Assets of the country’s rural banking industry has grown by 15.72 percent to P161.08 billion in the first semester of 2008, compared to the P139.21 billion in the same period last year. It grew by 7.78 percent compared to the P149.46 billion end 2007.
In the same period, commercial banks reported a 4.2-percent growth in terms of assets while the thrift banking system recorded negative growth.
This prompted the Rural Bankers Association of the Philippines (RBAP) to express optimism that the industry would likely grow by another 15 percent for the whole of 2008. That, in fact, is the average growth rate registered by the industry in the past five years.
“So far, our member banks reported strong growth in the third quarter reflecting positive growth in the countryside,” Gomez added.
Loans and deposits grew at a faster pace compared to the rest of the industry with loans for rural banks growing by 9.66 percent to P102.67 billion and deposits growing by 7.76 percent to P116.5 billion from January to June 2008.
Key to the overall growth was the emphasis placed on the microfinance and agriculture sectors, enhanced by strategic alliances with financial and non-financial entities.
Gomez cited the industry’s partnerships with the USAID Microenterprise Access to Banking Services (MABS) program, GTZ, the Land Bank of the Philippines (LBP), the Development Bank of the Philippines (DBP), and the Small Business Corp.
MABS chief of party John V. Owens agreed that expansion in micro-lending and the mobilization of small deposits as among the factors behind the industry’s strong growth.
“Most of our participating banks (rural banks entering the MABS program) are seeing a tremendous expansion in the number of loans being granted this year with micro loan disbursements exceeding P4.3 billion in the first nine months of 2008,” Owens said, noting the significant increase in deposit services among participating banks.
Rural banks presently manages more than six million deposit accounts, the first time in history that it surpassed the six million mark, majority being small deposit account holders in the countryside.
To meet the strong demand, rural banks have turned to technology.
The industry operates 83 automated teller machines (ATMs) from 73 units in 2006 and just five ATMs in 2005. In fact, 12 units of the 83 are offsite or ATM units located outside bank premises.
RBAP officials said that the number of ATM units could double by next year with the entry of third-party ATM providers such as Nationlink and ENCASH.
Number of branches expanded by a little over three percent to 2,146 in June this year compared to the 2,083 end 2007.
But looking at the 2003 to 2007 period, branches of rural banks grew by 2.36 percent, compared to the negative level of the commercial banks, and the less than one-percent growth of thrift banks.
Meanwhile, 46 rural banks have introduced electronic banking services, including the popular mobile phone banking.
Mobile phone banking transactions over the past 12 months doubled due to the support the industry received from Globe Telecom’s G-Xchange and their GCASH platform. It also received a boost this year when Nokia Philippines signed an agreement with RBAP offering Nokia Phone financing schemes for bank clients.
RBAP members will soon utilize Smart Money platform, a program of Smart Communications, which will focus initially on expanding remittances and loan disbursements and collections.
Mobile phone banking has been so successful that it has attracted the attention of different countries and global financial institutions.
Foreign private and government banking institutions have either sent delegations to the Philippines to study the country’s mobile banking practice, or have invited delegates from RBAP, MABS and the telecommunications companies to introduce the program.