Cebu banking posts ‘good’ growth in 2015

CEBU, Philippines – The banking sector in Cebu enjoyed good growth this year in terms of deposits and loans.

But tightened security, according to Cebu Bankers Club President Maximo Eleccion, is essential to maintain this growth and sustain the confidence of the banking public in putting their money in banks.

In an interview on the 2015 performance of the local banking industry, Eleccion noted that fewer bank-related crimes were recorded this year, citing the recent two ATM skimming incidents in Mandaue City involving Romanian nationals who reportedly hacked bank accounts of British nationals and withdrew their money through the ATMs in the Philippines.

He also mentioned the two robbery incidents this year involving an electronic bingo outlet in Mandaue City and a pawnshop in Cebu City.

The CBC consistently coordinates with the local police to ensure security in the banking sector, he said.

"They (police) regularly brief us on the current [peace and order] situation. We need to ensure because crimes mitigate confidence of the banking public," said Eleccion, a relationship manager at Bank of the Philippine Islands.

No bank closure in Cebu was so far reported this year, he also said, recalling the Rural Bank of Subangdaku, which closed down in 2009, as so far the last bank closure incident in Cebu he could remember.

When the economy is growing and the market is good, Eleccion said it's seldom to see banks closing down unless mismanagement of money by officials within a bank company occurs.

Deposit  growth

Furthermore, bank deposits in Central Visayas continued to grow in the first half of the year.

Available data from the Philippine Deposit Insurance Corp. (PDIC) showed that money deposited in banks in the region reached P454.2 billion in the first six months of 2015, up 14% from P396.7 billion in the same period last year.

Cebu accounted for over 75% of total deposits in Region 7 at P385.2 billion in January-June 2015 period.

PDIC had said that the robust economic environment and continuing expansion of branch network of banks nationwide boosted deposit growth.

The state deposit insurer noted that more depositors continued to entrust their savings in banks.

Performance

In terms of lending performance nationwide, Eleccion reported that bank lending to various sectors grew 14.1% in September this year, citing a report from the Bangko Sentral ng Pilipinas.

Consumer lending for auto, housing and small and medium enterprises (SMEs) also continues to grow, he added.

"The banking sector is an important intermediary in financing economic growth. If banks are healthy, then the economy could likely be healthy because banks would have the capacity to finance economic growth," the bank official explained.

Banks in Cebu, according to Eleccion, are among the fastest growing in the country in terms of loan and deposit growth, supported by the consumers.

"That is reflective of the higher GDP (gross domestic product) of Cebu," he pointed out.

Nationally, Eleccion gave an upbeat outlook for the Philippines banking system, citing an assessment report by global debt watcher Moody's.

Moody's has assigned a "stable" outlook for the country's overall banking system with the same outlook given to key drivers: operating environment; asset quality; capital; funding and liquidity; profitability and efficiency; and government support.

"We expect the credit profiles of the Philippine banks to remain stable over the next 12-18 months, supported by steady domestic economic growth, stable asset quality, and strong funding and liquidity profiles," Moody's quoted its vice president and senior analyst, Simon Chen, in the report released last month.

Moody's said the Philippines' stable operating environment and low banking sector penetration are supportive of credit growth.

The debt watcher also expects the Philippines economy to maintain growth despite headwinds buffeting global emerging markets.

In an outlook report it also released last week, Fitch Ratings has upgraded its rating outlook for the Philippine banking system to "positive" on the back of sound operating environment, healthy profile of local lenders and strong economic fundamentals.

In its third quarter report on Philippine economic and financial developments, the BSP noted the banking system maintains its strong position as it continues to support economic growth.

"Banks continued to dominate the financial sector, with universal and commercial banks accounting for 90 percent of total banks' assets," the central bank said.

The total resources of the banking system grew by 10.6% to P11.9 trillion as of end-September 2015 from a year-ago level of P10.7 trillion, the BSP said.

Savings and time deposits remained the primary sources of funds for the banking sector.

Total deposits as of end-September 2015 totaled P6.9 trillion, up 7.8% or P0.5 trillion from the year-ago level.

The Bangko Sentral said: "The health of the Philippine banking system remained solid, supported by the country's strong macroeconomic fundamentals and favorable growth prospects." (FREEMAN)