Foreign Banks in RP Hike Assets by 11% to P501 B

Article excerpt

Byline: LEE C. CHIPONGIAN

Foreign banks with domestic operations continue to post significant growth, with total banking assets up 10.77 percent from P501.107 billion to P555.356 billion as of end-December, the central bank in its report on the operations of the foreign banks, said.

The share of foreign banks in the total assets of the whole banking system is 13.9 percent. In 2004 there were four foreign bank branches existing prior Republic Act 7721, which liberalized the industry, ten new foreign bank branches (after the law) and six foreign bank subsidiaries. The four biggest foreign banks are Citibank NA, Standard & Chartered Bank, Hong Kong Shanghai Banking Corp. and Bank of America, which held the bulk of these assets or about 64.7 percent.

The BSP said the twenty foreign banks reported high liquidity, strong capitalization and better asset quality, although profitability declined compared to 2003.

The sectors net income after tax declined 21.25 percent to P6.3 billion from P8 billion in 2003. _(Foreign banks) veered away from risky corporate and commercial segments and focused on low-risk and high margin retail borrowers,_ BSP report said.

The net income after tax of foreign bank branches existing prior R.A. 7721 dropped by 22.7 percent to P4.7 billion from P6 billion while the new foreign bank branches also declined by 18.3 percent to P2.1 billion from P2.6 billion.

The BSP said the new foreign bank branches remained the most efficient in their operations, as their cost-to-income ratio was the lowest at 54.7 percent, the four original foreign bank branches with 59. …