Banks’ trust units hold assets amounting to 3.69 trillion pesos at the end of June, up 3.4% from the same period last year of 3.57 trillion pesos, on Bangko Sentral ng Pilipinas (BSP) database.
The sector’s total assets increased as the total assets of universal and commercial banks also increased during the period.
By portfolio breakdown, at the end of June, deposits in banks fell by 18.86% to 742.63 billion pesos against 915.28 billion pesos in 2021, but the liquidities and claims of banks increased slightly by 1.5% to reach 338 million pesos against 333 million pesos.
Net financial assets of trust units increased 7.55% to 2.42 trillion pesos from 2.25 trillion pesos in the same period last year, while net loans increased 14% to 76 .79 billion pesos against 67.31 billion pesos.
Banks’ fiduciary liabilities, meanwhile, fell 4% to 1.65 trillion pesos from 1.72 trillion pesos in the same period of 2021.
Unit Investment Trust Funds (UITF) accounted for 841.72 billion pesos, down 5.19% from the 887.89 billion pesos of the previous year. Agency trust holdings increased 5.6% to 1.5 trillion pesos from 1.42 trillion pesos last year
There are 32 banks – a mix of large and small banks – with trust licenses, but only 25 have active trust departments. Fourteen of the 21 major banks with fiduciary departments accounted for more than 60% of total fiduciary assets.
Last year, banks’ trust holdings increased by 8.19% to 3.71 trillion pesos, compared to 3.43 million pesos in 2020.
The BSP amended the regulatory framework for trust, investment management and other trust accounts, in particular the UITF rules.
In April this year, the BSP revised the regulations governing the internal audit function of trust companies (TCs) and authorized a group internal audit unit for TCs that are part of a group structure.
Based on BSP Circular No. 1141, where a TC’s parent company is a bank or non-banking financial institution, a TC may have its internal audit activities performed by the group internal audit function without be subject to the outsourcing framework since it is already under the supervision of an appropriate regulatory authority for banks, insurance companies, investment companies, investment companies or finance companies.
In this case, the circular specifies that the head of the group’s internal audit function can define the strategies, methodology, scope and internal audit quality assurance measures for the entire group.
An internal audit function is considered the third line of defense in a system of internal controls. Internal audit is an “independent and objective assurance and advisory function established to review, evaluate, and improve the effectiveness of an organization’s risk management, internal control, and governance processes,” the BSP said. .
PASB currently oversees 30 trust entities.
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