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The Bangko Sentral ng Pilipinas (BSP) data showed Philippine banking system remains stable as total assets grew despite COVID-19 pandemic.

Banks’ total assets grew by 5.4 percent to P19.8 trillion in July 2021 compared to the same period last year, the BSP said in a statement.

“The positive performance of the Philippine banking system is evidenced by sustained growth in its assets, deposits, and capital, as well as ample capital and liquidity buffers and loan loss reserves,” BSP Governor Benjamin Diokno said on Wednesday.

Bank assets were in the form of loans at 52.6 percent and portfolio investments at 26.6 percent, the central bank said.

Funding was sourced largely from deposits, which grew 7.2 percent to P15.4 trillion for the period compared to last year, “indicating the public’s continued trust and confidence in the banking system,” the BSP said.

Total loans declined by a slower rate of 0.4 percent to P10.8 trillion as of end-July compared to the 5 percent decrease a year ago, it added.

The BSP said credit activity is expected to improve due to the accommodative policy stance, the accelerated vaccination program, expected to boost confidence and lessen banks’ risk aversion, as well as the implementation of new quarantine classifications in the NCR.

The BSP kept the benchmark borrowing rate at its record level of 2 percent. The Monetary Board will have a rate policy meeting on Thursday.

Gross non-performing loan (NPL) ratio, meanwhile, is at 4.5 percent as of July but is accompanied by a high NPL coverage ratio of 82.4 percent, the BSP said.

President Rodrigo Duterte in February signed the Financial Institutions Strategic Transfer (FIST) Act which will help banks offload bad loans.

“The BSP will continue to adopt policy reforms on risk governance aimed at promoting the continued safety and soundness of the financial system against the backdrop of rapid advancements in technological innovations, an evolving financial ecosystem, and the increasing attention towards the attainment of social and environmental goals,” Diokno said.

Banks were also able to maintain sufficient capital and liquidity buffers, the BSP said.