.0 27.8 1,346.1 1,489.7
- -
Peso / Regular Accountabilities 4,132.5 4,280.7 2,920.8 2,908.7 26.4 25.7 1,185.3 1,346.3
Wealth/Asset/Fund Management Accounts 3,977.5 4,123.2 2,783.8 2,773.6 25.9 25.6 1,167.7 1,324.0
UITF 1,111.1 783.2 819.5 533.4 1.1 0.9 290.5 248.8
Employee Benefit 503.2 512.9 342.3 345.9 4.2 4.3 156.7 162.8
Pre-Need 128.2 125.3 87.5 87.3 0.5 0.4 40.3 37.6
Others-Institutional Accounts 1,126.9 1,340.8 614.7 679.8 9.5 9.5 502.7 651.4
Personal Trust 364.6 340.9 310.7 301.1 0.2 0.2 53.7 39.5
Personal Pension Fund - - - - - - - -
Personal Retirement Fund 0.1 0.1 0.1 0.1 - - - -
Others-Individual Accounts 743.4 1,020.0 609.0 825.9 10.6 10.3 123.9 183.8
Other Fiduciary Services 154.4 156.7 136.4 134.3 0.5 0.1 17.6 22.3
Advisory/Consultancy 0.0 0.0 0.0 0.0 - - 0.0 0.0
Special Purpose Trust 0.6 0.8 0.6 0.8 - - - -
FCDU/EFCDU Accountabilities 925.7 1,065.2 763.3 919.7 1.6 2.1 160.8 143.4
Wealth/Asset/Fund Management Accounts 624.8 628.8 464.1 487.7 1.1 1.6 159.6 139.5
UITF 194.2 157.5 97.5 76.5 - - 96.7 81.0
Employee Benefit 13.1 11.9 12.7 11.5 0.0 0.0 0.4 0.5
Pre-Need 0.5 0.7 0.5 0.7 - - - -
Others-Institutional Accounts 107.7 113.8 59.5 72.4 0.3 0.3 47.8 41.0
Personal Trust 56.1 59.0 48.2 51.0 0.4 0.4 7.5 7.6
Personal Pension Fund - - - - - - - -
Personal Retirement Fund 0.0 0.0 0.0 0.0 - - - -
Others-Individual Accounts 253.1 285.8 245.6 275.7 0.4 0.8 7.2 9.4
Other Fiduciary Services 300.9 436.5 299.2 432.0 0.5 0.6 1.2 3.9
Advisory/Consultancy - - - - - - - -
Special Purpose Trust - - - - - - - -
p/
preliminary
Note: Figures may not add up due to rounding-off.
“0.0” denotes below ₱0.0005 billion
Other fiduciary services include other fiduciary services-UITF
Appendix 28. Total Trust (Philippine Banks and NBFIs): Assets and Accountabilities by Type
As of End-Periods Indicated
In Billion ₱

TOTAL Trust Agency Other Fiduciary Advisory and Consultancy Special Purpose
Selected Accounts
2021 2022 p/ 2021 2022 p/ 2021 2022 p/ 2021 2022 p/ 2021 2022 p/ 2021 2022 p/

Total Assets 5,058.2 5,345.9 2,395.2 2,043.4 2,207.0 2,708.6 455.3 593.2 0.0 0.0 0.6 0.8

