Banking community flourished

Title

Creator

Rebong, Nicasio, II

Language

English

Source

May 31, 1970

Year

1970

Subject

Banking industry -- Philippines

Central Bank of the Philippines -- History

Rights

In Copyright - Educational Use Permitted

Fulltext

The banking community in the Philippines has grown by leaps and bounds since the Central Bank was established in 1949 and thus the adoption of the managed currency system. This could be gleaned from the proliferation of commer cial banks, rural banks, savings banks, private development banks, and other institutions engaged in banking services now in operation in this country. A tourist had observed that there are more banks here than even in more developed countries. And C.B. statistical data seem ed to bear this out. As of Dec. 31, 1969, the total number of commer cial banks reached 606, composed of 39 offices and 567 branches and agen cies. Last year alone, 23 branches and agencies of commercial banks were established. 452 Rural Banks Forty one new rural banks were opened in 1969, bringing the total number to 452. Of this total, 226 rural banks wer? located in Luzon, 79 in the Visayas and 47 in Mindanao. Sixty rural banks were authorized to accept demand deposits. No new savings bank was established in 1969. However, six branches and one extension office were opened, bringing the to tal number of savings banks in actual operation to 48 (10 head offices, 19 branches and 19 exten sion offices). Sixteen postal stations of the government-owned Postal Savings Bank were opened in 1969, bringing the total number in opera tion to 1,445 during the . period under review. The total number of private development banks By NICASIO REBONG II Herald Staff Member grew to 29 with the open ing of two new private de velopment banks last year. Growth Factors The phenomenal growth of the banking communi ty was attributed to the following factors: liberal minimum capital require ments for the establish ment of banks, favorable conditions, and other in centives. For the past 20 years, the C.B. has actively sought to encourage the growth of the banking system. Commercial banks mergers are facilitated and large scale or branch banking is encouraged so that the capital structure of the banking system can be strengthened, its li quidity position improved and the economies of large-scale banking may be enjoyed. P12 Million According to the C.B. annual report for 1969, total resources of com mercial banks amounted to P12,050 million, repre senting a growth of Pl,139 million or 13.2 per c6nt compared to the incre ment of Pl,276 million or 13.2 per cent in 1968. Earning assets increas ed by P933 million or 82 per cent of the total ex pansion in banks’ resour ces, compared with the P867 million growth in the previous year. By reducing the in crease in their liquid as sets to only P55 million or 3.3 per cent, as against P342 million or 26.1 per cent last year, the com mercial banks increased their other assets by Pl52 million or 20.8 per cent as against P67 million or 10.1 per cent in 1968. With the increase in de mand deposits, current liabilities of commercial banks expanded consider ably by $945 million or 14.8 per cent in 1969. compared with expansion of P326 million in 1968. 54 Per Cent Demand deposits in creased by P511 million or 54 per cent of the over all increment. Savings and time deposits gained P314 million as against increment of P200 million in 1968. Similarly, bills payable went up by P213 million, slightly below the P283 million growth in 1968 while guarantee ac counts declined by P254 million in 1969 compared to a considerable increase of P429 million in 1968. Net worth of commer cial banks rose from Pl,140 million in December 1968 to Pl,294 million at the end of 1969, or an in crease of P154 million compared to an increase of P98 million in 1968. As regards the rural banks, the C.B. reported their total resources amounted to P409 million as of July 31, 1969, an Increase of P30 million or seven per cent from the 1968 level. Outstanding loans went up by P26 million to P416 million- and investments in government securities gained nominally by P0.5 million to P7 million. Total deposit liabilities also expanded by P15 mil lion to P183 million and net worth rose to P193 mil lion. Savings Banks Meanwhile, total loans granted by savings banks dropped by P38 million or 27 per cent as against the P15 million or 11 per cent expansion registered in 1968, the C.B. report said. Similarly, the growth in resources slowed down from 21 per cent in 1968 to only 16 per cent in 1969. The P79 million expansion in resources in 1969 was brought about mainly by the P82 million increment in holdings of government securities. The savings banks dur ing the period under re view were granted an ad ditional P4.1 million emer gency loans by the C.B. but repaid P27.5 million. As a result, outstanding emergency loans of these banks from the C.B. drop ped by P23.4 million to P29.5 million at the end of 1969. Loans outstanding in creased slightly by P2 mil lion to P275 million. De posit liabilities improved by P82 million or 24 per cent as against a drop of P7 million or two per cent in 1968 while net worth decreased by P2 million or three per cent to P66 mil lion. Total resources of PSB increased by P2 million from the 1968 level. How ever, savings deposits de creased by Pl million to P58 million. Private Banks Private development banks expanded by P14 million to reach P144 mil lion in total assets in 1969. Total loans outstanding increased by P9 million to a level of Pl 15 million and investments in securities rose by P0.1 million to P2 million. Deposit liabilities like wise increased by P9 mil lion to P54 million. Simi larly, outstanding redis counts with the Develop ment Bank of the Philip pines went up by P0.4 mil lion to P25 million and capital assistance from this institution increased by Pl million to P25 mil lion Net worth also grew by P4 million to P60 million. An interim study pre pared by Sycip, Gorres, Velayo & Co. for a threemonth period ending March 31, 1970 said that total assets of commercial banking system were P8 million less than in Dec. 31, 1969. Largest Drop The largest drop in to tal assets was registered by the Philippine Natio nal