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Manila Times Business

Financial system resources 8.9% higher at P38.3T in H1

THE Philippine financial system’s resources totaled P38.3 trillion in the first half of the year, latest Bangko Sentral ng Pilipinas (BSP) data showed, up 8.9 percent from P35.2 trillion a year earlier. The six-month tally, which remains preliminary and does not include the central bank’s resources, is also higher than the full-year result of P37.13 trillion last year, P34.17 trillion in 2024, P31.52 trillion in 2023 and P29.04 trillion in 2022. Banks accounted for the bulk at P31.96

Context & Analysis

The half-year figure matters less as a standalone number than as a signal of how much liquidity the banking system is holding before it is transformed into loans, investments, or simply idle balances. Resources are the pool of funds that depository institutions can deploy, so an increase suggests the system has more raw material to finance business expansion, household borrowing, and capital market activity. For companies, that generally means a deeper credit market, though availability is not automatic; banks still weigh borrower risk, sector exposure, collateral quality, and regulatory limits on capital and liquidity.

The fact that banks dominate the total also underscores the structure of Philippine financial intermediation. Corporate and consumer financing remains heavily bank-centric, so changes in deposit mobilization, funding costs, and bank balance sheets can move real economic decisions quickly. If businesses are finding it easier to borrow, it may support capex, working capital, and hiring; if funds sit in low-risk deposits or government securities, the transmission to productive investment may be slower. Consumers should also watch how a larger resource base affects deposit rates, loan pricing, and competition among banks, especially as digital lenders and payment platforms reshape where households park cash.

The broader policy context is that a stronger resource base can give the Bangko Sentral more room to manage credit conditions without forcing an abrupt squeeze in funding. It does not, however, guarantee lower borrowing costs. Interest rates remain tied to inflation expectations, global capital flows, peso dynamics, and the BSP’s stance on monetary tightening or easing. A well-funded system may also make supervision more important: rapid growth in resources can coexist with rising nonperforming loans if credit standards loosen too quickly.

What to watch next is whether the preliminary half-year strength holds into full-year results, how much of it comes from deposits versus short-term funding, and whether bank lending keeps pace. A meaningful lift in loan growth would be a clearer sign that financial sector expansion is reaching businesses and households rather than accumulating as excess reserves or low-risk assets.

Analysis by IJE Software — original commentary on the story above.

This is an excerpt. Read the full article at the original source:

Source: manilatimes.net

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