BSP approves branches, rep offices of 4 foreign banks

Published April 28, 2018, 12:00 AM

by manilabulletin_admin

By Lee C. Chipongian

The Bangko Sentral ng Pilipinas (BSP) approved four foreign banks’ application to set up either branches or representative offices in the country last year.

This brings to 26 the number of foreign banks in the Philippines as of the end of 2017.

Since the law expanding foreign bank entry was approved in 2014 or Republic Act No. 10641, the BSP has approved 10 new foreign bank applications – these are Japanese, Chinese, South Korean, and Taiwanese banks. Last year, another nine were being reviewed for entry.

“Foreign bank branches and subsidiaries sustained their growth trajectory as a total of 26 foreign banks were approved and authorized to operate by the BSP in the Philippines as of end-December 2017,” the BSP said in its statement on the 2017 financial system report on Friday.

The central bank in another report said that foreign bank applications to locate in the country “shows that the Philippines remains one of the top investment destinations of foreign banks.”

To “level the playing field” among domestic banks, the BSP has been gradually lifting the moratorium on the establishment of local banks, except in areas with no existing banking offices. Beginning January 1, this year, the moratorium was “fully lifted and locational restrictions shall be fully liberalized,” said the BSP.

Among the number of universal and commercial banks in the country, six are foreign bank branches. For the category of commercial banks only, 15 are foreign bank branches and two are foreign bank subsidiaries.

In the meantime, there are 11 foreign banks with representative offices operating in Manila.

The BSP in a statement said that with the growth of foreign bank presence, as well as the continued competitiveness of local banks, the financial system “sustained its growth in 2017 with a positive performance amid volatilities in market conditions and the increasing sophistication of global financial services.”

“The banking system, which is the core of the financial system, remained sound as shown by the further strengthening of banks’ balance sheets with positive double-digit growth in assets, loans, investments, deposits and capital. Banks sustained their profitability which came from strong interest income from lending activities,” said the BSP.

The banking system posted an annual asset expansion of 11.6 percent to R15.2 trillion driven by a 16.4 percent loan expansion to R8.9 trillion and funded by the stable base of deposits which grew by 11.6 percent to R11.7 trillion, it noted.

Banks’ net profit rose by nine percent to R167.6 billion while banks also reported an improvement in non-performing loan ratio to 1.7 percent and a strong capital adequacy ratio of 15 percent, the BSP stated. Financial institutions also sustained “sufficient liquidity” with an “adequate stock of high-quality liquid assets as the liquidity coverage ratio registered at 185.3 percent on solo basis.”

At the end of 2017, the BSP said banks further grew their networks and geographic footprint with the help of digital technology in financial transactions. The latest data ending March 2018 show that there are 585 operating banks and 11,319 bank branches and other offices, including 919 micro banking offices (end-2017). There were also 20,279 automated teller machines (ATMs) and 71 banks with electronic banking facilities.