CBC bullish on bank sector growth in Cebu

CEBU, Philippines - The Cebu Bankers Club is bullish on the continued expansion of the banking industry in Cebu, citing the increasing economic activity as key driver to this growth.

CBC President Mario Fritz Palileo said that banks have also established presence in towns outside Metro Cebu, where economic activities have increased. 

"Within the city, banks put up brick and mortar whenever there are commercial zones being developed by real estate developers," said Palileo, who is assistant vice president at Unionbank of the Philippines.

"Banks also have put up branches in towns outside Metro Cebu whose economic activities have already increased," the bank official said.

The CBC official said that banks' branch expansion has always been done by strategic positioning.

He cited that one big universal bank is establishing its presence in cities of Carcar, Toledo and Bogo.

For Unionbank, he said it already opened two branches this year in Mactan Newtown in Lapu-Lapu City and AS Fortuna St. in Mandaue City.

"Another four branches by the third quarter of the year: two in Minglanilla and another two in Mandaue. Our strategy is to put up branches in areas where we have not yet serviced," Palileo noted.

Citing data from the Bangko Sentral ng Pilipinas, he said the total number of bank branches in Central Visayas region as of March 2017 reached 636, up from 622 as of March 2016.

"This shows that banks are cautious and selective when they put up branches, as franchises and cost to put up are very expensive," the bank executive explained.

Furthermore, based on data from the Philippine Deposit Insurance Corp. (PDIC), bank deposits in Central Visayas as of end 2016 reached P552.05 billion, up by 11 percent from P499.33 billion in 2015.

Bank deposits in Cebu, the region's financial center, as of end 2016 stood at P468.36 billion, up 10 percent from P425.78 in 2015.

Palileo further said that total loans, however, decreased from P214.38 billion as of December 2016 to P168.96 billion as of March 2017.

Aside from economic expansion, he believes the increasing population is also driving banking's growth.

The bank official also cited the increasing employment, robust consumer spending and household expenditure as among the drivers of the sector's growth.

Cebu's vibrant and growing economy which is mostly consumer-driven is also supporting this growth.

Cebu is seen to sustain this growth considering the consistent rise in bank deposits in the last years. (FREEMAN)