New speech of iep 54th charter anniversary symposium 1
To all past Presidents of RBAI, Confederation/Federation Presidents, our friends from media, our partners in the industry, our sponsors, my fellow Rural Bankers, friends, ladies and gentlemen, good morning. 99.2 Million mobile subscribers among all mobile networks in the Philippines; 12 Billion pesos in recorded transactions in mobile banking amongst RBAP member banks; a distinct increase in internet usage with 93 percent of the ABC market segments having access from their own homes; the Philippines holding the title of social networking capital of the world with having a penetration of 93.9% in Facebook alone; ranked 8th in the world for twitter usage; By 2015, 500 million and 1 Billion people in Asia will access financial services through mobile services through the initiatives of mobile operators to bank the unbanked; and, the steady growth in OFW remittance year on year! More than ever, the Filipino is wired and has access. These are the current realities and possibilities that present themselves as opportunities for the Philippine rural banking industry. These show that the market has evolved and has become more sophisticated. Hence, we in the RBAP conceived this year’s 54th Charter Anniversary Symposium theme: “Rural Banking Innovations: the next generation”, to specifically address the evolutionary changes taking place in the Philippine market. We wish to show you that the RBAP and its members have been leading the way most specially in the field of mobile banking where through the efforts of the RBAP‐MABS team has made the Philippines a leading example in financial inclusion using the mobile phone platform. In the past months, we have been visited by nations across Asia and Latin America to specifically study the success achieved by mobile financial services in the Philippines and its impact on micro enterprise and micro business. Fellow rural bankers, we need to realize that banking as we knew it before has been changed to a certain degree. We need to embrace the opportunities I mentioned and convert them into concrete services that will enhance our relevance to our core markets. To wit, the RBRDFI has increased its trainings and seminars to enable our
employees to understand the new products that we are rolling out as approved by our regulators. These trainings and seminars conducted with the cooperation of regulators and private sector partners are continuous and ensure knowledge transfer is constant and updated. You only need to participate to be able to have these new products in your respective financial markets. More than technology and innovations, I wish to touch on the new generation of rural bankers taking over the leadership of their respective family enterprises. These new rural bankers, the next generation, will definitely ensure that rural banking remains relevant. With the new paradigms and their appreciation of the evolving market and technology, they bring with them vigor and vitality that will invigorate your respective financial institutions. While Filipinos have been known to be prudent bankers, I believe the infusion of new blood and new ideas will renew our commitment to the communities we serve. In a recent meeting with all the confederation and federation presidents, I shared with them some data that I will now share with you. In the past two years, our performance has been of continued improvement. Indeed there are some closures, but these are more to mergers and consolidations rather than insolvency and undercapitalization. As of end of 2010, our CAR as an industry stands at 19% or 9 percentage points higher than what the BSP prescribes or the international standard of 8%. Rural banks also posted steady profitability indicators. Return on Equity (ROE) was at 11.7 while Return on Assets (ROA) was at 1.9%, levels that are at par with our commercial bank counterparts. The industry’s total gross loan is at P100.2 billion and deposits at P108.9 Billion, both an increase from the previous year data. Moreover, the NPL ratio is at 8.9% and continue to steadily decrease from the previous years. This is by in large a clear measure of our resolve to improve the performance as well as the image and perception not of just of individual rural banks but as a whole industry. We are continuing to communicate the good news to the general public by actively engaging the national press and making sure that misperceptions are immediately corrected and addressed and our own views aired in an environment of transparency.
