Cebu bankers expect slow rebound in 2010

It would be a slow recovery in 2010 for the country’s economy, according to the Cebu Banker’s Club as they gear up for the upcoming year.

However, even despite industries beset with crisis since 2008, CBC shared that they are relieved to have had a good year for 2009.

With this, they expect the growth to continue towards 2010 but anticipates a sluggish revival, said CBC president John Salas.

“It was a good year for us,” said Salas for the reason that the country, specifically in Cebu , was not as hardly hit with the crisis like other countries.

Salas said that they are ready for 2010 since the industry has been through a lot already not only with the current global recession but also with the previous economic instabilities like the one in 1997.

He said that since the Asian crisis in that year, a lot has changed and it has proven to be a “stone year” or has made a foundation that helped the sector become stronger.

According to Salas, strategies has been made in order to cope with the crisis and the financial turmoil has not greatly affected them since there were a lot of help coming from the government like the sponsored activities of the Bangko Sentral ng Pilipinas, which was supported by a lot of industries and companies.

“This made us prepared for 2009 as well as for 2010,” he said.

Salas added that through the concerted plan initiated by BSP and embraced by the industry, they did not at all reduce or shy away from credit during the time of the crisis and they were willing to lend to those in need.

According to Salas, based on the National Economic Development Agency’s study for this year in the industry, lending was stable, which was noted with outstanding loans of commercial banks including reverse repurchase agreements that grew by 3.1 percent year-on-year to reach P2.1 trillion in August 2009.

This is projected to grow more in the upcoming year as the economy slowly recovers. There is a natural increase in deposits as a result of investors' aversion towards equities and others perceived as riskier investment outlets.

Loan volume has likewise grown as banks shifted their asset portfolios to traditional domestic loans from complex and exotic structured deposit products.

Aside from traditional lending, the profit of the Banking Industry year on year is also up due to the fund management income from bond issuances.

Some of the banks that indicated a more profitable 2009 compared to 2008 was Allied Bank which profit in the first semester of 2009 was up by 20 percent compared to the same period in 2008 and Philtrust which profit in the first Semester also of 2009 went up by 40 percent from 2008.

Good performance of banks was also accredited to the 200 basis point reduction in policy rates of BSP and reduction of regular reserves from 21 percent to 19 percent in November of 2008. This boosted domestic liquidity, stimulated growth in lending and moderated the slowdown of the economy.

“Cebu's performance has always mirrored that of the Philippine economy in general. After all, Cebu has continually been recognized as the country's 2nd largest metropolis and it's fastest growing economy.”

The global financial crisis has also pushed retail banks to change focus from complex products back to the basic banking business of deposit taking and lending which was an advantage for Cebu’s growth as the banks are reportedly structured for these changes.

Salas said that these indications attest to the resiliency of the industry, which they expect to help make a better year for 2010.

But he said that it would not be a fast recovery and through some consultations, they expect that 2010 would an “adjustment period” for the country.

However, this would not stop for them to find ways to resume regular operations and to address to the concerns of their industry.

Salas said that one of the common concern that they would be addressing in the coming year is on how to make the industry more stable.

He said that this is imperative for the Philippines , specifically in Cebu considering the issues that the industry went through in the past year with some troubled banking institutions.

“It is imperative for us to create an environment for the banking public to have utmost trust and confidence in us. This goes out for the rural and commercial banks.”

He said that they are optimistic that they would be able to achieve this with the extended effort of BSP and the members of the industry that would help them realize their aim to have a “bigger and better banking industry.”