Discussion Papers

No.520 Changes in Source of Profits and Business Strategies? : Some Evidence from the Philippines’ Universal Banks in the 2000s


March 2015


In the 2000s, the Philippines’ local banking sector have conducted very conservative lending behavior and at the same time, gradually but continuously improved their profitability in terms of ROE (return on equity). A set of analyses on the flow of funds and segment reports (information) of local universal banks, whose loans outstanding to the industrial sector have dominated more than three fourths of the total outstanding, shows that (1) they have actively manage assets overseas, (2) their profitability has come from investment activities in the securities markets, and (3) some universal banks have shifted their resources into the consumer/retail segment. Although further refinement in the dataset is needed for a more detailed analysis, diverse business strategies would be expected among the local universal banks in the near future.

Keywords: credit channel, bank loan, the Philippines’ universal banks
JEL classification:  E42, E52, G38

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