The Philippine banking industry will have to brace for lower revenues, narrower margins and higher credit costs in the next few years coming from this prolonged COVID-19 pandemic, veteran banker Eugene Acevedo said.
Acevedo, president of Rizal Commercial Banking Corp. (RCBC), said the transformation in consumer behavior during the pandemic—as locked-down customers learned to be reliant on their mobile phones for banking transactions—had been phenomenal and exciting. His aspiration is for RCBC to be the “preferred” digital bank.
“But I have to caution that the future remains uncertain,” he said at the Yuchengco Group of Companies conference on Thursday.
For example, Acevedo said the new interest rate cap on credit card lending was already a major challenge that bankers had accepted.
Consumer loans, which provide high margins for banks, are seen to grow slowly.
“Customers, especially those whose incomes were adversely affected, have started to become more conservative, meaning they will probably save more and borrow less,” Acevedo said.
He added that a number of corporate and industry sectors would take longer to recover to pre-COVID-19 levels.
“They will continue to need our assistance and will stress our credit ratios,” he said.
To deal with such challenges, Acevedo said RCBC would differentiate itself by providing the best customer experience and reengineering traditional products, eliminating unnecessary steps. This means maximizing the mobile channel for uncomplicated products.
One can now do personal investing and deposit checks from other banks using only the mobile app, he noted. The bank has likewise rolled out a check scanning service for corporate clients.
Cost-cutting measures, such as rationalizing service branches and ATM networks, are likewise seen inevitable.
“In brief, we are closing the unprofitable parts of the business, particularly those that will have less relevance in the future. We have frozen hiring and are right-sizing our teams, enhanced by digital tools like robotics,” he said. INQ