6 digital banks breach P80B in collective deposits

ROBUST GROWTH Digital banks now have a total of 8.7 million customers in the Philippines. —Contributed photo

The depositor base of digital banks nearly tripled year-on-year in June, outpacing that of the entire domestic banking system and giving this new breed of lenders an additional lifeline as they try to build a profitable loan portfolio.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that the country’s six digital banks had attracted 8.7 million depositors as of June, significantly larger than their 3.6 million depositor base a year ago.

That pushed up the total deposits of the industry to P82 billion during the period, increasing at an annualized rate of 32.26 percent.

READ: New digital banks set to fire up competition for deposits

Such a growth outperformed the entire Philippine banking system, whose depositor base grew by 13.84 percent to 119 million accounts in June. Total deposits of the local banking sector likewise climbed by 9.5 percent to P19.5 trillion, data showed.

That figure included traditional big banks which—unlike digital banks that cater to underserved markets—mainly provide loans to borrowers with tested credit profiles. According to the BSP, the depositor base of large banks expanded by 7.34 percent to 82.2 million, helping to boost their total deposits by 9.3 percent to P18.3 trillion.

Moving forward, analysts said the decision of the BSP to reopen the digital banking sector to four more players would fire up competition for deposits.

READ: Bangko Sentral to license 4 new digital banks

The central bank had announced it would resume accepting applications for digital banking licenses starting Jan. 1, 2025, in a bid to expand the industry that initially includes six players: UNO Digital Bank, UnionDigital Bank, GoTyme, Overseas Filipino Bank of state-run Land Bank of the Philippines, Tonik Digital Bank and Maya Bank.

But the new digital banks—like the incumbent players—are expected to struggle to build a profitable loan portfolio at first as they mostly serve first-time depositors and borrowers.

For that reason, the BSP said it would tighten its scrutiny of upcoming digital banks, which would have to show the regulator their unique business plans to boost financial inclusion while building a sustainable loan book. —Ian Nicolas P. Cigaral