2018 marked the seventh consecutive year that the Philippine economy grew by at least 6 percent per year, and continued to be one of the fastest-growing economies in Asia. However, inflation steeply rose, particularly in the third and fourth quarters and peaked to a nine-year high of 6.7 percent. In response, the Bangko Sentral ng Pilipinas (BSP) raised interest rates in five consecutive meetings last year by a total of 175 basis points. The key policy rate currently stands at 4.75 percent (from 3.0 percent a year ago), the highest in nearly a decade. The Monetary Board likewise reduced banks' reserve requirement ratio by 2 percent in March and May of 2018.

The peso finished 2018 at P52.58 against the U.S. dollar, declining sharply by 5.24 percent from its 2017 end at P49.96. However, the closing was the peso's weakest in nearly thirteen years, and was now the third worst currency behind the Indian Rupee and the Indonesian Ringgit. The Philippine Stock Exchange Index fell 12.76 percent to 7,466 from 8,558 the previous year.

The Philippine banking system remained fundamentally sound during the year, and Isla Bank continued to strengthen. As your Bank’s Total Resources reached another new high of P1.441 billion, an increase of 9.6 percent from the previous year's level of P1.314 billion. Deposits increased to P721.8 million, from last year's P600.2 million, an improvement of 20.2 percent.

Our earning assets (loan portfolio inclusive of RRP plus investments), also rose by P181.0 million to reach P1.338 billion compared to P 1.157 billion at year-end 2017. Auto vehicle sales dropped in 2018, the first time in seven years due to the imposition of higher automobile taxes at the start of the year. The bank nevertheless, succeeded in increasing its level by P23.4 million to P191.8 million. The bank did not carry any Non-Performing Assets (NPLs) in our loan portfolio as against the banking industry reflecting an increase of 16.7 percent in 2018.


We ended the year with a Net Income amounting to P14.4 million which was slightly lower than the P 15.2 million recorded the previous year.

Major changes were effected in the country's fiscal system as the government started implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law.

While inflation continues to ease, the BSP is not expected to immediately ease policy rates at this time, but probably do so at the end of the second quarter

On the domestic front, latest projections from economic managers indicate inflation to range between 2 to 3 percent and the Philippine's GDP to around 6.1 percent.

In closing, we would like to extend our gratitude to our Board of Directors, Stockholders, Officers and Employees and our Clients for their continuing support, making this year another fruitful one for your Bank.