Peso / Regular Assets 4,132.5 4,280.7 2,080.9 1,745.3 1,896.6 2,377.9 154.4 156.7 0.0 0.0 0.6 0.8
Cash and Due from banks 0.3 0.4 0.3 0.3 0.0 - 0.0 0.1 - - - -
Deposits in Banks 941.7 1,041.8 626.6 371.7 229.4 582.5 85.7 87.6 - - 0.0 0.0
Financial Assets, net 2,999.5 3,033.7 1,406.0 1,323.9 1,550.9 1,661.6 42.0 47.7 - - 0.6 0.6
Loans, net 109.8 126.5 9.5 9.6 100.3 116.6 - - - - - 0.2
Equity Investments (net) 3.0 2.9 1.6 1.7 1.0 1.0 0.4 0.2 - - - -
ROPA (net) 0.1 0.2 0.0 0.0 - - 0.1 0.2 - - - -
Other assets 78.1 75.1 36.9 38.1 15.0 16.2 26.2 20.8 0.0 0.0 0.0 0.0
FCDU/EFCDU Assets 925.7 1,065.2 314.3 298.1 310.5 330.7 300.9 436.5 - - - -
Cash and Due from banks - - - - - - - - - - - -
Deposits in Banks 144.5 139.2 113.5 104.2 13.7 24.0 17.3 11.0 - - - -
Financial Assets, net 493.1 497.5 198.5 190.8 292.8 301.4 1.8 5.3 - - - -
Loans, net 1.3 1.3 - - 1.3 1.3 - - - - - -
Equity Investments (net) 0.0 0.0 - - 0.0 0.0 - - - - - -
ROPA (net) - - - - - - - - - - - -
Other assets 286.9 427.3 2.3 3.1 2.7 4.0 281.8 420.2 - - - -

Total Accountabilities 5,058.2 5,345.9 2,395.2 2,043.4 2,207.0 2,708.6 455.3 593.2 0.0 0.0 0.6 0.8

Peso / Regular Accountabilities 4,132.5 4,280.7 2,080.9 1,745.3 1,896.6 2,377.9 154.4 156.7 0.0 0.0 0.6 0.8
Wealth/Asset/Fund Management Accounts 3,977.5 4,123.2 2,080.9 1,745.3 1,896.6 2,377.9 - - - - - -
UITF 1,111.1 783.2 1,111.1 783.2 - - - - - - - -
Employee Benefit 503.2 512.9 447.8 454.9 55.4 58.0 - - - - - -
Pre-Need 128.2 125.3 127.4 124.6 0.7 0.7 - - - - - -
Others-Institutional Accounts 1,126.9 1,340.8 29.5 29.7 1,097.4 1,311.1 - - - - - -
Personal Trust 364.6 340.9 364.6 340.9 - - - - - - - -
Personal Pension Fund - - - - - - - - - - - -
Personal Retirement Fund 0.1 0.1 0.1 0.1 - - - - - - - -
Others-Individual Accounts 743.4 1,020.0 0.4 12.0 743.0 1,008.0 - - - - - -
Other Fiduciary Services 154.4 156.7 - - - - 154.4 156.7 - - - -
Advisory/Consultancy 0.0 0.0 - - - - - - 0.0 0.0 - -
Special Purpose Trust 0.6 0.8 - - - - - - - - 0.6 0.8
FCDU/EFCDU Accountabilities 925.7 1,065.2 314.3 298.1 310.5 330.7 300.9 436.5 - - - -
Wealth/Asset/Fund Management Accounts 624.8 628.8 314.3 298.1 310.5 330.7 - - - - - -
UITF 194.2 157.5 194.2 157.5 - - - - - - - -
Employee Benefit 13.1 11.9 12.3 10.9 0.8 1.0 - - - - - -
Pre-Need 0.5 0.7 0.5 0.7 - - - - - - - -
Others-Institutional Accounts 107.7 113.8 15.6 19.4 92.1 94.4 - - - - - -
Personal Trust 56.1 59.0 56.1 59.0 - - - - - - - -
Personal Pension Fund - - - - - - - - - - - -
Personal Retirement Fund 0.0 0.0 0.0 0.0 0.0 0.0 - - - - - -
Others-Individual Accounts 253.1 285.8 35.6 50.5 217.5 235.3 - - - - - -
Other Fiduciary Services 300.9 436.5 - - - - 300.9 436.5 - - - -
Advisory/Consultancy - - - - - - - - - - - -
Special Purpose Trust - - - - - - - - - - - -
p/
preliminary
Note: Figures may not add up due to rounding-off.
“0.0” denotes below ₱0.0005 billion
Other fiduciary services include other fiduciary services-UITF
Appendix 29. Total Trust (Philippine Banks and NBFIs): Income and Expenses
For the Periods-Ended Indicated
In Billion ₱

