Free transfers intensify deposit competition

From AB Capital's The Opening Bell: Three Moves

Event

Bangko Sentral ng Pilipinas (BSP) Circular 1238 has prompted most banks to waive InstaPay and PESONet fees, with industry estimates suggesting a 1% revenue reduction and a 1% to 3% profit impact for large banks. Transaction volumes have reportedly increased by as much as 50% following the waivers.

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We think the near-term earnings drag should remain manageable for universal banks, given transfer fees contribute only a small portion of revenues. Our own estimates point to a 2.3-2.9% EPS cut for the big three banks (and less than 1% for smaller banks). Higher transaction activity could strengthen customer retention, deposit gathering, and cross-selling, although smaller lenders with less diversified fee income face greater pressure.

Catalyst

The key variable is whether increased payment activity converts into sustained deposit balances and additional card, lending, insurance, or investment-product revenues. Greater deposit mobility may also intensify competition, particularly if digital banks respond through higher deposit rates, rewards, or improved platform features.

Action

In our view, the development favors large banks with broad ecosystems, established digital platforms, and stronger cross-selling capabilities. We prefer BDO and BPI, which are better positioned to absorb modest fee losses and monetize customer engagement, while maintaining caution on smaller banks facing higher funding competition.

Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.