Philippine banks post record profit in 2024

February 15, 2025 | 12:00am

MANILA, Philippines — Philippine banks bolstered their earnings by 9.8 percent to hit an all-time high of P391.28 billion in 2024 from P356.49 billion in 2023 on the back of higher interest income.

Data from the Bangko Sentral ng Pilipinas (BSP) showed the operating income of the banking sector increased by 11.4 percent to P1.27 trillion in 2024 from P1.14 trillion in 2023.

The industry’s net interest income went up by 13.4 percent to P1.04 trillion last year from P915.55 billion in 2023 as interest earnings rose by 16.3 percent to P1.5 trillion from P1.29 trillion, while interest expenses jumped by 25.2 percent to P464.74 billion from P371.24 billion.

The central bank kept its key policy rates elevated last year as it continues to be cautious of risks to inflation. It only started cutting borrowing costs in August 2024, slashing the benchmark rate by a total of 75 basis points to 5.75 percent.

During its first policy review of the year, the BSP’s Monetary Board pushed the pause button on its easing cycle. It unexpectedly held interest rates steady as global policy uncertainties threaten the outlook for inflation and growth.

Likewise, the banking sector’s non-interest earnings went up by 5.1 percent to P233.67 billion from P222.3 billion as trading gains rose by 19.2 percent to P27.39 billion from P22.98 billion, while fees and commission income booked a double-digit 16-percent growth to P163.31 billion from P140.77 billion.

The non-interest expenses of banks also went up by 10.4 percent to P712.07 billion from P645.15 billion.

As borrowers struggle to keep up with rising costs on their loans due to the still-elevated interest rate environment, Philippine banks are allocating more provision for credit losses.

According to the BSP, the industry’s provision for credit losses on loans and other financial assets increased by 29.4 percent to P118.87 billion last year from P91.87 billion in 2023.

On the other hand, soured loans written off by Philippine banks more than doubled to P3.33 billion in 2024 from P1.6 billion in 2023.

For universal and commercial banks, their net income increased by 9.7 percent to P366.02 billion in 2024 from a year-ago level of P333.76 billion.

Fitch Ratings earlier said that Philippine banks are expected to emerge as key beneficiaries across Southeast Asia economies if policy rate cuts remain shallower than anticipated in 2025.

“We believe Philippine and Singapore banks will be key beneficiaries if rates are higher than we expected. Our rated banks in these markets have good funding profiles and are in liquid banking systems that can capitalize on yields staying buoyant while keeping deposit rates lean,” the debt watcher said.

Smaller Philippine banks, however, face more challenges, as weaker deposit base and limited competitive edge in lending constrain their ability to leverage the same benefits.

Recommended