Banking
From The Report: The Philippines 2016
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As banks expand credit to a traditionally under-banked economy, the sector is enjoying a period of rapid catchup growth. A positive feedback loop is at work in which banks are increasingly driving economic growth, supported by inflows from foreign investment and Filipinos working abroad, while growing trust in the banking system is drawing greater volumes of savings. Although bank lending has risen quickly, to $122bn in September 2014, it was equal to just over 40% of annual GDP. That is about half the level in Thailand and a third of the level in Malaysia, leaving considerable room for further expansion. Indeed, by the time regional integration comes to pass, Philippine banks may be more competitive across South-east Asia than many are expecting. This chapter contains an interview with Amando M Tetangco Jr, Governor, Bangko Sentral ng Pilipinas; and a roundtable with Reynaldo A Maclang, President, Philippine National Bank; Alfonso L Salcedo Jr, President and CEO, Security Bank; and Justo A Ortiz, Chairman and CEO, UnionBank of the Philippines.

Articles from this Chapter

Overview

Broader reach: Economic development is enabling an expansion of lending
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The banking sector is in the midst of a strong growth phase as economic development and use of banking services has been extended to traditionally under-banked areas in the Philippines. Tight fiscal policy has led to lower inflation and growing willingness to hold savings in bank deposits, while the number of people with enough income to use banks is rapidly rising. The resulting abundance of liquidity is pushing banks to aggressively expand lending, resulting in high sector growth rates. Ahead…

Interview

Maximising benefits: OBG talks to Amando M Tetangco Jr, Governor, Bangko Sentral ng Pilipinas (BSP)
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Interview:Amando M Tetangco Jr What opportunities will a national retail payments system unlock in terms of fostering inclusion and stability? AMANDO M TETANGCO JR: An efficient national retail payments system (NRPS), which maximises benefits out of digital technology, will bring about faster, more secure and more transparent financial transactions. Once fully operational, the NRPS will provide an inter-operable payments network that will financially link the country – from Batanes in the…

Analysis

Exploring markets: Lenders are working hard to offer credit to new segments and put liquidity to work
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Banks in the Philippines have a well-deserved reputation for primarily lending to large national corporations, but that is finally beginning to change. The extent of the concentration is visible mainly in data from the Bangko Sentral de Pilipinas (BSP), the central bank, on the regional distribution of lending. As of June 2015, 55% of outstanding domestic bank loans and receivables were to counterparties with addresses in the central business district of Makati, where the vast majority of nationwide…

Overview

Liberal landscape: OBG talks to Reynaldo A Maclang, President, Philippine National Bank; Alfonso L Salcedo Jr, President and CEO, Security Bank; and Justo A Ortiz, Chairman and CEO, UnionBank of the Philippines
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Interview:Reynaldo A Maclang,Alfonso L Salcedo Jr andJusto A Ortiz In what ways has the liberalisation of the banking sector altered the landscape for local banks? REYNALDO A MACLANG: Liberalisation will bring about increased competition for mid-sized banks, which are not only coping with larger domestic players but also face a growing presence of foreign banks. The latter have the advantages of a built-in clientele from their country of origin and advanced technologies that they…

Analysis

Joining the party: New arrivals face unique challenges and the prospect of high returns
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More than a year after the Philippines’ banking sector was opened to greater foreign direct investment, the international response has been underwhelming. The main reason is that asking prices for local assets are too high. Still, in terms of the numbers of new entrants, the reform has been a success. Five new international banks have been cleared to enter the Philippines since a law opening up foreign access to the sector was adopted in July 2014. The law allows foreign investors to own up to…