Deposits in Philippine banks continued to increase, buoyed by the strong performance of the economy in the second quarter and improved economic outlook that boosted business activities across all sectors.

Data from the Philippine Deposit Insurance Corporation’s (PDIC) Quarterly Report on Deposits showed that deposits grew 8.8% year-on-year, reaching P4.77 trillion as of end-September 2010, higher by P385 billion from the P4.38 trillion recorded in the same period a year ago. The growth though was slower compared to last year’s 11%.

Thrift banks (TBs) registered the highest deposit growth per bank type at 13.5% from 5.3% in the same period in 2009. Commercial banks (KBs) recorded a deposit growth of 8.3%, but this was lower than the 12.4% registered in 2009. Meanwhile, rural banks’ (RBs) deposit base posted a turnaround, increasing by 7% from a contraction of 9% in the same comparable period. The Quarterly Report on Deposits excludes deposits in overseas branches of Philippine banks.

By account type, time deposits and long-term negotiable deposits (LTNCDs), which account for 35.2% or P1.68T of total deposits, grew 8.3%, a turnaround from –2.9% last year. PDIC said that the level was indicative of depositors’ more positive outlook in the Philippine economy over the medium-term. Savings deposits, meanwhile, continue to hold majority of deposits at 46.2%, amounting to P2.21 trillion. This, however, represented a decline in growth at 8.7% this year from a double-digit increase of 20% over the same period in 2009. The decline in growth of KBs’ savings deposits base to 8.3% this year from 22.6% last year contributed heavily to the slower growth in savings deposits. Growth in demand or NOW deposits, which accounts for 18.6% of total deposits, likewise slowed down to 9.9% this year from 21.7% last year as Demand/NOW deposit growth decreased across all bank types.

Individual accounts continued to dominate the total deposit pie in terms of amount at 59.5%, which was more than the combined deposits held by private corporations (27.2%), government (10.2), trust departments (1.1%), banks (0.9%), and non-resident deposits (1.1%).

Small savers or those whose deposits have balances of P15,000 and below comprised 75.6% of total deposits in terms of number of accounts, but the total amount held by this group of depositors only account for 1.1% of total deposit amount in the banking system. On the other hand, deposits with balances of more than P2 million account for only 1% in terms of total accounts, but takes up 66.7% in terms of deposit amount. PDIC data showed that during the period July to September 2010 alone, deposits with balances of more than P2 million increased by P32 billion.

PDIC said that total insured deposits as of September 2010 stood at P1.4 trillion representing 96.8% of total accounts which were fully insured at the Maximum Deposit Insurance Coverage of P500,000.