By Joann Santiago
MANILA, Sept. 8 (PNA) — The public’s trust in the Philippines’ banking system continues to strengthen as proven by the continued increase in deposits and loans.
Bangko Sentral ng Pilipinas (BSP) data shows that total assets of banks’ reached Php10.44 trillion in end-March 2014. This is a far cry from the Php6.51 trillion in end-2009.
In the recent celebration of the Bank Marketing Association of the Philippines’ (BMAP) 40th anniversary, BSP Governor Amando Tetangco Jr. said the rise in banks’ total assets between 2009 to 2014 stood at an average of 11.9 percent annually, higher than the 8.2 percent between 2001 to 2008.
For peso deposits alone, growth rose further from 11.4 percent between 2001-08 to 14.3 percent from 2009 until the first half of the year.
The central bank chief pointed out that this expansion “is best appreciated when we consider that 6.87 million new deposit accounts were added in the nine quarters between March 2012 and June 2014.”
“Of this total, 92.4 percent are accounts with outstanding balances of P100,000 or less,” he said.
Relatively, total loans, excluding banks’ placements in the BSP’s overnight borrowing facility, reached slightly above Php4 trillion as of end-June this year.
Tetangco said banks’ outstanding loans grew by 7.6 percent annually between 2001 to 2008 but posted a faster rate of 11.9 percent from 2009 to date.
Also, expansion of assets under banks’ trust departments as well as those of trust and investment entities grew faster and reached Php3.24 trillion as of March 2013, up by 165 percent from Php1.22 trillion in end-2008.
“The growth rates in both the deposit base and in trust activity tell us that the saving public has confidence in our banks for safekeeping and/or investing their hard-earned personal savings,” Tetangco said.
Tetangco said this confidence in the banking industry shows how the industry has caught the public’s confidence.
“Simply put, it is an expansion that cannot unfold by itself without proper marketing of banking products and services,” he said.
The central bank chief also noted that aside from rising assets, the kind of products and services being offered in the domestic financial market has evolved on back of technological innovations.
“After all, in a country of 100 million individuals, Philippine demographics signifies opportunities in diversity,” he said.
Tetangco said these innovations will help the country firm up for the entry of more foreign investors vis-à-vis the implementation of the law that allows the full entry of foreign banks in country as well as the looming regional integration.
He explained that what would spell the difference is not just about specific products but the kind of risk management, good corporate governance and consumer protection.
“It is this stability that underpins our banks’ value proposition to savers, while providing a viable counterparty for borrowers,” he said.
Tetangco said “the value of risk management cannot be overstated,” stressing that “in a market where uncertainty and risks are hallmark issues, a bank can only be viable as a two-way agent between savers and borrowers if it is able to effectively manage its risk exposures.”
“In the end, effective risk management is the skill that allows market stakeholders to operate as a going-concern. This is a skill unique to banks and it must be a success factor that distinguishes the Philippine banking brand from the rest,” he said.
The BSP chief assured market players of regulators’ support towards policies on raising standards.
“We shall pursue this through an environment that enables the development of a distinct brand for the Philippine banking industry,” he said.
“From our perspective, effective risk management, a unwavering culture of good corporate governance and the empowerment of the financial consumer are the fundamental aspects of our brand of banking. For sure, there are many challenges that lie ahead, but what you have achieved so far gives us confidence moving forward,” he added. (PNA)