By Luisa Maria Jacinta C. Jocson, Senior Reporter

THE PHILIPPINE BANKING industry’s combined net earnings jumped by 10.6% in the first quarter as both interest and non-interest income rose, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Central bank data showed the banking industry’s net profits climbed to P101.9 billion at end-March from P92.11 billion in the same period a year ago.

This as net interest income went up by 11.6% to P276.23 billion in the first three months from P247.41 billion in the same quarter in 2024.

Interest income increased by 11.1% to P395.99 billion in the first quarter from P356.43 billion a year ago, while interest expense rose by 9.6% to P119.32 billion at end-March from P108.86 billion last year.

Meanwhile, banks’ non-interest income stood at P60.67 billion in the January-March period, higher by 14.5% from P52.98 billion a year earlier.

Earnings from fees and commissions increased by 19.2% to P44.59 billion as of end-March from P37.42 billion a year ago.

However, trading income registered a net loss of P1.17 billion in the first quarter, a reversal of the P1.5-billion gain a year ago.

Lenders’ non-interest expenses rose by 13.1% to P191.01 billion in the period ending March from P168.95 billion year on year.

Meanwhile, the industry’s losses on financial assets widened to P29.83 billion in the first three months of 2025 from P21.81 billion a year ago. Provisions for credit losses likewise grew to P34.89 billion from P25.11 billion last year.

“Faster loan growth this 2025 relative to last year may have driven higher income growth for the banking industry this year,” Reinielle Matt M. Erece, an economist at Oikonomia Research and Advisory, Inc. said in a Viber message.

Latest data from the BSP showed bank lending rose by 11.8% year on year to P13.19 trillion in March.

“This increased the volume of products they were able to sell, i.e. financial products, as interest rates are expected to go down,” he added.

Alfred Benjamin R. Garcia, research head at AP Securities, Inc., said the higher profits are “partly volume-driven,” noting the growth in high-yielding consumer loans.

Earlier BSP data showed consumer loans to residents jumped by an annual 23.6% to P1.64 trillion in March.

“This helped keep net interest margins high even though interest rate levels are lower than where they were at the same time last year,” Mr. Garcia said.

The central bank began its easing cycle in August last year and has reduced borrowing costs by a total of 100 basis points (bps) so far, bringing the key rate to 5.5%.

The Monetary Board has delivered 25-bp rate cuts at each of its policy meetings in August, October, December last year and April this year.

Mr. Erece added that while lower interest rates reduce the margins of banks, it can also spur higher demand for financing services.

BANKING SYSTEM ASSETS
Separate BSP data showed the banking industry’s total assets amounted to P27.64 trillion as of end-March, higher by 7.8% from the P25.65 trillion in the same period in 2024.

Banks’ assets are mainly supported by deposits, loans, and investments. These include cash and due from banks as well as interbank loans receivable (IBL) and reverse repurchase (RRP), net of allowances for credit losses.

The banking sector’s total loan portfolio inclusive of IBL and RRP jumped by 14.5% to P15.14 trillion as of end-March from P13.22 trillion a year ago.

Net investments, or financial assets and equity investments in subsidiaries, increased by 12% year on year to P8.23 trillion.

Net real and other properties acquired stood at P119 billion, up 11.2% year on year.

Banks’ other assets went up by 1.9% to P2.06 trillion as of end-March.

On the other hand, cash and due from banks fell by 29% to P2.1 trillion at the end of the first quarter.

“The continued growth in banks’ total resources may still be largely attributed to the growth in loans and in investments,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“Also supported by the continued growth in bank deposits that partly helped fund the growth in loans and investments,” he added.

Meanwhile, the total liabilities of the banking system grew by 7.4% to P24.18 trillion at end-March from P22.53 trillion a year earlier.