In his keynote speech delivered during the Chamber of Thrift Banks (CTB) Convention recently, Bangko Sentral ng Pilipinas (BSP) governor Felipe Medalla said that more community banks and thrift institutions could soon be expected to embrace digital finance.
According to the BSP chief, 20% of thrift banks are now using InstaPay and PesoNet as digital payment rails. At least 25% of them now also utilize InstaPay while 17% are into PesoNet services.
“The use of PesoNet and InstaPay, two of our digital payment rails, by thrift institutions is something that pleases us,” said Medalla. “We can now anticipate their numbers to rise in tandem with the growth of digital payments.”
The CTB is the umbrella organization of the country’s thrift banks that helps ensure a manageable, if not better, operating environment for thrift banks.
Since its inception in 1974, it has been at the forefront of advocating appropriate legislative and regulatory reforms, thus influencing the statutory and regulatory framework.
Thrift bank expansion to outpace the growth of the banking industry
According to a press release posted on the BSP’s website, thrift banks have capital buffers of 19%, which is greater than the 16.2% average for the Philippine banking system. Thrift banks’ liquidity cushion is at 32.4 percent, less than the industry average of 193.9 percent.
Asset growth for thrift banks was reported at 4.6 percent while loan growth was 6.5 percent as of June 2022.
Additionally, deposits have climbed by 3.9 percent, and profitability was greater than the overall banking system average at 57.1 percent.
Non-Performing Loans (NPL) coverage for thrift banks is 63.2 percent, which is also less than the 97.1 percent average for the Philippine banking system. Bad loans or NPLs in the thrift banking business are higher at 7.8 percent compared to the sector’s average of 3.6 percent.
“In essence, the country now has a banking system that is increasing slowly but without compromising the institution’s stability and at the same time, retaining the depositor interest,” the BSP press statement read.
“The current state of the thrift banking system shows the same pattern. The fact that thrift bank expansion has outpaced the growth of the overall banking industry by a factor of more than three is of particular relevance,” it added.
This is consistent with the BSP’s strategy for sustainable finance, which outlines the requirements for releasing funding for sustainability projects and initiatives.