Philippine bank deposits hit P22 trillion at end-June

By Katherine K. Chan, Reporter

TOTAL DEPOSITS in Philippine banks rose by 8% year on year as of end-June as the banking system remained healthy, but challenging economic conditions moderated quarter-on-quarter growth, analysts said.

Latest central bank figures showed deposits in the local banking system reached a combined value of P22.395 trillion at end-June, up 8.34% from P20.671 trillion in the same period last year.

However, the growth in deposits was slower than the 10.2% annual increase at end-March.

Quarter on quarter, the value of bank deposits inched up by around 0.8% from P22.218 trillion.

The number of deposit accounts jumped by 20.48% to 190.952 million from 158.494 million a year earlier.

Domestic lenders also onboarded more depositors at end-June, with a 7.82% climb to 28.768 million from 26.682 million the previous year. 

“The growth in bank deposits reflects continued confidence in the Philippine banking system, supported by household savings, business liquidity needs, and ongoing digitalization efforts,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, noted that the growth in deposits was largely driven by depositors’ stable income flows and decision to safeguard funds amid heightened economic risks.

“Growth was likely supported by continued income flows from employment and remittances, corporate cash balances, and households’ preference to keep funds in relatively safe and liquid instruments amid economic uncertainty,” he said via Viber.

Economic expansion weakened to a new post-pandemic low of 2.3% in the second quarter amid the lingering effects of the flood control scandal and shocks from the ongoing Middle East war.

The weaker second-quarter economic performance may also be behind the slowing deposit growth versus the first quarter, Mr. Asuncion noted.

“The slower pace relative to the first quarter is likely due to base effects and softer economic activity, but the overall expansion in deposits remains consistent with a banking sector that continues to enjoy ample liquidity and a stable funding base,” he said.

Mr. Rivera said deposits may have moderated from the previous quarter due to increased spending and depositors turning to higher-yielding platforms.

“Slowdown from Q1 may reflect base effects, stronger household and business spending, and some shifting of funds toward higher-yielding alternatives such as government securities and other investment products,” he said. “It may also indicate that deposit accumulation is normalizing after a stronger earlier pace.”

The bulk of the industry’s deposit liabilities as of end-June were in savings deposits, which grew by 3.47% to P9.276 trillion from P8.965 trillion in the comparable year-ago period.

This consisted of regular savings amounting to P7.594 trillion, kiddie and teen savings at P56.599 billion, and other savings worth P1.594 trillion.

Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., noted that more favorable economic conditions, including manageable inflation alongside rising employment and income growth, as well as better bank savings products will be key to healthier deposit growth ahead.

“Going forward, maintaining healthy deposit growth will require keeping inflation under control, sustaining job and income growth, and ensuring banks continue to offer competitive, accessible, and technology-driven savings products,” he said in a Viber message.

“Strong deposit growth remains important because it provides the funding needed to support lending, investment, and overall economic expansion,” he added.

Meanwhile, 28.804 million Filipinos have a basic deposit account (BDA) as of June, 7.89% higher than the 26.696 million accounts recorded a year ago.

Basic deposits edged up by 6.02% year on year to P30.927 billion from P29.17 billion.

As of March, 177 banks are offering BDAs, according to separate Bangko Sentral ng Pilipinas (BSP) data presented during the Development Budget Coordination Committee’s briefing for the 2027 National Budget at the House of Representatives on Monday.

“This is one of the ways that we at the BSP promote financial inclusion,” BSP Deputy Governor Zeno Ronald R. Abenoja told the briefing.

The BDA, introduced in 2018, is meant to address the needs of the unbanked and underserved Filipinos, with a low opening amount of P100 or less, no maintaining balance requirement, no dormancy charges, a maximum balance of P50,000, and requires only simple identification documents. In 2022, the BSP directed lenders to limit BDAs to one per depositor.

Central bank data also showed demand deposits stood at P6.224 trillion, increasing by an annual 8.48% from P5.737 trillion.

On the other hand, time certificate of deposits went up by 15.67% to P5.961 trillion from P6.895 last year.

Of the total deposits as of end-June, universal and commercial banks cornered P20.816 trillion, up by 7.85% from the P19.302 trillion a year ago.

Large banks had 96.512 million depositors holding a total of 104.524 million accounts as of June.

Deposits held by thrift banks rose by 8.11% annually to P1.061 trillion. Thrift bank depositors reached 10.525 million, while accounts hit 10.772 million.

Meanwhile, rural and cooperative banks booked P345.727 billion deposits at end-June, jumping by 24.72% from P277.199 billion a year prior. They had 31.351 million depositors with 31.56 million accounts.

Deposits in digital banks surged by 55.42% to P171.545 billion from P110.375 billion the previous year. Digital banks also onboarded more depositors as of end-June with 29.608 million, holding 44.096 million accounts.