Market Insights Financial Banking Traditional Banks

Traditional Commercial Banking - Philippines

Philippines

In the Philippines, the Traditional Commercial Banking market market is anticipated to witness a significant increase in Net Interest Income, projected to reach US$10.97bn in 2024.
This growth is expected to continue with an annual growth rate (CAGR 2024-2028) of -2.66%, ultimately leading to a market volume of US$9.85bn by 2028.
When compared globally, in China is set to dominate in terms of Net Interest Income, with an estimated value of US$1,749.0bn in 2024.
The Philippines' traditional commercial banking sector is experiencing a shift towards digitalization and mobile banking services.

Key regions: Brazil, China, South Korea, Japan, India

Definition:

Commercial banking refers to the financial services sector that provides a range of financial products and services to businesses, including small and large enterprises. Commercial banks offer services such as loans, lines of credit, and other financial products specifically designed for businesses. These services are critical to supporting the growth and development of businesses and the broader economy.
Commercial banks play a key role in the financial landscape by providing businesses with the funding they need to invest in new projects, hire employees, and expand their operations. They also offer a range of risk management services, such as trade financing and hedging solutions, to help businesses manage their financial risks.
The commercial banking market is highly competitive, with large global players as well as regional and local banks competing for business. Banks in this market are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. Changes in regulations and the growing trend towards digitalization are also shaping the commercial banking market, creating opportunities for new entrants and forcing existing players to adapt.
Overall, commercial banking provides a vital range of financial services to businesses and is critical to supporting the growth and development of the broader economy.

Structure:

The market data comprises Net Interest Income, the value of Deposits, the value of Loans, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Additional information:

The Banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. Banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. Additionally, changes in regulations and the growing trend toward digitalization are shaping the retail and commercial banking market, creating opportunities for new entrants and forcing existing players to adapt.

Key players in this market are companies such as Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

The Traditional Commercial Banking market in Philippines is experiencing a notable shift in customer preferences, market trends, and local special circumstances.

Customer preferences: Customers in the Traditional Commercial Banking market in Philippines are increasingly seeking more personalized and convenient banking services. They are looking for seamless digital banking experiences, such as online banking platforms and mobile applications, to manage their finances efficiently. Moreover, there is a growing demand for sustainable banking practices and socially responsible investments among customers in the Philippines.

Trends in the market: One of the key trends shaping the Traditional Commercial Banking market in Philippines is the rising adoption of fintech solutions. Traditional banks are partnering with fintech companies to offer innovative financial products and services, including digital payments, peer-to-peer lending, and robo-advisors. This collaboration is helping traditional banks enhance their customer offerings and stay competitive in the evolving market landscape. Additionally, there is a noticeable trend towards financial inclusion, with banks expanding their reach to unbanked and underserved populations in remote areas of the Philippines.

Local special circumstances: The regulatory environment in Philippines plays a significant role in shaping the Traditional Commercial Banking market. The Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, sets stringent regulations to ensure the stability and integrity of the banking sector. These regulations influence the way banks operate, innovate, and compete in the market. Moreover, the geographical landscape of Philippines, with its dispersed population across many islands, presents unique challenges for banks in terms of expanding their branch networks and reaching customers in remote areas.

Underlying macroeconomic factors: The economic growth and stability of Philippines are key macroeconomic factors driving the development of the Traditional Commercial Banking market. As the economy continues to grow, there is an increasing demand for banking services to support businesses, investments, and personal financial needs. Additionally, factors such as inflation rates, interest rates, and foreign exchange fluctuations impact the overall performance and profitability of banks in Philippines. Adapting to these macroeconomic conditions is crucial for traditional banks to thrive in the competitive market environment.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Modeling approach / Market size:

Market sizes are determined by a combined Top-Down and Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use data provided by the IMF, World Bank and the annual reports of the top 1000 Banks by asset size. Next we use relevant key market indicators and data from country-specific associations such as GDP, deposit interest rates, lending interest rates or bank account penetration rates. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. For example, the S-curve function and exponential trend smoothing are well suited to forecast financial services for digital as well as traditional products and services.

Additional Notes:

The market is updated twice per year in case market dynamics change.