Universal and Non-bank Financial

TOTAL Thrift Banks
Commercial Banks Institutions (NBFIs)
Selected Accounts

2021 2022 p/ 2021 2022 p/ 2021 2022 p/ 2021 2022 p/

Trust Income 13.7 14.4 9.4 9.6 0.1 0.1 4.2 4.7

Fees and Commissions 13.3 13.7 9.2 9.3 0.1 0.1 3.9 4.3
Other Income 0.5 0.7 0.2 0.3 - - 0.2 0.3

Trust Expenses 6.3 7.2 3.1 3.4 0.1 0.1 3.1 3.7

Compensation/Fringe Benefits 2.6 2.9 1.6 1.7 0.0 0.0 0.9 1.2
Taxes and Licenses 1.1 1.2 0.6 0.6 0.0 0.0 0.5 0.6
Other Administrative Expenses 1.1 1.4 0.5 0.6 0.0 0.0 0.5 0.8
Depreciation/Amortization 0.3 0.2 0.1 0.1 0.0 0.0 0.2 0.1
Allocated Indirect Expenses 0.1 0.2 0.0 0.1 0.0 0.0 0.0 0.1
Other Expenses 1.3 1.3 0.3 0.3 0.0 0.0 1.0 1.0

Net Income 7.4 7.2 6.3 6.2 0.1 0.1 1.1 1.0

p/
preliminary
Note: Figures may not add up due to rounding-off.
“0.0” denotes below ₱0.0005 billion
Appendix 30. Foreign Bank Branches and Subsidiaries: Balance Sheet by Industry
As of Periods-Ended Indicated
In Billion ₱

Foreign Bank Foreign Bank

TOTAL
Selected Accounts Branches Subsidiaries

2021 2022 p/ 2021 2022 p/ 2021 2022 p/

ASSETS 1,396.6 1,417.6 1,211.2 1,229.1 185.4 188.5

Cash and Due from Banks 341.5 331.3 305.5 301.9 36.0 29.4
Financial Assets (net) 362.0 335.0 316.6 291.1 45.3 43.9
Loan Portfolio (inclusive of IBL and RRPs), net 656.3 647.9 563.7 547.7 92.6 100.2
Equity Investments (net) 2.4 2.8 2.4 2.8 -
ROPA (net) 1.9 3.0 0.0 0.0 1.9 3.0
Other Assets 32.5 97.7 22.9 85.7 9.6 12.0
-
LIABILITIES AND CAPITAL 1,396.6 1,417.6 1,211.2 1,229.1 185.4 188.5

Liabilities 1,164.4 1,156.4 1,007.3 996.1 157.1 160.3

Financial Liabilities Held for Trading 21.4 36.5 21.1 36.0 0.3 0.5

Financial Liabilities DFVPL - - -

Deposit Liabilities 887.4 874.5 755.1 742.2 132.3 132.3

Peso Liabilities 555.7 522.9 451.7 424.9 104.1 98.0

Demand and NOW 316.1 324.3 271.3 283.8 44.8 40.6

Savings 167.2 134.2 140.2 111.3 27.0 22.9

Time/LTNCD 72.4 64.4 40.1 29.8 32.2 34.5

Foreign Currency 331.6 351.6 303.4 317.3 28.2 34.3

Demand and NOW 62.2 62.2 62.2 62.2 0.0 0.1

Savings 245.1 237.8 226.7 217.1 18.4 20.6

Time/LTNCD 24.3 51.5 14.5 38.0 9.8 13.6

Due to 170.2 100.2 170.1 100.1 0.1 0.1

Due to Other Banks 44.8 50.5 44.8 50.5 -

Due to Treasurer of the Philippines 0.5 0.7 0.5 0.6 0.1 0.1

Due to PDIC 0.5 0.5 0.4 0.4 0.1 0.1

Due to BSP 0.0 0.0 0.0 0.0 -

Due to Head Office/Branch/Agency (Philippine
124.4 48.5 124.4 48.5
Branches of Foreign Banks) - -
Bills Payable 31.5 31.7 16.7 15.7 14.9 16.0

