Manila: Total assets of the Philippine banking system increased by over 11 percent in May this year, data from the Bangko Sentral ng Pilipinas (BSP) showed. The banking system's total assets amounted to PHP30.4 trillion in May, compared to PHP27.3 trillion in the same month last year. This marks an increase from the PHP30.1 trillion recorded in April of this year.

According to Philippines News Agency, Union Bank of the Philippines chief economist Ruben Carlo Asuncion stated that the continued expansion in bank assets reflects growth in lending, sustained deposit inflows, and higher investment holdings. These factors, combined with resilient domestic demand and supportive liquidity conditions, have contributed to the sector's growth.

Asuncion emphasized that the surpassing of the PHP30-trillion mark demonstrates the banking sector's ability to support economic activities through credit creation and financial intermediation, which are crucial for consumption, investment, and business expansion. He noted that while the bank assets are expected to continue growing, the outlook is affected by the resurgence of hostilities in the Middle East.

Asuncion pointed out that prolonged hostilities could lead to elevated oil prices, revive inflation pressures, and introduce uncertainty in global financial markets. These conditions could impact consumer and business sentiment, potentially affecting borrowing and investment decisions. Despite these challenges, domestic liquidity remains ample, and credit demand is constructive. The banking sector's balance sheet is anticipated to expand, although with increased sensitivity to geopolitical developments and their implications for inflation and interest rates.