EVERY January, the governor of the Bangko Sentral ng Pilipinas (BSP) traditionally renders to the banking community and other stakeholders what may be considered as the governor’s State of Banking Address (SOBA).
This year, Gov. Amando M. Tetangco, Jr. delivered what could be his farewell SOBA before industry leaders, government functionaries (led by Senate President Koko Pimentel), and various stakeholders.
Usually held at the lawn of the historic Fort Abad within the BSP Complex, this year’s address had to be moved indoor to the adjacent Metropolitan Museum because of inclement weather. The equally impressive alternate venue is home of the vast gold artifacts collection of the BSP as well as current displays of contemporary Filipino artists.
Tetangco is scheduled to end his unprecedented second term as BSP Governor of the Bangko Sentral ng Pilipinas on July 2, 2017. This assumes that the powers-that-be are unable to convince Tetangco to accept a third term. Term extension, according to observers, should not be a problem, considering the administration’s super majority in Congress which could pass an amendatory law lifting term limits. Current limit is two terms of 6 years each.
Whether Tetangco’s address was a valedictory -- or a pre-inauguration -- remains to be seen. As the song goes: “que sera, sera,” “what will be, will be”.
What is clear, however, was how well both the Bangko Sentral ng Pilipinas and the Philippine banking community superbly performed in 2016. This, despite the extreme external volatilities, uncertainties and threats during the year.
Remember that 2016 was the year when the Chinese stock market went on a seeming free fall, when a very jittery market closely watched Fed moves, when Britons unexpectedly voted to leave the European Union, and when Donald trumped Hillary in a stunning electoral upset.
Despite all these unsettling factors, the BSP continued to deliver on its primary mandate of price and financial stability.
Once again, the Philippines achieved a convergence of low inflation (below 2 per cent) and high growth. Equally important, the banking community played a significant role in helping sustain the pace of growth.
Here are the significant highlights of Tetangco’s 2016 Philippine banking score card.
The banking sector is sound, stable, and continues to be a source of strength for our economy.
Bank lending continued to expand by double-digit rates and went mostly to productive sectors.
As of November 2016, consolidated bank loans reached P7.4 trillion, almost 19% higher than the year-ago level.
Total assets of the banking industry reached P13.2 trillion, over 12% growth from the November 2015 level.
Deposits increased by more than 13% to P10.1 trillion, an all-time high.
Asset quality improved further with non-performing loans at 2.0%
Bank capitalization remained comfortably above the minimum required under national and international standards.
BSP stress tests indicate that Philippine banks can withstand extreme shocks in both credit and market risks.
The banks continued to report profits.
The Philippines is the only banking industry within Asia Pacific that was given positive outlook by Fitch Ratings in 2016.
Moody’s recognized the country’s banking industry as the only one within ASEAN that has a stable outlook on all rating factors -- operating environment, asset quality and capital, profitability, funding and liquidity.
In view of the recent liberalization of the entry of foreign banks, nine banks have entered the Philippine banking industry thus far, with six more banks expressing interest.
The BSP and the banking industry continue to develop a more inclusive financial system in terms of providing access to financial services, consumer finance education and stronger consumer protection.
All of the above, Tetangco attributed to close collaboration of the BSP and the banking sector which “worked together to continue to strengthen our banking system, raise risk management standards, and align governance standards with international best practices.”
Tetangco also paid tribute to the other members of the BSP Monetary Board, which he chairs: Finance Secretary Carlos G. Dominguez, Alfredo Antonio, Felipe Medalla, Armando Suratos, Juan D. De Zuñiga and Val Araneta.