Thrift banks to sustain countryside push
THRIFT BANKS are expected to continue expanding their footprint in the countryside, particularly in the Visayas and Mindanao, as investors continue to flock to those areas amid improved sentiment on doing business in provincial areas following the victory of President Rodrigo R. Duterte.
“I think [ thrift bank] expansion will be felt in the Visayas and Mindanao region. With President [Duterte] coming from the south, we expect a lot of activity happening in the south,” Chamber of Thrift Banks President Rommel S. Latinazo, who is also the president of Yuchengco- led Rizal Commercial Banking Corp. (RCBC) Savings Bank, said in an interview when asked for his view on local thrift banks’ growth.
“If investors would grow in the area, definitely the banks would follow suit. That would be an expansion opportunity for the banks,” he added.
The Board of Investments (BoI) in Davao City had said in a news conference last July that there has been a surge of investor inquiries in Mindanao two months before the May presidential elections and “ballooned right after the elections.”
BoI Davao Director Gil M. Dureza said during that news conference that investment leads for Mindanao amounted to P886.75 billion in the six months to June 2016, bulk of which came from foreign parties in the manufacturing sector with P742 billion.
Mr. Duterte’s earlier pronouncement of amending the 6040 constitutional prohibition on foreign ownership of businesses has boosted investor interest in the country, attracting investors from Europe, the United States, China, Taiwan, Malaysia and India.
CONTINUED EXPANSION
“[Generally,] we continue to expand. At the onset of 2016, I said my view is that thrift banks will continue to expand. I think our performance has been at par with the industry. I believe we will be able to sustain this until the following year,” Mr. Latinazo said.
Mr. Latinazo had said in the CTB’s national convention on March 18 that thrift banks are seen to sustain their momentum for 2016 after banks have posted a double- digit growth in loans and small lenders focusing on their niche markets — the micro, small and medium enterprises (MSMEs).
Data from the Bangko Sentral ng Pilipinas ( BSP) showed that thrift lenders recorded a 19.8% capital adequacy ratio (CAR) at end-December last year, up from the 19.56% logged in the third quarter of 2014 but fell from the 22.31% seen at end- 2014 amid enough capital buffers to meet the central bank’s standard.
CAR measures a bank’s solvency, which indicates its ability to absorb losses without having to put its funds at risk.
The 19.8% CAR of small banks are well above BSP’s 10% CAR requirement for stand-alone lenders effective Jan. 1, 2012.
However, non- performing loans (NPLs) — or debts unsettled at least 30 days past their due date — held by thrift lenders grew by more than a fifth to P37.555 billion in August, 21.3% higher than P30.972 billion recorded at endAugust 2015.
Despite higher NPLs, thrift banks remained profitable in the first half of the year after it saw its net income reach P6.759 billion, up 14% compared to the P5.928 billion logged in June 2015, while net profit in 2015 for was at P11.876 billion, 15.4% higher from the P10.287-billion profit booked in 2014.
As of March this year, there are 61 thrift lenders operating in the country, according to central bank data, which are more focused on serving retail clients through consumer loans.