Bank., manifested in its investments by P92 million and the drop in its cash and due from banks of P38 million. The SGV study attri buted the decline in total assets of PNB mainly to the reduction in its bills payable and “other liabi lities” by P170 million. Other highlights of the SGV study are: —Five private develop ment banks showed re ductions in total assets of Sunday, May 31, 1970 BANKING SUPPLEMENT Page 3 Equitable Bank Branch in Makati Philippine Banking Corporation Head Office at Port Area more than PIO million each, with one bank showing a drop of P43 mil lion. —The net decline in to tal assets of private do mestic banks amounted to only P3 million. Principal cause of the decline was the drop in deposits with private domestic banks of P64 million, which was counterbalanced by ad ditions tc these banks’ bills payable and “other liabilities’’ of P52 million and an increase in their net worth of P12 million. —In contrast to domes tic banks, the four bran ches of foreign banks re gistered net additions to total assets of P86 million during tne quarter, with two banks accounting for most of this increase. Main sources of additions to the total assets of fo reign banks were the in crease in their deposit ba lances of P44 million and in their due to head office accounts of P25 million. —Total liquid assets of the commercial banking system of P2.795 million as of March 31, fell short by P69 million of balances at year-end 1969. Of the 35 domestic banks, 25 showed declines in liquid assets. All foreign banks showed increase in liquid assets. —The decline in liquid assets was mainly from cash and due from banks, which dropped by P126 million. The increase in cash and due from banks as of Dec. 31, 1969 from balances of the previous quarter was about P388 million. —About P58 million was added to investments in bonds and other secu rities during the quarter, with a private banks show ing an increase of P23 million; PNB, P14 million; and a foreign bank, PIO million. About half of the private domestic banks re gistered declines in invest ments. —Loans outstanding of the commercial banking system amounting to ab out P7.9 billion as of March 31, comprise ap proximately 66 per cent of the banks’ total as sets. Private domestic banks hold about 55 per cent of ihe total loans; PNB, about 35 per cent. —This quarter’s in crease of Pl 10 million was due principally to loan additions from the private banks (domestic P45 mil lion, foreign P50 million). —PNB’s net increment in total Ioans during the quarter amounted to only P18 millton, after the sub stantial decline in its over draft balances of P90 mil lion. Loans and discounts as well as customers’ lia bility acceptances of PNB rose by P57 million and P58 million respectively. —As of March 31, de posits with the Philippine commercial banking sys tem totalled P7.1 billion, of which 59 per cent is £age 4 BANKING SUPPLEMENT Sunday, May 31, 1970 with private domestic banks and 30 per cent .with PNB. —The net increment of P50 million in deposits with the commercial bank ing system resulted from additions to time and sav ings deposits of Pl 15 mil lion and deposits with the government of P39 mil lion, after reductions in demana deposits and de posits of banks by P71 million 3nd P33 million, respectively. —Deposits with private domestic banks dropped by a net amount of P63 million; those with PNB and foreign banks rose by P69 million and P44 mil lion, respectively. —This quarter, PNB re duced its bills payable and “other liabilities by a substantial P170 million. —Private d o m e s tic banks continued to liqui date their bills payable (by P45 million this quar ter) . Net additions to this group of account arose mainly from the incur rence ol additional “other liabilities” of P50 million and additions to marginal deposits on letters of cre dit of P33 million. An increase of P20 mil lion during the first quar ter of 1970 brought the total net worth of domes tic commercial banks to about Pl.2 million as of March 1970. —Unused letters of cre dit rose by a substantial Pl,484 million this quar ter, with PNB accounting for P929 million of the increase. The increment of P929 million is about 174 per cent of the addi tions to PNB’s unused let ters of credit for 1969. —Unused letters of cre dit of private domestic banks rose by P326 mil lion. Last year, unused letters of credit of these banks dropped by P68 mil lion from the previous year. —The significant in crease in unused letters of credit may be attributed mainly to the floating ex change rate adopted on Feb. 21, 1970 and the si multaneous lifting of the ceiling on foreign curren cy letters of credit. The floating rate for the peso is around P6 to U.S. $1 as compared to the parity rate of P3.90 to U.S. $1. THE CORNER BANK During the recent wave of student demonstrations against the “establish ment” — the government, the capitalists, the privi leged elite, etc., it is re freshing to note that one bank continued to identify itself with the masses without any cry of dissent from the protestors. This is not at all surpris ing since Provident Sav ings Bank — “The Corner Bank,” has been closely identified with the masses from the time it first for mally opened its doors to the public six years ago. Indeed, it was established primarily to serve the banking needs of and help the “common tao.” And it earned its name, “The Corner Bank,” because it has chosen to establish its main office and later its branches where it is con venient and accessible to them — at the corner of the busiest streets. With the sustained sup port and continued pa tronage of the so-called “bakya crowd,” Provident has been able to greatly expand its resources and now ranks among the country’s bigger and more solid savings banks. From a modest start of P3 million, Provident’s to tal resources soared, in a short span of six years, to its present total of P60 million. Within this same span of years, it was able to establish six extension offices to better serve its growing clientele. These branches are all conven iently located in Legarda, Central Market, Ylaya, Evangelista, Baclaran and Rizal Avenue and collec(Continued ou Page Id) Sunday, May 31, 1970 BANKING SUPPLEMENT Page 5

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