Non-bank financial institutions with quasi-banking functions (NBQB) and non-stock savings and loan associations (NSSLA) sustained their profitable operations in 2023, the Bangko Sentral ng Pilipinas (BSP) said.

Based on the central bank's report on recent trends in the Philippine financial system as of December 2023, the net profit of NBQB reached P1.8 billion last year, just 0.3 percent lower than in the same period a year ago.

The BSP said the sector's total assets grew by 6.7 percent to P161.3 billion as of December 2023, a turnaround from the 10.1-percent decline in assets in the same period in 2022.

'The industry's assets in December 2023 were largely comprised of loans at around 87.6 percent share,' the BSP said.

Lending activity among NBQB also increased by 10.2 percent to P144.5 billion in December 2023. This was accompanied by an improvement in loan quality as non-performing loans declined by 15.3 percent to P6.5 billion in 2023 from P7.7 billion in 2022.

The non-bank sector's gross NPL ratio eased to 4.5 percent in December last year, an improvement from the 5.9 percent recorded in December 2022. Moreover, the NPL coverage ratio was at 47.7 percent, higher than the 36.2 percent from a year ago.

'Bills payable remained the main source of non-bank sector's funding, accounting for 68.3 percent share or P110.1 billion of the industry's total assets as of December 2023,' the central bank said.

'Total capital, which made up 14.3 percent share of the industry's total assets, grew by 8.3 percent and reached P23 billion as of the same reference period,' it added.

As of December last year, the country has five NBQB supervised by the BSP. These include one investment house, three financing companies and one other NBQB.

In terms of network, the three financing companies have a total of 14 branches, while the investment house and other NBQB are single head office units.

On the other hand, the net profit of NSSLA jumped by 11.7 percent to P27.9 billion in 2023.

NSSLA saw a 5.7 percent growth in total assets to reach P316.8 billion as of December 2023. This is mainly composed of members' loans at 77 percent of total assets.

'The asset expansion was largely funded by members' capital of P206.9 billion (up by 7.7 percent) and deposits of P86.2 billion (0.2 percent) as of December 2023,' the central bank said.

The BSP also noted that the industry's gross total loans grew by 6.1 percent to P268.3 billion in December 2023.

However, despite the credit growth, NPLs rose by 8.6 percent to P22.1 billion. The NPL ratio stood at 8.2 percent in 2023, a tad higher than last year's 8.1 percent.

'NSSLAs matched the increase in NPLs by ample loan provisioning as the NPL coverage ratio of the industry stood at 109.8 percent in December 2023, albeit lower than the previous year's 115.4 percent,' the BSP said.

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