Chamber of Thrift Banks: Expanding to New Markets
In a predominantly agricultural country like the Philippines, thrift banks play an essential role in economic development through its commitment in granting financial support to Micro, Small, and Medium Enterprises (MSMEs), consumers and housing.
As a significant contributor to nation-building, the robust thrift banking sector serves its mandate by promoting savings mobilization, provision of loans for housing and the promotion of countryside development through financing in the non-urban areas define the role of thrift banks in the government’s reform packages which include job creation and economic growth.
45 YEARS OF LEADERSHIP AND SERVICE
The year was 1974. In an effort to forge greater unity among the thrift-banking sector, a small group composed of 10 savings banks, 28 private development banks and 44 savings and loans associations gathered to create the Chamber of Savings and Development Banks. In 1996, it was officially registered as the Chamber of Thrift Banks (CTB) — an umbrella organization of the country’s thrift banks whose sole mission is to provide an institutional medium through which the members can collectively assist and cooperate with one another, with other members of the banking sector, and with the national government and its instrumentalities.
Serving faithfully for 45 years now, CTB – working closely with the Bangko Sentral ng Pilipinas (BSP) – has been at the forefront of promoting, developing, expanding and strengthening the role of thrift banks in the accumulation of savings, enhancement of trade, commerce, industry and agriculture, and in the overall economic development of the country.
Aside from coordinating the efforts of its member thrift banks, CTB ensures that various concerns are brought to the attention of the right government institution or regulating body, particularly the BSP. Today, CTB’s 47 member-banks rely on a strong network of over 2,500 branches nationwide that serve millions of Filipinos from all walks of life.
To better understand how the CTB leads thrift banks in navigating this age of disruptive technologies, The
Philippine STAR sits down with CTB president Cecilio San Pedro as he talks about the challenges faced by the banking industry in expanding to new markets, ahead of the CTB’s 45th Annual National Convention.
WORKING WITH STAKEHOLDERS
In support of the central bank’s initiatives to strengthen the banking sector, CTB engaged its member banks and held several constructive (and productive) dialogues with BSP, the most recent of which involves the Amendments to the Liquidity Coverage Ratio (LCR) Framework and Minimum Prudential Liquidity Requirements. At CTB’s request, BSP agreed to defer the LCR requirement implementation date in order to provide ample time for subsidiaries of commercial
and universal banks to build up their liquidity positions; and to amend the formulation of the Minimum Liquidity Ratio (MLR) requirement to give more flexibility to stand-alone thrift banks.
The CTB also collaborated with Department of Agriculture (DA) Sec. Emmanuel Piñol and former House Committee on Banks chair Ben Evardone on how banks can help finance various agricultural projects such as the solar-powered irrigation projects, the farm mechanization program, the completion of farm-to-market road network, and the different processing and post-harvest facilities in the country, and at the same time enable banks to comply with the mandatory credit requirement under the Agri-Agra Law. Together with DA, CTB is pushing for the issuance of agriagra compliant bonds that will finance these agricultural projects, and thereby boost agriculture and uplift the lives of our farmers (by making them competitive) and improve agriculture’s share in our gross domestic product (GDP).
CTB also pro-actively engages and assists its members in their continued compliance with the Credit Information System Act.
“As an active member of the Board of the Credit Information Corporation (CIC), not only do we monitor our members’ compliance and continued submission of credit data to CIC, we also encourage them to access data from CIC as a tool for helping them make good lending decisions. The availability of reliable credit information will address the problem of information asymmetry and help ease the borrowers’ financial constraints, thus will bolster overall credit availability particularly for Micro, Small and Medium Enterprises (MSMEs), the niche market of thrift banks,” San Pedro assures.
In the international stage, CTB and its member-banks participated in the various programs and activities of the Brussels-based World Savings and Retail Banking Institute (WSBI). CTB earned the benefit of representation on international advocacy issues with international regulators’ standard setting like the G20 (where banking regulations emanate and which are then adopted by BASEL and
our regulators). One of the major advocacies of WSBI is to lobby for proportionality (or the “tailored” approach to regulation) in the implementation of BASEL 3 measures per country or jurisdiction.
NavigatiNg New horizoNs iN the Fire
Since the establishment of the chamber, the business landscape — the banking industry, in particular — has undergone major changes and continues to evolve quickly. Half a century of innovations and technological leaps have changed the way banking is done. From the analog and paperbased transactions, today’s banking heavily relies on the use of the Internet, smartphones, online transactions and cashless payments.
The CTB president expounds, “We welcome the industrial innovations under the Fourth Industrial Revolution (FIRe) because we are cognizant of the huge benefits that can be derived from these technologies. Disruptive technologies have the potential to impact
growth and employment by creating new markets, business practices, products, systems infrastructure and employee skills. Products from such technologies are cheaper, more efficient and convenient to use. As organisations look to navigate digital transformation — and truly prosper from it — we will make use of these disruptions to offer innovative products and services that allow more Filipinos to actively participate and benefit from our growing economy.”
“As a tribute to the late BSP Governor Nestor Espenilla, Jr., we remain committed to our pledge of getting the CTB membership involved in the BSP’s National Retail Payment System (NRPS), another tool for promoting financial inclusion. CTB membership in the Philippine Payments Management, Inc. continues to grow, providing electronic fund transfer facilities thru PESONET and Instapay. This is our way of contributing to BSP’s goal to raise the share of e-payments to 20 percent of all transactions in the Philippines by 2020,” he assures.
In acknowledgment of this important contribution (among others), CTB was recognized by the BSP as one of its Outstanding Strategic Industry Partners in recognition of its exemplary support to the central bank’s various advocacy programs.
The 2019 CTB National Convention
This year, CTB members gather for the Annual National Convention that aims to unite the industry in charting the course for the year ahead. The convention theme “Expanding to New Markets” captures the sector’s continuing commitment to perform its vital role of providing the essential financing support to its niche markets and the unbanked.
Financial technology company FintQnologies Corp. is this year’s CTB convention partner. Newly appointed BSP Governor Benjamin Diokno is Keynote Speaker and Inducting Officer while BSP Director of Payment System Oversight Department Raymond Estioko expounds on the National Retail Payment System (NRPS), which pushes for the shifting of cash-heavy transactions to digital avenues. FintQnologies Corp. managing director Lito Villanueva spearheads a forum on Inclusive FinTech or financial technology while Center for Agriculture and Rural Development Mutually Reinforcing Institutions (CARDMRI) founder and chairman Dr. Jaime Aristotle Alip talks about Microfinance. Presidential Adviser for Entrepreneurship and Go Negosyo founder Jose Ma. ‘Joey’ Concepcion III leads the MSME forum and discusses programs that are intended to popularize entrepreneurship.
“Our sector re-affirms our commitment to continuously initiate concrete steps that are supportive of the BSP’s thrust on financial inclusion and ensure that our members continue to look ahead and use technologies to improve business operations. CTB will always be ready to assist its member banks in their digital agenda,” San Pedro concludes.
The thrift banking industry maintained its stability with key indicators marked by sustained growth in resources, lending and profitability. This was supported by increased deposit mobilization, adequate capitalization as well as enhanced asset quality.
Total assets stood at P1,244.7 billion, higher by 6.55 percent than year ago’s P1,168.19 billion.
The industry sustained credit growth as core lending rose by 6.73 percent to reach P916.02 billion from year ago’s P858.22 billion reflecting sustained lending activity of the sector to its avowed niches of operation (viz; MSMEs, housing and consumers).
Total capital reached P161.78 billion in December 2018, up by 10.34 percent from a year ago level of P146.61 billion. Source: Bangko Sentral ng Pilipinas