To further allay your fears on the recent spate of bank mergers, let me tell you that this form of streamlining has brought in more benefits for us, pushing us to be more innovative. This has resulted to an expansion of non‐traditional delivery of channels. From the latest count, there are 187 ATMS deployed by rural and cooperative banks, while 55 banks are offering electronic banking services. The agricultural front, despite the natural calamities, has been on the upswing. More than ever, we remain essential in providing and extending financial assistance to our farmers who have achieved a bumper crop harvest of corn for the first time in recent history. According to Secretary Alcala of the DA, by 2013 the Philippines will be rice sufficient. This puts us directly in the frontline of sustaining the financial ability of our farmers and ancillary industries in helping them move their businesses and agricultural growth forward and upward. We can ably move this on by already providing micro insurance products for the farmers and small businesses that are dependent on agricultural production. In fact, together with RBRDFI and MABS, we had started rolling out the training for accreditation to be able to offer micro‐insurance products in our banking offices. I also would like to encourage the creation of confederation and federation websites linked to the RBAP website in order to create a national network of rural banks visible globally to all Filipinos. This helps promote each of the rural banks in their respective areas and serves as a GLOBAL WINDOW that our OFWS can view. One interesting aspect that we can explore connected to this is by catering to the special needs of many OFWs, specifically on matters concerning remittances. While remittance centers are dime a dozen, there is still a way for us, Rural Bankers, to enter this industry by offering a faster yet affordable service to our clients in the countryside, who are also beneficiaries of many OFWs. And this is where the PhilPass Remit System comes in. To give you a bird’s eye view, our strategic role if and when we decide to use this system, is we can offer cheaper, if not the cheapest transaction fees with very limited risk. In the near future, upon your acceptance and implementation of PhilPass Remittance facilities as introduced by the BSP, this RBAP and Confed/Fed website network can be a guide for any Filipinos in the country and also including OFW’s living abroad.
We have also been actively talking with members of Congress for the amendment of our Charter to allow the infusion of foreign equity and partners for rural banks. I believe that this will help rural banks raise more capital in the service of progress for our clientele, who are the underserved and underbank, and is an essential component as a catalyst for growth. The creation of a Technical Working Group for Credit Risk Management is another positive step that we have undertaken. We envision this TWG to, (1) formulate safety parameters to protect the welfare of Rural Banks and (2), come up with faster and efficient procedures in loan packaging and processing. On a related note, the RBAP has continued its partnership with SBCORP in pursuing their main objective, this time around targeting an additional set of rural banks for accreditation. One of the aims of this partnership, just to brief you, is to prepare a risk‐based cash flow approach analysis in packaging and evaluating SME loan applicants. And finally, I am happy to inform all of you that the CIC or Credit Information Corporation; a credit bureau for all banking and financial institutions has formally started gaining ground. Although we are waiting for the full implementation of this credit bureau, it is already gaining momentum and receiving positive feedback from stakeholders. To further explain the status of CIC we have the President Mr. Balthazar Endriga to discuss this later on. If there is anything at all that I have noticed in the years I have been involved in our philanthropic enterprise, it is our slowness to embrace things that are new to us. Charge this to our so‐called prudence, but now is a time to embrace change for the benefit of our consumers. I am not talking about overhauling the whole bank or even going into a branding campaign. I am talking about changes and innovations that will definitely make an impact. These are simple steps that will innovate your respective banks. But more than these, a new mindset that is consumer focused will increase our banks relevance to our markets and always keep us on the cutting edge of rural banking excellence. I hope that I have given you an insight on what the possibilities are and the opportunities that can be derived from them. All we need to be is proactive‐ proactive in the development of new products and
services and pro‐active in our appreciation of the knowledge that our market is changing. With these, we can move onwards and create a global example of what a rural bank should be! We did it with mobile phone banking, so having Philippine rural banking as a global example is not an impossibility, but doable. Fellow rural bankers and leaders in the banking industry, I end with assurances to you that we in the leadership of the RBAP will continue to assist you in the process of innovation as we continue into the new millennium. Together and united, we are a financial force that can achieve change and greater good for our countrymen. Let us embrace our heritage and purpose for our creation – to help the financially underserved and unbanked. In the process, accede to the fact that the markets and consumers have evolved and changed. And in the process, so must we. I hope you will become Ambassadors of change and innovation for the industry after our symposium. Mabuhay. SPEECH OF IAN ERIC PAMA President Rural Bankers Association of the Philippines 54th Charter Anniversary Symposium Prepared by PROCOM