Bank CEOs bullish over 2-year horizon, says new BSP survey

A bank teller prepares stacks of P500 denomination for the bank’s automated cash dispenser in this file photo. AFP FILE PHOTO/ROMEO GACAD

The country’s top bankers expect the Philippine financial system to remain stable for the next two years, at least, with some even expecting it to strengthen, according to a new survey conducted by the Bangko Sentral ng Pilipinas (BSP).

In a statement, the central bank said that its maiden Banking Sector Outlook Survey conducted in the first half of the year showed that 66.7 percent of the respondents consider a stable outlook for the banking system while the remaining 33.3 percent view that banking system will be stronger in the next two years.

“This is anchored on the respondents’ economic growth forecast of 5 to 7 percent,” the BSP said. “The stable outlook for the banking system can be attributed to the strong macroeconomic fundamentals, adequate liquidity, rising capital buffers and profitability of banks.”

The survey gathers the sentiments of the presidents, CEOs and country managers of 114 banks in the country related to their growth outlook and risk assessments, business performance strategies, and insights on regulation and supervision within a two-year horizon. It is also part of the BSP’s surveillance toolkit to promote the sustained resilience of the banking system.

The central bank said majority of the respondents believe that expanding client base, deepening of customer relationships, and developing new products are necessary to grow the bank. 

“With the rapid pace of digital technology reshaping the banking industry, respondents underscore the need to optimize available technology,” it said. 

The banking industry supports the use of technology-enabled solutions as survey results reveal that 81 out of 114 or 71.1 percent of respondent banks have plans to use technology in the banking transactions in the next two years. 

Managing reputational and operational risks, data and cybersecurity enhancement, upholding consumer protection, and increase of capital and liquidity ratios were also deemed important to protect the bank. 

All the banking group respondents except for those from rural and cooperative banks mentioned that compliance with mandatory credits to the agricultural and agrarian reform sectors and small businesses as the most challenging area in terms of compliance. 

Respondents also cite that compliance with the BSP’s reportorial requirements and regulation on anti-money laundering remains an ongoing concern. 

“Overall, the maiden conduct of [survey] discloses the banks’ awareness of internal and external risks affecting their business,” the BSP said. “[It] shows that banks are formulating strategies to address these concerns while positioning for opportunities particularly from financial technology. 

The central bank said this bullish outlook shows banks’ readiness to “support the sustained development of the national economy.” /kga