Deposit Substitutes 11.1 8.6 11.1 8.6 0.0 0.0

Others 20.5 23.1 5.6 7.1 14.9 16.0

Unsecured Subordinated Debt 2.0 - - - 2.0 -

Redeemable Preferred Shares - - -
Other Liabilities 51.8 113.5 44.3 101.9 7.5 11.4
Capital Accounts 232.2 261.3 204.0 233.1 28.3 28.2
Capital Stock 21.6 21.6 - 21.6 21.6
Retained Earnings and Undivided Profits 15.1 45.4 8.5 38.8 6.7 6.6
Other Equity Instruments - - - - - -
Deposit Subscription - - - -
Assigned Capital 145.8 147.0 145.8 147.0 - -
Net Due to Head Office, Branch and Agency/Accumulated 49.7
Earnings 47.2 49.7 47.2 - -
-
p/
preliminary
Note: Figures may not add up due to rounding-off.
Appendix 31. Foreign Bank Branches and Subsidiaries: Income and Expenses by Industry
For the Periods-Ended Indicated
In Billion ₱

Foreign Bank Foreign Bank

TOTAL
Selected Accounts Branches Subsidiaries

2021 2022 p/ 2021 2022 p/ 2021 2022 p/

Operating Income 54.4 108.1 45.3 98.6 9.0 9.5

Net Interest Income 34.5 40.5 27.1 33.9 7.4 6.6
Interest Income 39.0 49.0 30.1 39.7 8.9 9.3
Provision for Losses on Accrued Interest 4.4 0.1 3.0 0.0 0.1 0.1
Less: Interest Expenses 0.1 8.4 0.0 5.8 1.3 2.6
Non-interest Income 19.9 67.6 18.2 64.7 1.6 2.9
Dividend Income 0.0 0.0 0.0 0.0 0.0 0.0
Fee-based Income 11.1 11.0 10.4 10.1 0.8 0.9
Trading Income/(Loss) 6.6 10.4 6.3 8.8 0.2 1.6
Other Income/(Loss) 2.1 46.2 1.5 45.7 0.6 0.5

Non-Interest Expenses 43.0 49.4 35.6 41.7 7.5 7.6

Losses/Recoveries on Financial Assets 0.7 (2.6) 1.4 (2.1) (0.7) (0.5)
Net Profit Before Share in the Profit/(Loss) of Unconsolidated
Subsidiaries, Associates and Joint Ventures Accounted for Using 12.1 56.2 11.2 54.8 0.9 1.4
the Equity Method
Share in the Profit/(Loss) of Unconsolidated Subsidiaries,
Associates and Joint Ventures Accounted for Using the Equity (0.0) 0.1 (0.0) 0.1 - -
Method
Total Profit/Loss Before Tax and Before Minority Interest 12.1 56.3 11.2 54.9 0.9 1.4
Income Tax Expense 5.3 14.5 4.7 13.9 0.6 0.6
Total Profit/Loss After Tax and Before Minority Interest 6.8 41.8 6.5 41.0 0.3 0.8
Minority Interest in Profit/(Loss) of Subsidiaries - - - - - -
NET PROFIT/(LOSS) 6.8 41.8 6.5 41.0 0.3 0.8

Selected Ratios
Profitability
Return on Assets 0.5% 3.0% 0.6% 3.4% 0.2% 0.4%
Return on Equity 2.9% 16.9% 3.2% 18.8% 1.1% 2.8%
p/
preliminary
Note: Figures may not add up due to rounding-off.
 Second Semester of 2022
Published by
Supervisory Policy and Research Department
Financial Supervision Sector
Copyright 2022