By Melissa Luz T. Lopez, Senior Reporter

Majority of Filipino households unbanked: BSP survey

Posted on January 14, 2017

MAJORITY of Filipino families remained unbanked in 2014, based on the central bank’s latest Consumer Finance Survey (CFS) that saw more a third of households spending beyond their means.

File photo of the Bangko Sentral ng Pilipinas building
Only two in 10 families have been saving their money in banks, the Bangko Sentral ng Pilipinas (BSP) said, with more unbanked Filipinos in the provinces than in Metro Manila.

Of those with bank accounts, only 70% actually had interest earnings. Peso deposit accounts had a median balance of P5,300 that year.

“The foremost reason cited by households for not having a deposit account was not having enough money to keep an account,” Monetary Board Member Felipe M. Medalla said in a press briefing on Friday at the central bank headquarters in Manila.

“Based on the odds ratios, results show that majority of household heads who are employed in private establishments and government are banked,” the BSP also said in the report, adding that those who worked in the informal sector were largely unbanked.

Some 2% of respondents said they did not need a bank account, while others said banks were far from their locations or that they did not like dealing with financial entities. A few more said they could not manage owning an account, while some pointed out that service fees or minimum deposits are too high for them to afford.

The CFS is conducted by the central bank every four years. For the 2014 survey, 18,000 households were tapped nationwide, except families in Leyte and areas within the Autonomous Region in Muslim Mindanao.

The survey covers the assets, debt levels, income, spending, and savings behavior of Filipino consumers.

The 2009 CFS -- which covered 10,520 households in Metro Manila and the Ilocos, Central Visayas, and Davao regions -- reported that 21.5% of Filipinos had bank accounts back then.

Annual incomes averaged P178,607 in 2013, with bulk of the wages often spent on food and drinks (42.7%) and for housing rentals (12.2%). One in eight households relied on money transfers from abroad to sustain their daily expenses, the BSP added.

A third of households said they actually spend beyond what they make, leaving them without money for emergencies.

“Almost 50% of households reported not holding any cash on hand for emergency and unexpected expenses. For those who had cash on hand for emergency, the average and median amounts of cash holdings were P3,964 and P1,000, respectively,” the BSP said.

The share of overspenders, however, dropped to 33% from a 43.8% rate seen in 2009.

To add, the survey results bared that only 2% of households had credit cards, while 15% of households relied on other forms of borrowing via personal, salary, multi-purpose, and business loans to pay tuition and medical fees, settle existing debts, or fund expansion plans.

Only 5.2% of home owners said they borrowed money to purchase their houses, with 75.5% of households saying they owned their place, which also happens to be the biggest asset held by Filipinos.

Still, the “sangla ATM” scheme where borrowers use their bank card as collateral remained the most popular means to secure a loan.

Only one in four Filipinos had retirement or insurance plans, with the majority covered by purely work-based programs led by the Social Security System, the BSP said. Coverage stood at 24.2% in 2014, against the 42.7% tallied in 2009.

In contrast, the BSP observed increasing interest to set aside savings among families. Rosabel B. Guerrero, director of the BSP’s Department of Economic Statistics, said during the briefing that respondents were now more interested in placing their extra money with the banks, with the figure rising to 43.3% from 39.4% in 2009.

The BSP said the survey results highlighted the need for greater efforts towards financial inclusion by allowing the entry of more micro-banking offices to unbanked areas, while also improving financial education strategies for Filipinos.

“The ownership of assets remains limited, the usage of banking services is small... they don’t think banks are useful for their own purpose given the requirements. This is a challenge also to the regulators, the BSP in making sure that bank branching is given encouragement so that more presence is felt by the population,” BSP Deputy Governor Diwa C. Guinigundo said.

The National Baseline Survey on Financial Inclusion published by the central bank in 2015 showed that only 43% of Filipino adults held savings, with 68% of them keeping their money at home rather than in financial entities.