As of December 2021, the return on assets ratio of thrift banks in the

Philippines was at 1.07 percent, reflecting an increase from the

previous year. Return on assets refers to the ratio of annualized net
profit or loss and average total assets.

Moreover, Banking Sector Developments the Philippine

Banking System (PBS) sustained its solid footing amid the
pandemic. Total assets of the Philippine banking system grew
by 7.2 percent year-on-year (YoY) to P20.6 trillion as of end-
January 2022. This growth rate was higher than the 5.7
percent rate in January 2021. The asset growth was funded
mainly by deposit generation and capital infusion.

The main part of the profit of a bank comes from the service
fees, charged for its services and the earned interests from its assets.
Its main expense is the paid interest on its liabilities.
Assets are used by businesses to generate income. Loans and
securities are a bank's assets and are used to provide most of a bank's
income.

High net interest income and margin indicates a well managed bank
and also indicates future profitability.

The return on equity is what the bank's owners are primarily

interested in because that is the return that they earn on their
investment, and depends not only on the return of assets, but also on
the total value of the assets that earn income.

 Inflation is basically buying goods and services

as a higher cost than it was before. According to the
Total Remuneration Survey (TRS) 2020, Philippine
companies will raise their pay by an average of 5.6%
in 2021. However, due to the unstable economic
environment because of the COVID-19 Pandemic,
operations of companies were affected and therefore
resulted in a low gross profit which eventually caused
disruption in wage increase. Even before the COVID-
19 pandemic, Filipinos have been battling the
increasing inflation rate in the Philippines. According
to the Philippine Statistics Authority (PSA), from 2.1%
in May 2020, the inflation rate rose up to 4.5% in May
2021, which shows an increase of more than 100%.