PH banking trust assets hit P4.3 trillion, up 6% year-on-year

The banking industry’s trust assets reached P4.317 trillion as of September 30, marking a 6.19% increase from the previous year’s P4.065 trillion, according to data from the Bangko Sentral ng Pilipinas (BSP). These assets represent investments from banks' trust and fiduciary business, as well as their investment management activities.

The growth in trust holdings reflects strong demand for fiduciary services, with the bulk of these assets remaining highly liquid, primarily in agency accounts. The 44 major banks in the Philippines, which dominate the financial sector in terms of gross loans and total assets, accounted for the vast majority of the trust holdings, totaling P4.288 trillion by the end of the third quarter.

Trust assets are typically investments in securities issued by government and private companies, where a trustee manages funds and property on behalf of a beneficiary. As of the end of September, agency trusts amounted to P2.061 trillion, up 1.47% from P2.031 trillion a year earlier, while unit investment trust funds (UITF) saw a notable increase of 18.8%, reaching P587.578 billion from last year’s P494.544 billion.

Further, pre-need trusts, which cover investments for future needs such as education and funeral expenses, grew by 2% to P94.139 billion, and employee benefits trusts slightly improved by 0.15% to P354.418 billion. Other fiduciary services increased to P659.872 billion, reflecting a 0.35% year-on-year rise.

While cash holdings and net deposits in banks decreased, with a 6% decline in cash and due from banks, and a 5.6% drop in net deposits, the overall financial assets of banks showed a positive trajectory. Net financial assets rose by 13% to P2.67 trillion, while net loans fell by 34.8% to P47.957 billion.

The BSP oversees 20 trust departments in banks and nine non-bank financial institutions (NBFIs), including seven trust corporations and two investment houses. Despite a high interest rate environment, the trust industry remained profitable, bolstered by strong revenue from fees and commissions.

To further strengthen the trust sector, the BSP recently introduced a circular to enhance the periodic review process for trust, investment management, and fiduciary accounts. The aim is to ensure that trust entities perform their duties with due diligence and in accordance with BSP regulations, safeguarding the interests of clients and beneficiaries.