DBP strengthens partnership with rural banks

MANILA, Philippines — State-owned Development Bank of the Philippines (DBP) has strengthened its partnership with rural banks to service the banking needs of underserved communities in the country.

DBP president and chief executive officer Emmanuel Herbosa led the recent signing of an agreement with Rural Bankers Association of the Philippines Elizabeth Timbol to develop and implement strategic growth initiatives towards countryside development.

The ceremony was witnessed by DBP executive vice presidents Jose Gabino Dimayuga and Susan Prado as well as RBAP vice president for Luzon Gregory de Guzman.

Under the partnership, about 420 RBAP members would be granted enhanced access to DBP’s digital banking services and credit programs as the bank implements its mission to reach more Filipinos in rural communities.

No less than Bangko Sentral ng Pilipinas Governor Benjamin Diokno has stressed the importance of rural and cooperative banks in fostering financial inclusion as well as countryside development due to the industry’s strong geographical presence.

The small banks are stable and in a strong position to support the financing needs of micro, small, and medium enterprises (MSMEs) as well as large firms in rural communities affected by the COVID-19 pandemic.

Preliminary BSP data indicated that rural and cooperative banks raised new or refinanced loans to MSMEs and critically impacted large enterprises as compliance with reserve requirements ratio (RRR).

The results of a BSP baseline survey showed small banks were able to adopt their operations to community quarantine restrictions and eventually able to return to normal operations.

In addition, these banks used technology to continue serving their client base amid social distancing measures and movement restrictions.

Latest data showed rural and cooperative banks continued to show positive balance sheet performance with a 5.9 percent rise in total resources to P265.7 billion as of end March.

Resources were mostly directed to banks’ lending business fueled by deposits that went up by 6.1 percent to P188.2 billion.

The industry’s loan quality improved as their non-performing loan (NPL) ratio decreased to 11.2 percent at end-March from 11.6 percent a year earlier.

The capital adequacy ratio of rural and cooperative banks stood at 19.5 percent, well above regulatory thresholds.

The BSP’s comprehensive prudential reforms support the resilience of supervised institutions, including rural and cooperative banks, in managing rising risks from the economic slowdown brought about by the COVID-19 pandemic.