Consing, Dee, Buenaventura
Banks paint rosy picture for 2018
Lawrence Agcaoili (The Philippine Star) - January 9, 2018 - 12:00am

MANILA, Philippines — Bank executives are painting a rosy picture for the local banking industry this year on the back of the sustained growth in the economy which is expected to be supported further by the implementation of the tax reform program.

Cezar Consing, president and chief executive officer of Ayala-led Bank of the Philippine Islands (BPI), said 2018 should be a reasonably good year for the banking industry.

“The prospects of lower reserve requirements, and perhaps slightly higher interest rates, should be positive for net interest margins,” he said.

Consing said the passage of the first package of the Comprehensive Tax Reform Program as well as the massive infrastructure build up of the government under the Build Build Build program are other positive factors for the banking sector.

“At the same time, the recently passed tax program should be supportive of the government’s massive infrastructure program which is very positive for loan demand. These factors will be supportive of banks in general. BPI, which will focus on growth without sacrificing efficiency, should do well in this environment,” he said.

President Duterte signed into law Republic Act 10963 or the Tax Reform for Acceleration and Inclusion Act (TRAIN) on Dec. 19, 2017 which is expected to yield P90 billion in additional revenue for the government.

Proceeds of the tax reform program would bankroll a portion of the massive P8.44 trillion infrastracture projects under the program.

Metropolitan Bank and Trust Co. president Fabian Dee said the country’s growth momentum is expected to continue into 2018 especially with the government’s massive infrastructure program.

“As infrastructure build up accelerates, and more investments come through, this will translate to higher spending capacity. Overall, these events will be positive for the banking industry,” Dee said.

Economic managers penned a gross domestic product (GDP) growth of seven to eight percent this year.

The Philippines booked 75 straight quarters of uninterrupted growth as the GDP expansion accelerated to 6.9 percent in the third quarter of last year from the revised 6.7 percent in the second quarter.

The feat was achieved as inflation remained at 3.2 percent last year, well within the BSP’s two to four percent target.

For his part, Rizal Commercial Banking Corp. president Gil Buenaventura said the banking industry would continue to ride the economic momentum, while the Tax Reform Law is seen boosting consumer spending.

“The GDP growth is still good and consumer spending and consumption just tracks the GDP growth. The tax reform will translate to consumer spending, therefore, more need for housing, cars, among others. I think it will be positive for everybody,” he said.

Bangko Sentral ng Pilipinas Governor Nestor Espenilla said a sound and liquid financial system also provided support to Philippine economic activity last year.

“Banks’ balance sheets expanded with a double-digit growth in assets and deposits. Credit continued to flow steadily to productive sectors and sustained efforts by the BSP and the financial sector to enhance liquidity and risk management practices kept threats to financial stability at bay,” he said.

AYALA-LED BANK BPI CEZAR CONSING
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