The Market Monitor Minding the Nation's Business
By Jerry Maglunog
As the market for micro, small and medium enterprises (MSMEs) remains so big at about 92 percent, more banks have pledged to increase their exposure to MSMEs as an admission that the sector is too huge to ignore.
It was gathered in previous meetings that at least three banks have pledged to “dig deeper” into the plight of those needing bank financing but have never been served due to the very difficult credit underwriting and loan default risks.
The country’s second biggest bank, Metrobank, is the first to acknowledge that this sector is severely unserved given the country’s archipelagic state and poor credit standings of the people in this arena.
“MSMEs are severely under-penetrated. We want to tap more of them,” admits Mary Mylene Caparas, the bank’s executive vice president and head of institutional banking sector in one forum.
According to this banker, it is not bad if Metrobank will redirect at least five percent of its P760 billion total loan portfolio to this sector. Alloting five-percent of this amount will roughly translate to less than P40 billion.
That amount is more than four times of local banks’ loan exposure to MSMEs which was pegged at P9.4 billion as of end January 2015. As of the moment, Caparas said the bank is evaluating how to best serve those in this sector.
As of the moment, she said Metrobank is preparing a battery of loan officers who will evaluate applications for MSME loans. Unlike other banking services, loan seekers classified as those in the MSME have no capability to shell out anything as collateral.
“Nothing is final yet. What is clear is this is the area where we want to grow,” Caparas, who came from Citibank and just serving Metrobank for a year now, emphasized.
Another bank that want to increase exposure to micro loans is Bank of the Philippine Islands (BPI). Unlike the earlier bank, BPI has already started its aggressive campaign to include micro loan seekers in their fold through its Globe Banko initiative.
BPI Globe Banko is a joint venture between Ayala Corp., a Philippine conglomerate; BPI, a commercial bank; and Globe Telecom Inc., a telecommunications provider.
As of 2011, BPI Globe BanKO had authorized capital of P1.8 billion ($40.9 million) and served approximately 340,000 small businesses. Even the Bangko Sentral ng Pilipinas (BSP) has acknowledged that this initiative is worth following by other banks, especially those that want to increase foothold among micro loan seekers.
The BPI initiative is launched with the help of variety stores, pharmacies and other smaller businesses that don’t need banks. Natividad Alejo, BPI’s top person in charge of the activity, said that BPI, the third biggest bank in terms of assets, is eying to tap at least 30 percent of the 70 percent unbanked portion of the population.
“If 70 percent is 70 million definitely the 30 percent of this figure is not small. No portion of our people should be left without a bank attending to them,” she said.
The third entity wanting to expand services provided to micro loan seekers is Card Bank Inc., a leading rural bank. Since its Day 1 of operations, Card Bank has already proven its tack to be with those in this arena. The bank’s growth is so unprecedented as it now grown into insurance and remittance center.
“The image that we want to stay is for us to be recognized as microfinance-oriented rural bank,” said Allyson Cabuhal, the bank’s area manager in its Baguio City branch. Among the 535-plus RBs, it is the only one that will definitely adhere to BSP’s memorandum to banks to increase their exposure to unbanked sector.
In December 2014 alone, Card Bank’s exposure to smallest loan seekers has reached P54 million. For amount ranging to P50,000 and below, hundreds of those in karinderya, boat and bicycle business along Burnham Park in the country’s summer capital were able to obtain loans to the bank,” the area manager said.