INCLUSIVE GROWTH THROUGH INCLUSIVE BANKING
The officers and members of the Bank Marketing Association of the Philippines, led by the re-elected President Allan Tumbaga, fellow bankers, special guests, good afternoon.
As you know by now, I always look forward to meeting BMAP members. The Bangko Sentral ng Pilipinas has always counted on BMAP as a partner in continuously improving and elevating the standards of the Philippine banking industry.
No doubt about it, banks continue to dominate our country’s financial system: by our estimates, about 80 percent of the total resources of our country’s financial system belongs to the banking sector. Clearly, the role of Philippine banks in supporting balanced and sustainable growth cannot be over-emphasized. We saw this happen in 2010, a banner year for both our economy and our banking sector.
As advanced economies struggled to recover from the global slowdown, our economy sustained its dynamism, drawing strength from our solid macroeconomic fundamentals and stable banking system.
In particular, domestic activity recorded a remarkable expansion with a 7.3 percent growth last year, surpassing the Government’s 2010 target of 5-6 percent. It is noteworthy that this robust growth was realized within a subdued inflation environment: an average of 3.8 percent in 2010, near the low end of our target.
Our external payments position continues to strengthen, supported by a record high balance of payments surplus and strong international reserve position that is now at its highest ever. This provides us with comfortable buffers against possible external shocks and helped ensure external debt sustainability. Moreover, the stability of the peso was maintained. This is one of the factors that led to our credit rating upgrade.
Meanwhile, the banking system remained sound, stable, and liquid as indicated by capitalization yardstick, solid asset quality, sustained growth in deposit base, and improving profitability.
Our country’s remarkable rebound in 2010 happened because the necessary policies and support measures were implemented in a timely manner. By all accounts, the developments in the previous year provide us with a good head start for 2011. More importantly, it allows us sufficient headroom to work further towards a more meaningful growth that is sustained and even more inclusive.
Inclusive growth through an inclusive financial system
Ladies and gentlemen, growth has always been the mantra of every economy. What we should work on together is meaningful economic growth that encompasses all sectors of society. This is what broad-based growth is all about.
One way of achieving a broad-based growth is through a more inclusive financial system that reaches out to the underbanked and the unbanked. This is not to say that we have not made remarkable progress here. The Philippines is now recognized globally to have the best regulatory framework for promoting the growth of the microfinance sector which has proven effective in liberating our entrepreneurial poor from poverty. As of end-June 2010, 200 banks had outstanding loans of P6.1 billion extended to about 830,000 clients; this is equivalent to an average loan of P7,350.00 per microentrepreneur.
One indicator of the success of these microentrepreneurs is their new-found capacity to save regularly: their consolidated deposits now exceed P3 billion. In other words, these microentrepreneurs are now able to support their families, generate employment in their communities, and maintain deposits in banks that fund productive activities.
While these are inspiring trends, we should not overlook the fact that millions of Filipinos still live in poverty.
This is where BMAP’s expertise can be put to good use: making our banking sector more inclusive. A starting point would be to have a broader and deeper economic and financial education program that cuts across all sectors. Empowering Filipinos through financial education and better consumer protection are priority areas that we should continue to work on.
In marketing bank products, it is important that BMAP members advocate and follow the good governance tenets of transparency, fairness and accountability. In educating your clients, you have to lay down the benefits as well as the potential risks they face. Credit card use comes to mind. The interest and wellbeing of your clients should always be a factor in planning and implementing your marketing programs. Think long-term, not short-term.
I am happy to know that BMAP is preparing a series of programs in support of BSP’s initiatives in these areas. We at the BSP believe that financial inclusion should be pursued alongside the promotion of stability and efficiency in the financial system. In fact, we can develop a deeper, more diversified, and more stable financial system by having a more inclusive financial system.
Moving forward, the BSP will continue to work on creating a sound and stable banking system that will be more responsive to the needs of the different sectors of our economy, including the underserved and un-served. Together, we should work to have a truly inclusive financial system.
My colleagues in the BMAP, we have our work cut out for us. I call on your membership once again to help educate and empower Filipinos to make better financial decisions… that will ultimately make for a strong and robust financial system. As the global financial landscape continues to shift and evolve, we should stay the course in sustaining the reforms that will advance our agenda for an inclusive financial system that fosters economic resilience… and a better life… for everyone.
My congratulations and best wishes for a great year in 2011 for BMAP and all its officers and members.
Mabuhay ang ating mahal na bansang Pilipinas!
Maraming salamat sa inyong lahat!