THE CHAMBER of Thrift Banks (CTB) remains "optimistic" on industry
prospects, but expects slower growth this year in the face of a
potential spillover from the euro zone crisis and rising oil prices
stoked by tensions between Iran and the west.
"Despite the headwinds from Europe, the US and threats of higher oil
prices, the environment locally is much more favorable for both
consumers and lenders," said CTB President Patrick D. Cheng, president
and chief executive officer of HSBC Savings Bank, Inc., during the
group's media briefing yesterday at the RCBC Plaza in Makati City.
At the same time, however, he admitted that "as much as we want the
thrift bank industry to maintain the double-digit growth it has shown in
the past years, it may be difficult for the industry to sustain that
growth today amid the headwinds from the external environment...So, we
expect the industry to post a high single-digit growth this year."
Housing and auto loans business will remain a primary growth driver for
the thrift bank industry this year, CTB Treasurer and RCBC Savings Bank
President/CEO Rommel S. Latinazo said in the same event.
"Housing will be a major outlet of business of thrift banks this year
and we are seeing good activity in that segment...," Mr. Latinazo said.
"We will also focus on growing our auto loans business, which did well
last year despite auto supply disruptions caused by the earthquake that
hit Japan and floods in Thailand last year," he added.
"Aside from that, we also see opportunities in other industries...we
expect to sustain the growth of the MSME (micro, small and medium
enterprises) industry which we have been catering to in the countryside."
He also said the industry is bullish on its lending business in other
segments like agricultural, manufacturing, transportation, construction
and tourism, among others.
More challenging now
However, thrift banks have to be innovative amid a low interest rate
environment that could erode interest income and growing competition in
products and services for the same market, Mr. Cheng said.
"The low borrowing rates now is not only an opportunity for consumers,
but an opportunity for thrift banks to expand their business as well,"
he said.
As of end-2011, the number of thrift banks in the country had been
reduced to 71 from 73 the preceding year after troubled Banco Filipino
Savings and Mortgage Bank and LBC Development Bank were placed under
receivership by the Bangko Sentral ng Pilipinas, Mr. Cheng said in his
opening remarks for the briefing.
In spite of the lower number of industry players, thrift banks continued
to grow the number of branches to 1,409 from 1,346 the year before, he
noted.
Deposit accounts of the whole industry totaled 4.1 million last year,
Mr. Cheng recounted without providing comparative 2010 data. Savings and
mortgage banks accounted for 40%; stock savings and loan associations,
30%; private development banks, 26%; and micro finance-oriented banks, 4%.
Total deposits rose just 0.68% to P468.06 billion as of end-November
2011 from P464.88 billion the year before.
Thrift banks' loan portfolio expanded by 8.4% to P364.55 billion from
P336.15 billion, also as of end-November, while total assets of the
industry grew by 0.22% to P579.06 billion from P577.81 billion in those
11 months.
As of end-November, non-performing loan ratio (NPL) -- soured accounts
in proportion to total loans -- improved to 6.46% from 8.41%, while
non-performing asset ratio (NPA) likewise improved to 7.44% from 8.95%.
NPL loan coverage ratio of thrift banks grew to 57.99% from 50.77%,
while NPA coverage improved to 37.67% from 31.51% as of end-November.
"The stronger coverage ratios are indicative of thrift banks' resolve to
provide adequate buffers against unexpected losses amid uncertainties in
the financial environment," Mr. Cheng said in his speech.
Thrift banks' capital adequacy ratio -- a key measure of banks'
financial strength -- stood at 15.53% as of end-June, well-above the
central bank's 10% minimum requirement. -- Ann Rozainne R. Gregorio
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