Pension funds dominate the sector
The non-banking financial institution (NBFI) sector – i.e. organizations that do not have a full banking license and cannot accept deposits from the public – has remained resilient despite the harsh impact of Covid-19 on the economy.
This is according to information provided by the sector regulator, the Non-Banking Financial Institutions Regulatory Authority (NBFIRA).
The NBFI sector is a broad industry consisting of, among others, pension fund insurance, capital markets, lending business, the latter including pawn shops and micro-lenders.
The industry reportedly recorded asset growth of 2.5% in 2020, with assets estimated at 129 billion pesos, up 3 billion pesos from 2019.
Pension funds continue to dominate the sector, with a market share of 71% at 92 billion pesos, against 89 billion pesos the previous year.
“All sectors, except capital markets, recorded increases in total assets from 2019. The insurance sector increased by 6.1% to reach P22, 878 million in 2020 against P21 , 556 million in 2019,” says the NBFIRA statistical report.
Lending activity, on the other hand, increased by 17% from P5.431 million in 2019 to P6.369 million recorded in 2020.
Capital markets, which involve instruments such as bonds and equities, reportedly recorded an “enhanced decline” of 23% to P8.075 million, following a decline of 27% (P10.483 million) in 2019.
Despite the resilience, the sector’s revenue fell by 23.6%, falling from 6 billion pesos to 17 billion pesos.
“As a percentage of nominal GDP, revenues were 9.5%, reflecting a decline from 11% recorded the previous year,” the regulator noted.
Regarding fund management, the sector remained well capitalized and ended the year at 8.1 billion pesos against 7.5 billion pesos in 2020.
The capital and reserves of the sector, excluding pension funds, recorded a lower increase of 8.8% compared to the 10.5% recorded in 2019.
Meanwhile, the industry recorded a 3% increase in total liabilities in 2020, compared to a 13.2% decline recorded the previous year.
Capital markets, however, saw a 74% drop in total liabilities to P309 million, due to a significant drop of 95% in management companies and 73% in asset managers.