AYALA-LED Bank of the Philippine Islands (BPI) is strengthening its banking business with the country’s small and medium enterprises (SME) to help realize the sector’s full growth potential.
“SMEs are the types of companies that require funding and loans. Their primary need is financing for their working capital or capital expenditures,” said Junie Veloso, head of BPI’s Business Banking Segment.
Veloso said compared with the neighboring countries in the Association of Southeast Asian Nations, the Philippines needs to improve on its performance in helping small businesses grow.
“In the total loans in the country, less than 10 percent are given to SMEs, which account for 35 percent in the country’s gross domestic product,” he said.
Ninety-nine percent of the country’s total business make-up totaling one million is composed of micro, small and medium enterprises. This sectors is the most underserved, especially when it comes to financing.
To tap this market, the BPI established Business Banking Segment, which focuses on this sector.
In Cebu, many SMEs have not yet availed themselves of loans and most of them only have deposits, Veloso said.
“We believe that SMEs play a key role in nation building. The Cebu SME market has a huge growth potential and we want to be there when it happens,” said Veloso.
“Our clients can expect new loan products that will make use of a new score card for faster loan processing and approvals. We continue to make enhancements on our processes. We’re looking at a 30-day turnaround time for standard applications, and even faster for certain products,” he added.
Credit scoring
To apply for loans, BPI Business Banking Segment established a credit score card to guide SMEs in the process of their loans.
“We have a risk-based approach. During the application and approval process, the smaller amount is more likely faster to be approved as opposed to a higher amount with the bigger perceived risk then it’s a more thorough process,” he said.
BPI has also engaged a risk management firm, Tongdun International, to implement artificial intelligence solutions that will result in faster automated lending processes and an optimized credit scoring model.
“Fifty percent of our SMEs clients in the Visayas come from Cebu. Most of those who apply are wholesalers, traders and retailers,” Veloso said.
Expansions
BPI president and chief executive officer Cezar Consing said Cebu continues to be one of their key markets in the Philippines as it accounts for 54 percent of the whole Visayas and Mindanao (VisMin) business, while the whole of Visayas accounts for 60 percent of the whole VisMin business.
Last year, BPI expanded its reach to the northern and southern parts of Cebu with the opening of new branches in Bogo, Toledo and Carcar.
In 2019, BPI will open more branches in Cebu City, plus a few more branches in nearby areas, such as Tacloban, Tagbilaran and Ormoc. (JOB with PR)