Thrift banks target double digit growth

MANILA, Philippines - The country’s thrift banking system is extremely bullish in the Year of the Tiger, looking to grow its loans and deposits by double digits this year, despite the continued “encroachment” of both the commercial and rural banks.

Total loans grew by nearly eight percent while deposits by roughly 12 percent, as of November last year. Unconfirmed reports indicate that the month of December outperformed the previous month.

Net profits amounted to P1.714 billion as of September 2009 from a flat P1 billion in the first semester of the same year.

Thrift banks account for nearly 10 percent of total deposits, which has practically remained unchanged.

“2009 was a very difficult year, but the thrift banks road out the storm,” Pascual Garcia III, president of the Chamber of Thrift Banks (CTB), said in a press briefing yesterday. Garcia is also the president and chief executive officer of the Philippine Savings Bank (PSBank).

The casualty list has remained low ‘losing’ four banks last year, or reducing the lost of active participants form 77 in 2008 to 72 last year.

The Sterling Bank of Asia acquired Centennial Bank while Banco de Oro Unibank Inc. (BDO) gobbled up the GE Bank. Two others were reclassified as rural banks due to their inability of raise capital.

Nonetheless, the industry actually grew based on the increase in the number of branches from 1,296 in 2008 to 1,333 in November last year.

Target of loan growth this year is double digit, with the housing sector still expected to take the largest slice of the lending pie. Last year, mortgage lending was reported to account for 37 percent of the thrift banking sector loan portfolio.

As of September last year, lending to the real estate market hit P115.58 billion of the total P298.9-billion total loan port-folio.

Alfonso Salcedo president and chief executive officer of BPI Family Savings Bank, said that there is a backlog in the sector of between 3.5- to four billion.

“I do not think that even 500 million can be fulfilled in the immediate future,” Salcedo said.

He likewise stressed that fears of an asset bubble was unfounded as the country’s banking sector learned its lessons from the 2007 financial crisis and the recent US led global crisis.

Prudent lending practice, strong regulatory environment and an improving economy has kept the Philippine banking industry as among the healthiest in Asia.

Thrift banks are composed of 29 savings and mortgage banks, 18 private development banks, 23 stock savings and loan association, and three microfinance-oriented banks.

Total deposits amounted to P434.21 billion as of Nov. 2009, up 11.87 percent from the P388.13 billion in the same period in 2008.

Deposit mix consisted of 87.6 percent of peso deposits while the remaining balance of 12.4 percent is field in by dollar deposits. The time deposit account represented the largest portion of the deposit base at 54.78 percent, or P208.38 billion while the peso savings account is at 33.49 percent, or P127.38 billion and demand deposits at 11.73 percent, or P44.82 billion.

Non-performing loans (NPLs) was placed at 7.9 percent although its was 6.6 percent in 2008. Non-performing assets (NPA) ratio improved from 8.9 percent from 9.5.