The fourth quarter once again proved to be a challenging period for the country’s universal and commercial banks (U/KBs). In the final months of 2020, aggregate loans of these U/KBs posted a 3.96% decline to P9.582 trillion, the biggest since the 4.17% contraction recorded way back in the fourth quarter of 2003. This also marked the second decline in almost 11 years following the slump in the previous quarter.

Unsurprisingly, profitability also took a hit as the median return on equity further declined to 3.66% from 4.13% in the third quarter of 2020 and 6.75% in the fourth quarter of 2019.