Competition spurred growth in the banking sector in 2011

CEBU, Philippines - The banking sector in Cebu remained upbeat in 2011 as players continued to outsmart each other in attracting depositors with varying packages, designed specifically to lure clients to avail of low-interest consumer loans.

“The [banking] sector generally did well in 2011. Most if not all had hit their targets. It means business and economic in the Philippines relatively did well despite the external problems especially in Europe and United States,” said Cebu Bankers Club (CBC) past president Prudencio Gesta.

Aside from the sustained flow of remittance from OFWs (Overseas Filipino Workers), booming Business Process Outsourcing (BPO) and strong confidence of investors, Gesta said the banking sector’s growth is largely fueled by the active lending activities brought about by the low interest environment.

However, although the banks admitted that there is a swell of liquidity, thus the active promotion of lending, Gesta said corporate loan still remained weak, while big companies are now adopting its own funding source mechanism, via issuing commercial papers or from capital market to lend capital resources from the public.

Gesta, who sits as the senior vice president and deputy group head for Rizal Commercial Banking Corporation (RCBC) added that despite some problems of the banking sector that happened during the year, such as the crisis faced by the LBC Bank, and other previous bank closures, Gesta said the banking industry sustained its strength, backed up by the strong leadership and fundamentals by the Bangko Sentral Ng Pilipinas (BSP).

Amid good financial performance and upbeat outlook, Gesta said banks are now slowly seeing growth in attracting depositors and clientele via the online mechanism.

Meanwhile, in an interview with BPI president Aurelio Luis R. Montinola III, he said that banking had been doing very well in increasing its client base through alternative channels, both in mobile and web-based or online banking services.

Although BPI is continually investing in branches’ renovation around the country, as well as increasing online kiosk facilities, strengthening its online services is one of the growth drivers for BPI in the next few years.

Of its total capital expenditure (capex) in 2011, Montinola said significant share is spent on strengthening its online banking capabilities, and efficiencies.

BPI believes that because of its active move especially in attracting the young generation segment, the bank is confident to achieve a good growth figure by end of 2011, and sustain its leadership in the banking sector.

Security Bank president and chief executive officer (CEO) Alberto S. Villarosa said that because of the encouraging performance of the bank this year, despite the unpredictable world economy, it plans to open up 50 branches by 2012.

Villarosa said the bank is confident to post at least 25 percent growth by end of 2011, in terms of customer-based.

In loans and deposits, the bank targets to grow by 20 percent to 22 percent by end of this year.  

Likewise, international bank Hong Kong Shanghai Banking Corporation (HSBC) president and chief executive officer (CEO) Tony Cripps, said the bank is boosting its operations in the Philippines, by expanding its retail banking and wealth management (RBWM) products, such as mortgages, insurance, credit card among others.

HSBC, entered into active participating in the housing loan in the last two years, due to the encouraging real estate sector in the Philippines.

So far, Cripps said consumer lending posted encouraging results, thus the bank is considering its retail banking segment, as its growth driver.

Jonas Ravelas, Banco de Oro Universal Bank first vice president and chief market strategist said that this is now the time that the corporate sector will take advantage of the active opening of banks’ to lending activities, while interest rates is still on its lowest level.

Ravelas said the Philippines has over-supply of liquidity especially in 2011. In fact, one large bank had recently hit its one-trillion-peso market. However, the uncertainty of the world’s economic status has made investors hesitant to borrow from banks. (FREEMAN)