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Banking in the Philippines - statistics & facts

Despite the sharp decline of the gross domestic product (GDP) in the Philippines brought about by the global coronavirus pandemic (COVID-19), the country’s financial service sector showed resilience thanks to regulatory reforms implemented after the Asian financial crisis in 1997. In 2020, the gross value added of banking institutions reflected growth compared to the previous year while the ratio of nonperforming loans (NPL), though higher, remained below four percent. The Philippine banking system was expected to continue implementing reforms necessary to satisfy the banking needs of Filipinos while boosting the economy.

Different types of banks and their functions

Banks in the Philippines are classified into universal, commercial, thrift banks, rural, cooperative, and Islamic banks. Universal banks are authorized to provide a variety of services including investment, commercial, and development banking, as well as mutual funds and housing loans. Commercial banks, on the other hand, are privately-owned institutions that accept deposits and offer checking services. In the Philippines, these kinds of banks are the largest group of financial institutions and the most popular among customers with different financial needs because of their wide array of financial services. Among the largest universal and commercial banks in the country in terms of assets were BDO Unibank Inc., Metropolitan Bank, and Trust Company, and the Land Bank of the Philippines.

On the other hand, thrift banks are comprised of savings and mortgage banks as well as loan associations that focus on accumulating and investing depositors’ savings. This type of bank also provides short-term to long-term financing. Meanwhile, rural banks and cooperative banks are authorized to provide basic financial services to rural residents and financial assistance to farmers. Finally, Islamic banks cater to Muslim Filipinos and operate in accordance with Islamic laws.

Digital payment initiatives

Despite consistent efforts to encourage citizens to open an account at a financial institution, the share of adults with bank accounts remains below 40 percent. Among the primary reasons for this were a shortage of money needed for opening an account, lack of need, and absence of documentary requirements such as valid identification. In order to address this, the BSP aggressively promotes digital payments for both government subsidies and salaries. In addition, digital payment methods were promoted for paying bills and vendors to compel Filipinos to open an account. As a result, online banking penetration was forecast to gradually increase in succeeding years.


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