Filipinos turning to bank savings

MANILA, Philippines  — More Filipinos have realized the need to have an emergency fund  amid the coronavirus pandemic as seen in the surge in deposit volume and new deposit account openings, according to Bank of the Philippine Islands.

BPI saw a 15 percent growth in deposit account openings despite most of its branches being closed during the lockdown.

Carmina Marquez, head of deposits at BPI, said the impact of the coronavirus disease 2019 or COVID-19 crisis on the economy and incomes have made people more conscious about their savings.

“Saving enough money for a rainy day – or in this case a prolonged storm – takes discipline, but it must be done, and people are seeing that very clearly now. The pandemic made many realize the importance of building an emergency fund to tide us over unexpected circumstances that could drain one’s finances,” Marquez said.

Marquez said many were depositors in other banks who either completely transferred to BPI or decided to spread out their deposits among different banks.

She said Filipinos could start small and set aside 20 percent of their monthly income.

“This allows you to have 2.5 months’ worth of salary set aside each year.  Before you know it, in five years’ time, you would have saved a years’ worth of your salary,” Marquez said.

Marquez said depositors prefer to hold on to their cash and thus, have moved their funds from longer tenor time deposit to regular savings, while deposit market rates decline as there is enough liquidity in the market.

BPI has deposit products that provide clients with liquidity while allowing them to optimize their savings by giving clients additional interest earnings or insurance coverage.

For his part , ING Bank country manager Hans Sicat said the three-month lockdown may have led Filipinos to become more prudent with their savings in preparation for emergencies.

“We are inclined to believe that more Filipinos will look at emergency funds as an essential component but segregated from their usual savings in banks,” Sicat said.

The COVID-9 Financial Readiness Survey from eCompareMo.com revealed that 71 percent of its respondents lacked an emergency fund that would last for three months. It also showed that only 25 percent of Filipinos with emergency funds have the means to pay for their basic necessities.

According to ING, an emergency fund is needed because it helps Filipino stay debt-free in times of emergencies, cover unforeseen emergency expenses, and discourages passive spending. The general rule of thumb is that funds should be equivalent to a person’s salary for at least three to six months.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno has committed to double the level of Filipino adults with formal bank accounts to 70 percent by 2023 from the current level of 35 percent.