BSP launches first Other Financial Corporations Survey

THE Other Financial Corporation Survey (OFCS) is a comprehensive measure of the assets and liabilities of the other financial corporations (OFCs).

The OFCS is an important tool in identifying the concentration of vulnerabilities of the financial sector vis-à-vis the other sectors of the economy.

It comprises of trust entities; private and public insurance corporations; holding companies; government financial institutions, specifically government owned or controlled corporations engaged in financial intermediation; non-money market funds covering unit investment trust funds and investment companies; and other financial intermediaries and auxiliaries consisting of offshore banking units and non-banks without quasi-banking functions.

When consolidated with the data from the Depository Corporation Survey (DCS)1 , OFCs represent around a quarter of the total assets in the country’s financial system, a summary on the claims and liabilities of the entire financial corporations sector (FCS) can be generated. The consolidation of all financial corporations’ data will result in an improved integrated monetary database.

The analytical format, which will be released to the public, presents the three (3) main components of OFCS: 1) net foreign assets (NFA), 2) domestic claims, and 3) other liabilities. Claims on and liabilities to nonresidents (in NFA) and central government (CG) (in domestic claims) are presented on a net basis. 2

The Bangko Sentral ng Pilipinas (BSP) started groundwork on the OFCS in August 2014 with the International Monetary Fund, and with the assistance from partner agencies—the Governance Commission for Government Owned or Controlled Corporations (GCG), the Insurance Commission (IC), and the Securities and Exchange Commission (SEC).

Currently, the OFCS data in the Philippines covers nine (9) quarter periods from 1Q2017 to 1Q2019.

With this release of the OFCS survey results, the Philippines is now the 64th country (out of the 189 IMF-member countries) that has reported the OFCS to the IMF.

 

HIGHLIGHTS

Preliminary data from the OFCS showed that total assets of OFCs reached P7,976.2 billion as of Q1 2019. Meanwhile, preliminary data based on DCS showed that the total assets of the country’s depository corporations (DCs) amounted to P23,068 billion in the same period.

When combined, the resources of the Philippine financial system totaled P31,044.2 billion in Q1 2019. The OFCs represents around a quarter of the total assets in the country’s financial system.

Net foreign assets of the OFCs in Q1 2019 amounted to P81.9 billion, lower by 0.4 percent compared to P82.2 billion recorded in Q4 2018.

The lower OFCs’ NFA balance stemmed from the 1.3 percent growth in the liabilities to nonresidents, which more than offset the 0.8 percent increase in the claims on nonresidents.

The expansion in the OFCs’ claim on nonresidents to P264.7 billion in Q1 2019 from P262.7 billion in the previous quarter was due to the the sector’s higher holding of debt securities and insurance technical reserves (ITR).

Meanwhile, the increase in liabilities from P180.5 billion in Q4 2018 to P182.8 billion in Q1 2019 to nonresidents was mainly driven by the deposit liabilities to nonresidents.

Domestic claims of the OFCs expanded by 4.1 percent to reach P5,953 billion in Q1 2019 from P5,720.8 billion in Q4 2018 due mainly to the uptick in the sector’s net claims on Central Government (CG) (by 11.1 percent), and claims on other sectors (by 2.2 percent), and DCs (by 1.9 percent) during the quarter. Net claims on CG reached P1,372.3 billion, higher compared to the P1,234.7 billion a quarter ago.

OFCs, particularly trust entities, boosted its investments in debt securities issued by the CG during the quarter.

Meanwhile, the rise in claims on other sectors was attributed to the increase in the claims on private sector, even as claims on public nonfinancial corporations (PNFCs) declined during the quarter in review.

The increase in claims on private sectors was driven mainly by OFCs’ placement in equity and debt securities issued by private companies.

On the other hand, the decline in claims on PNFCs was due to trust entities’ net withdrawal of investments in equity securities issued by government owned or controlled corporations.

Other liabilities of OFCs expanded to P6,034.9 billion in Q1 2019, a 4.0 percent increase from the P5,803 billion level in Q4 2018, and an 11.3 percent growth from the P5,422 billion level in Q1 2018. OFCs liabilities comprised largely of shares and other equity and ITR.

Going forward, the OFCS report will be regularly released to the public within four (4) months after reference quarter. The release schedule of the said report may be seen in the Advanced Release Calendar of the BSP using this link http://www.bsp.gov.ph/statistics/release_calendar.htm