Wealth of Advice

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By Francisco J. Colayco

Our CFE Executive Director, Armand Bengco, wants to share some important information to make our readers more feel more confident about our Philippine economy as we start 2013.

“We all know that one of the first indications of a good economy is the availability of profitable and stable banks. The information comes from the Bangko Sentral ng Pilipinas (BSP) that is the real source of dependable information when it comes to banks. However, there is a time lag in reports so the data only reflects those in 2011 and 2012.

Indeed, the Philippine Banking Industry has been profitable and stable. There are now over 700 banks with about 8,500 branches. These banks have strong corporate earnings and net profit in 2012 has increased by 17% over 2011. It is expected to increase even more in 2013. The assets of the banks have also increased by 5.6% in 2012 compared to 2013.

The main source of income is interest and thus the loans given out by the banks in 2012 increased by 15.1% compared to 2011. Most of the loans are for the real estate, manufacturing and transport industries. Happily, there have been less delinquent payments by the borrowers and that improves the loan and asset quality of the bank.

Banks borrow your money when you deposit it in savings, current and time deposits. They have to be able to pay you at any time you withdraw from your deposits. Therefore it is important that the bank also has enough money to pay you. The bank also should have enough capital to follow the regulatory and international standards. Reports show that our Philippine banks have ample liquidity and strong capitalization.

Further, the Philippine banking system has become more receptive to the needs of the Filipino people who are now even more international in nature with the OFWs all over the world. The BSP has adopted stricter risk-based capital requirements under BASEL III, which is a global regulatory standard that strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage. This BSP move has placed the Philippines at par with banks in Australia, Hong Kong, Singapore and China in implementing BASEL III plans.

In increasing financial access to the under-banked and unbanked, BSP has encouraged and actually implemented programs to support e-banking and mobile banking plus efforts to support rural banks and cooperative banks.

With 8 of every 10 Filipinos without a bank account, where best to start one’s existence in the financial world by opening a bank account and most definitely one can be confident in the Philippine banking system, indeed, we can BANK ON IT!

With the numerous articles and features before 2012 ended and the bullish forecasts for 2013, what caught most of my curiosity is the article “Filipinos have much to be proud of” by Antonio Lopez, a columnist of another newspaper

From his article, one starts to give the idea that the Pinoy is getting richer? Wealthier? Some interesting numbers that compares the Philippines to 204 countries in the world.

• per capita income of Filipino was US$1,146 in 2001 and US$3,157 by 2011

• growing yearly at 16% the past 11 years
• US$3,157 per capita income is US$8.65 a day. This is good because the World Bank considers income of US$2 or less a day as poor.

Philippines is 12th largest in terms of population

Philippines is 34th richest country in GDP at US$315-billion

New measures of wealth according to United Nation’s Inclusive Wealth Index (IWI) look into the Philippine capital asset.

• Human Capital
  • 100 million Filipinos; 20 times bigger than Singapore (where population is dwindling)
  • 95% average literacy
    • English, the language of trade and even the internet is spoken; Even if many times, Filipinos are not grammatically correct but English speaking foreigners will get by anywhere in the Philippines
    • Pinoys are considered to be skilled and easily trainable
• Natural Capital
  • The Philippines is rich in natural resources like minerals, rare metals, natural gas and probably even oil and plenty of land.
  • 2/3 of the Phils. is water – a rare commodity in this century (according to the article)
• Manufactured Capital
  • OFW remittances
    • With 10 million OFWs or 10% of the population; US$23-billion in one year rising despite the global crisis.
  • Dollar Reserves
    • As of October 2012, US$82-billion dollar reserves for the Philippines is more than enough to pay the US$62-billion foreign debts.
  • Money in Banks
    • PhP5.04-trillion in deposits in Phil. banks
    • PhP3.57-trillion in loans
    • PhPPhP1.47-trillion can earn or be placed in higher yielding instruments.

As of October 2012, US$82-billion dollar reserves for the Philippines is more than enough to pay the US$62-billion foreign debts.
Money in Banks
PhP5.04-trillion in deposits in Phil. banks
PhP3.57-trillion in loans
PhPPhP1.47-trillion can earn or be placed in higher yielding instruments.

The article “The Philippines: a Rich Country (in 2050)” is indeed within reach. 38 years from now, our children and our children’s children will be in a different Philippines. We need not wait till then. If we
- continue doing what is right and good.
- stop things that will hinder our personal and even our national well being and
- be determined to improve ourselves.

We shall indeed live in our lifetime (or most of us considering life expectancy is getting longer), in a Philippines that is no longer the “sick man of Asia” but a genuine, sustainable prosperous country. LET’S HAVE PRIDE IN OUR TRIBE!”