PH rural banks growing robustly, says BSP

The rural banking industry continued to grow in terms of their most important financial indicators which, the central bank said, was evidence this subsector of some of the country’s smallest financial institutions remained strong and stable.

In a press statement, the Bangko Sentral ng Pilipinas (BSP) said rural banks exhibited “positive growth” in assets, loans, deposits and capital based on latest data as of end-March 2018.

“The industry also continues to be profitable and operates with a wide physical network,” the regulator said.

The industry’s assets expanded by 8.3 percent to P216.7 billion at the end of the first quarter, funded by the 6.7-percent growth in deposits that reached P154.8 billion. Capital adequacy ratio stood high at 19.1 percent. Meanwhile, return on equity was solid at 7.1 percent while annualized net profit was reported at P2.9 billion at the end of the period.

“Rural banks continue to support countryside development and growth of retail banking through financing of rural communities,” the BSP said. “The industry catered to the needs of agri-agra and micro, small and medium enterprise (MSME) borrowers, with compliance ratios far exceeding the mandated requirements.”

Rural banks have a network comprised of 2,800 banking offices nationwide as of end-July 2018.

To further expand reach and maintain competitiveness, they have also leveraged on innovative technologies, such as the use of cloud-based banking solution and cash agents.

“The industry outlook of rural banks remains positive,” BSP said. It noted preliminary results of the Banking Sector Outlook Survey showed the top three strategic priorities of the rural banks over the next two years were growing the business, protecting the bank and optimizing available technology.

“These strategies enable rural banks to provide a wide range of innovative financial products and services appropriate to the needs of the local communities,” the central bank said.

Recently, a number of rural banks have gone on board with the electronic payment platform PESONet and InstaPay.

“All these indicate that the rural banking industry welcomes the use of technology-enabled solutions and displays strong interest in participating in the digital finance ecosystem,” it added.

“In this respect, the BSP remains strongly committed in providing an enabling regulatory environment to contribute to the growth of the industry while promoting its sustained safety and soundness,” the regulator said. “The BSP will continue to be sensitive to the application of the principle of proportionality to ensure that requirements for rural banks remain commensurate to their size, scale and complexity of operations.”