Banking community unperturbed amid spate of calamities, tensions

MANILA, Philippines — As foggy-like haze swarmed Metro Manila amid light rains last Friday, bankers and diplomats trooped to the headquarters of the Bangko Sentral ng Pilipinas (BSP) for the annual reception for the banking community.

Natural disasters including the bush fires in Australia, heightened tension between the US and Iran, the global outbreak of the coronavirus from Wuhan in China as well as the eruption of the Taal Volcano in the domestic front greeted the new decade.

“It has become a tradition for us to gather at the beginning of every year, and for good reason. It is a timely opportunity for us to look back at the year that was and look forward to what the coming year may bring,” BSP Governor Benjamin Diokno.

Bankers, diplomats spotted

Taipan and Philippine National Bank director Lucio Tan who is still mourning the death of his son Lucio “Bong” last November was spotted together with PNB president and chief executive officer Jose Arnulfo “Wick” Veloso and good friend CTBC Bank vice chairman William Go.

Also spotted were BDO Unibank chairperson Tessie Sy-Coson and China Bank chairman Hans Sy, children of the late retail and banking magnate Henry Sy, Metropolitan Bank and Trust Co. chairman Arthur Ty, son of the late tycoon George SK Ty, Bank of the Philippine Islands chairman Jaime Augusto Zobel de Ayala, Aboitiz-led Union Bank of the Philippines chairman Justo Ortiz, among others.

Former Philippine Ambassador to the US and from Central Bank of the Philippines Jose Cuisia Jr., US Ambassador to the Philippines Sung Yong Kim, Japanese Ambassador Koji Haneda, Australian Ambassador Steven Robinson AO, and Malaysian Ambassador Norman Muhamad, Thailand Ambassador Vasin Ruangprateepsaeng and former Budget minister and central bank governor Jaime Laya also graced the occasion.

Bank presidents seen during the reception included Cezar Consing of BPI, Fabian Dee of Metrobank, Sanjiv Vohra of Security Bank, Eugene Acevedo of Yuchengco-led Rizal Commercial Banking Corp., Antonio Moncupa Jr. of Gotianun-led East West Bank, Albert Yeo of BDO Private Bank, Roberto Panlilio of JP Morgan Chase Bank, Hans Sicat of ING Bank Manila, among others.

2019 in review

The Philippines has booked 84 consecutive quarters of uninterrupted growth with the gross domestic product (GDP) expanding by 5.9 percent last year, missing the government’s lowered six to 6.5 percent growth target last year, from 6.2 percent in 2018.

“We started 2019 with some uncertainty – reflecting the weaker growth performance and escalating trade tensions between major economies, and geopolitical factors that affected business sentiment and global demand. On the domestic front, the delay in the passage of the 2019 budget and the election ban weakened government spending and public construction. However, despite these global and domestic challenges, the Philippine economy remains in a position of strength,” Diokno said.

This, Diokno added, highlights the Philippines’ place as one of the most resilient and fastest growing economies in Asia and in the world.

The BSP also reported the central bank’s effective monetary policy contributed significantly to achieving within-target inflation as the consumer price index eased to 2.5 percent last year after accelerating to 5.2 percent in 2018 paving the way to a tightening cycle that saw interest rates jump by 175 basis points.

The benign inflation environment and slower-than-expected GDP growth allowed monetary authorities to slash interest rates by 75 basis points, partially unwinding the tightening cycle in 2018.

The BSP’s Monetary Board also slashed the reserve requirement ratio for big and mid-sized banks by 400 basis points and for small banks by 200 basis points releasing about P450 billion into the financial system to boost economic activity through lower intermediation cost.

Bringing BSP closer to Filipinos

The central bank governor said the BSP is committed to bringing the benefits of central banking closer to all Filipinos through more inclusive policies.

“I have always said that a central bank cannot operate from an ivory tower. We are now setting our sights on digital innovations as we pursue one of our most important advocacies, financial inclusion,” Diokno said.

He said digital solutions present opportunities for cost savings and efficiency gains that make the economics of serving the marginalized sector of the economy viable.

The BSP has partnered with the Department of Education, the Overseas Workers Welfare Administration, the Armed Forces of the Philippines and the Civil Service Commission to reach broader and more diverse audiences through financial learning.

“We support initiatives that would make it easier for Filipinos to have the necessary requirements to apply for new bank accounts or financial services,” he said.

The BSP is collaborating with the Philippine Statistics Authority (PSA) to implement the Philippine ID System by printing 116 million pieces of cards over the next three years.

“Filipinos, especially the unbanked, will be able to easily obtain a valid government ID card, which they can use to apply for bank accounts and other financial services,” Diokno said.

Likewise, Diokno said the BSP, together with the other members of the Interagency Technical Working Group on Islamic Banking, is committed to support the growth of Islamic banking in the country.

Prospects for 2020

“2019 was a very good year. I expect 2020 to be even better. We will continue to pursue goals that will benefit the Filipino people. We will persevere in pushing initiatives that will ensure that every Filipino has wider access to financial products and services,” the BSP chief said

Diokno is confident the share of electronic payments in total payment transactions in the country would rise to 50 percent by 2023 from about 30 percent this year.

The result of the recent survey conducted by the United Nation’s led Better Than Cash Alliance (BTCA) showed the share of e-payments jumped to 10 percent in 2018 from only one percent in terms of volume and to 20 percent from eight percent in terms of value.

Diokno said the BSP is confident that seven out of 10 adult Filipinos would have access to financial services through bank accounts by end 2023.

“It is our hope that with your help, and the help of other industry players and other government agencies, we will enable more Filipinos to reap the benefits of a stronger and more inclusive economy,” he said.

Diokno has time and again reiterated there is no need to panic due to the heightened US-Iran tension, the lingering US-China trade disputes, the eruption of the Taal volcano, and the ongoing spread of the novel coronavirus that originated from Wuhan in China.

“Don’t scare yourself. Let us not be alarmist,” the BSP chief concluded.

Diokno asked members of the banking and diplomatic communities to “Let us all keep working together for a stronger and more inclusive economy.”