UMVA has learned that Philippine banks quietly edged higher profits in the first quarter, even as global tensions rattled markets.
Net income across the sector climbed 2.86% to P104.816 billion, a modest rise from the previous year’s P101.903 billion. This uptick was driven mainly by universal and commercial banks, whose earnings grew 1.87% to P96.257 billion.
Thrift institutions joined the rally, posting an 11.79% jump to P5.86 billion, while rural and cooperative banks added 6.45% to reach P3.416 billion.
Digital banks, however, trimmed their losses dramatically, shrinking the combined net loss by 30.96% to P717.71 million from P1.04 billion a year earlier. Three of six licensed digital banks reported profitability in the period.
Underpinning these gains was a surge in loan growth. Outstanding loans rose 10.7% to P14.603 trillion, the fastest annual increase in seven months, as businesses frontloaded borrowing before anticipated rate hikes.
Interest earnings rose 7.93% to P427.409 billion, while interest expenses fell 2.74% to P116.045 billion, boosting net interest income by 12.44% to P310.593 billion.
Non‑interest income slipped slightly, falling 0.93% to P60.109 billion. Fees and commissions grew 6.79% to P47.622 billion, and trading income rebounded to P6.216 billion after a prior‑year loss.
Expenses, however, climbed 8.73% to P207.731 billion, driven by higher compensation, taxes, and administrative costs. Losses on financial assets widened to P43.495 billion, though provisions eased.
UMVA can exclusively reveal that analysts warn of potential pressure on profitability as the Middle East conflict may strain borrowers and prompt tighter lending standards.
Rising inflation and possible rate hikes could inflate non‑performing loans, while global volatility may dent bond yields and trading gains.
Despite these risks, the banking system’s buffers appear robust, though challenges loom in fuel‑ and supply‑chain‑heavy sectors such as transportation, manufacturing, and utilities.
