This was funded by sustained deposit inflows which grew by 15.3 percent, to P11.3 trillion. The non-performing loan (NPL) ratios further improved to 1.9 percent, with adequate and prudent provisioning for credit losses. Bank capital is being beefed up by strong earnings from core income sources particularly lending activities.
Our worry was reinforced by our assessment that, with the federal funds rate still near zero, there would likely be only limited scope for us to respond by lowering short-term rates if the weakening in economic activity turned out to be persistent.