The Market Monitor Minding the Nation's Business
By Riza Lozada
Total deposits in the Philippine banking system grew by 14 percent to P10.5 trillion as of December 31, 2016 from P9.2 trillion the previous year, data from state-owned Philippine Deposit Insurance Corp. (PDIC) showed.
Total number of deposit accounts also increased by six percent to 54 million accounts from 51 million a year ago.
In terms of deposit size, accounts of over P100,000 grew faster at 8.7 percent year-on-year compared with accounts with lesser amount which grew by 5.6 percent.
PDIC data showed, however, in terms of share to total number of deposits, accounts with balances of up to P100,000 comprised 89.3 percent last year.
“The robust and sustained growth of deposits both in amount and number of accounts reflects heightened depositor confidence in the stability of the banking system,” PDIC President Roberto Tan said.
“The increase in the number of deposit accounts shows how depositors continue their trust in banks to safeguard their hard-earned savings. This growth augurs well to the depositing public’s awareness of the importance of saving and overall, speaks well of more funds being made available to the system for investments and production,” he added.
Out of total deposit accounts in the banking system, a total of 52 million or 96.4 percent of deposit accounts as of end-2016 were fully covered by deposit insurance. This translated to total estimated insured deposits of P2.3 trillion or 21.5 percent of total deposits as of end-2016. PDIC provides deposit insurance up to maximum coverage of P500,000 per depositor per bank.
The growth in deposits could also be explained by the expansion of branch network in all regions nationwide from 10,574 in end-2015 to 10,952 in December 2016.
The banking sector was also opened to new players in light of the law passed in 2014 allowing full entry of foreign banks in the country.
Data from the Bangko Sentral ng Pilipinas (BSP) showed that a total of 582 cities and municipalities remained unbanked as of end-2016, a slight improvement from the 596 recorded as of March 2016.
Of these areas, there are 168 unbanked cities and municipalities in Luzon, 170 in Visayas, and 244 in Mindanao.
As of end 2016, the Autonomous Region for Muslim Mindanao (ARMM), Eastern Visayas (Region 8), and the Cordillera Administrative Region (CAR) remained the top regions with the most unbanked cities and municipalities at 108, 99 and 50 cities and municipalities, respectively, representing 44 percent of all unbanked areas in the Philippines.
The number of unbanked areas was partly the result of the closure of 22 banks last year where three were located in CAR, Region 4-A and Region 6.
“The continuing growth of the banking system poses both challenges and opportunities for financial inclusion,” Tan said.
“The presence of unbanked municipalities underscores the importance of continuous efforts to promote financial inclusion to ensure that rural and far-flung communities have access to much-needed formal financial services,” he added.
The PDIC, as part of the National Strategy for Financial Inclusion,regularly conducts lectures on financial literacy and the importance of responsible banking to empower depositors and the general public with information that will help them make informed financial decisions.