11/14/2020 Bangko Sentral ng Pilipinas Media and Research

Media and Research - Press Releases

 

Philippine Financial System Pulls Through the

COVID-19 Pandemic
November 05, 2020
 
The Bangko Sentral ng Pilipinas (BSP) releases the enhanced Report on the Philippine Financial
System for the First Semester of 2020.1 The Report highlights the narrative of the Philippine financial
system as it entered the COVID-19 pandemic in a position of strength, and stayed relatively sound and
stable while providing continued support to the financing needs of the domestic economy.

“Despite the immense economic disruption following the outbreak of COVID-19, decisive, time-bound
and wide-ranging policy responses have helped to prevent a seizing-up of the banking system”, BSP
Governor Benjamin Diokno said. The impact of the pandemic on the overall condition and performance
of the banking system, which remains the core of the domestic financial system, has been
manageable.

Indeed, the Enhanced Community Quarantine (ECQ) prompted banks to adjust their daily operations
while the slowdown in economic activities affected their borrowers’ capacity to pay.  However, with the
issuance of BSP monetary and regulatory relief measures presented in the Report’s Box Article, the
banking system managed to post growth in assets, loans, deposits, profitability, as well as stable
capital and liquidity buffers. During the first semester of 2020, the total assets, loans and deposits of
both the universal and commercial banking (U/KB) and rural and cooperative banking (RCB) industries
registered growth while that of the thrift banking (TB) industry declined, largely driven by the
consolidation of subsidiary TBs with their parent banks.

The financial soundness indicators (FSIs), which assessed the banking system’s strengths and
weaknesses, affirmed that the banking system is resilient during the first half of 2020.  Moreover, the
FSI analysis implies that consequent risks from lending should be monitored moving forward especially
in the event of excessive uncertainties that could place additional pressures on the banking system.  A
bright spot amid the pandemic was likewise discussed in Box Article 2. In particular, the pandemic
accelerated the digital transformation of the banking system through the increased usage of digital
financial platforms. This was driven by the opening of around 4.1 million digital accounts among banks
and non-bank electronic money issuers (EMIs) and significant increase in Insta Pay and PesoNet
transactions during the ECQ period.

The Report also highlighted that foreign currency deposit system, trust entities, foreign banks in the
country, quasi-banks and other non-bank financial institutions all showed positive performance during
the review period. Meanwhile, the section on pawnshops and money service businesses (MSBs)
highlighted their role as critical access points for the improved service delivery of the financial system.

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11/14/2020 Bangko Sentral ng Pilipinas Media and Research

Moving forward, the BSP stands committed and ready to strengthen its onsite and off-site surveillance,
deploy the full range of prudential policy toolkit and to promote the financial sector reform agenda so
as to safeguard the soundness and stability of the financial system conducive to a strong, sustainable
and inclusive economic growth recovery for all Filipinos.

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1 Available at

https://www.bsp.gov.ph/Lists/Report%20on%20the%20Philippine%20Financial%20System/Attachments/29/StatRep_1Sem2020.pdf

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