Philippines Sector Brief – Financial Services

 

I. Quick Facts
• Of the total GDP in the Q3 2014, financial services contributed 7% to the 57% growth attributed to the services sector
• The total resources of the banking system grew by 10.6 percent to P11.9 trillion as of end-September 2015 from the year-ago level of P10.7 trillion
• Banks still dominate the financial sector; 90% of total bank assets come from universal/
commercial banks
• A total of 638 banking institutions (head offices) are recorded as of June 2015
• The 2012 Census reveals that 6,961 establishments are engaged in financial and insurance activities. Other financial service activities except insurance and pension funding comprised
73.7% of the total establishments

II. Business Opportunities
• The promulgation of RA 10641 or An Act Allowing the Full Entry of Foreign Banks in the
Philippines opens the banking sector to foreign companies which are now allowed 100%
subsidiary ownership and local bank acquisition
• The ASEAN Integration which envisions a semi-integrated regional market by 2020 will liberalise the whole sector through removal of restrictions on banks, insurance, and investment companies
• Bangko Sentral ng Pilipinas (BSP) recently approved the gradual lifting of moratorium on the granting of licenses setting up new banks. Licensing fees are waived for new banks in areas with no banks, and for microfinance-oriented thrift and rural banks

III. Key Players (as of total assets)
• BDO Unibank Inc (P 1,884,473.87)
• Metropolitan Bank & TCO
(P1,367,627.52)
• Bank of the Philippine Islands
(P1,158,519.16)
• Land Bank of the Philippines
(P1,139,846.39)
• Philippine National Bank (P607,455.23)
• Security Bank Corp (P483,019.90)
• Development Bank of the Philippines
(P465,082.20)
• Rizal Commercial Banking Group
(P410,355.29)
• China Banking Group (P401,759.17)
• Union Bank of the Philippines
(P331,100.95)

IV. Challenges
• Main challenge for the local banks is to preserve their competitive advantage following the recent ASEAN integration and enactment of RA 10641 which could possibly make foreign banks dominate the market.
• Tariff Regulations for Non-Life Insurance. Compliant companies are unable to operate on the basis of an even playing field due to numerous cases of non-compliant stakeholders that are not included in the penalty system for tariff violations and have no incentives to be compliant.

V. Trends
• With the start of ASEAN integration last 2015, the financial services market will grow bigger, more demanding and competition will be intensified
• Continued consolidation of banks as well as the exit of weaker players in the banking system continuously taking place (i.e. merging of Land Bank and DBP, acquisition of Planters’ Bank by China Bank)
• Local banks are starting to work on enhancing their risk management and IT Systems to become more competitive

Sources: Bangko Sentral ng Pilipinas, Trading Economics, EU Business Advocacy Papers, Philippine Statistics Authority

BRITISH CHAMBER OF COMMERCE OF THE PHILIPPINES
8F W Fifth Building, 5th Avenue corner 32nd Street, Bonifacio Global City,
Taguig City, Philippines 1634
T: +632 5565232 ext. 301 | F: +632 519 6889 |
W: www.britcham.org.ph/uksmesphilippines

 

Sectors: Financial & Professional Services
Countries: Philippines
Topics: Market Research
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