THE central bank sees a bullish outlook for the country’s thrift banks, a top official of the Bangko Sentral ng Pilipinas said.
Deputy Governor Chuchi Fonacier, during the Chamber of Thrift Banks’ (CTB) general membership meeting on Nov. 12, said that promising growth of the banking industry, sustained lending activities, robust capital, and satisfactory quality of assets show a stable base for the industry.
She added that the BSP’s first Banking Sector Outlook Survey found that out of 54 thrift banks, 75 percent expect the country’s economy to grow between five and seven percent in the next two years. It also found that 61 percent of thrift banks look forward to a strong and stable banking system for the next two years.
“Given these positive sentiments, the thrift banking industry has set its sights on growing the business by expanding client base, investing in technology and developing new products and services,” Fonacier said.
She added that a second area of priority among thrift banks is the management of risks.
“To fortify the industry against headwinds, the industry recognizes that particular attention should be given to the following risks: model risk, credit risk, cybersecurity risk and quality of prudential reporting in the next two years,” she said.
Fonacier said both the BSP and the CTB have a “strong point of convergence” when it comes to the economic outlook of the country and financial supervisory reforms.
Among these points of convergence is the BSP’s supervisory agenda, Sprint, which stands for strategic, proportionate, risk-focused, interactive, next generation and technology-driven.
BSP aims to align its financial policy reforms with international standards, actively support capital market reforms, and continue to advance financial inclusion. It also wants to embed effective risk management systems in banks by enhancing its risk-based capital framework and standards for credit, liquidity and operational risk management.
It also intends to adopt Basel III revisions to the approach for credit risk and operational risk by 2022, and discuss with the industry these amendments.
“As we pursue the adoption of international best practice, the BSP shall be vigorous and more pronounced in our application of proportionality. For instance, as a result of industry consultations, the BSP is open to extending the observation period of the liquidity coverage ratio (LCR) to provide thrift and rural banks with more time to adjust to the new metrics,” Fonacier said.
The observation period for the LCR is until Dec. 31, 2019 for thrift banks that are subsidiaries of universal and commercial banks while stand-alone thrift banks will be subject to the 20 percent minimum liquidity ratio starting Jan. 1.
Fonacier added that the BSP will be rolling out supervisory technology projects next year, which include a financial institution portal, a web-based facility to streamline BSP regulatory compliance processes; application programming interface system, which will transform the BSP’s regulatory reports process into a flexible and streamlined architecture; and automated complaint-handling system or chatbot, allowing financial consumers to submit concerns via text message, Viber or web portal. (MEA)