Thrift banks to post steady growth this year as headline inflation slows

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THE CHAMBER of Thrift Banks (CTB) expects the thrift banking industry to sustain its growth this year given expectations of softening inflation in the coming months, the group’s top official said.

In an interview, CTB President Gregorio B. Anonas III said there is a “good opportunity” for thrift lenders to continue to expand this year, with loan growth expected to “grow as it has been growing” by 10-15%.

“I think definitely, we will continue to grow. There’s an opportunity to even expand our business,” Mr. Anonas told BusinessWorld on the sidelines of the Annual Reception for the Banking Community hosted by the central bank last Jan. 25.

Mr. Anonas, who is also the president and chief executive officer (CEO) of Wealth Development Bank Corp., said thrift banks’ lending growth will likely be sustained given that inflation is expected to decelerate in the coming months.

“I think the worst is over. We had an extraordinary [interest rate] hike [last year], but the government policy on interest rates is pegged on inflation. And we see inflation going down this year,” he added.

In 2018, the Bangko Sentral ng Pilipinas hiked borrowing costs by a cumulative 175 basis points to rein in rising inflation and price expectations.

Headline inflation averaged 5.2% last year, the fastest since 2008’s 8.2%, amid elevated oil prices and issues on food supply.

However, rise in prices is seen to moderate this year, with the central bank expecting inflation to return below the four-percent pace by the end of the first quarter, well within its target band of 2-4%.

“We hope that we will see the taming of the inflation moving forward,” the president of the chamber said, adding that the growth of thrift lenders in 2019 will be mainly driven by housing and small and medium enterprise loans.

Mr. Anonas also noted that there is an opportunity for thrift banks to tap more unbanked Filipinos in a bid to boost financial inclusion in the country.

According to the latest central bank survey, approximately 52.8 million or 77.4% of Filipinos remain unbanked, as 60% of the respondents cited that they do not have enough money to maintain a bank account.

“Especially right now with technology, we can reach the unbanked and we’re in a good position for that,” Mr. Anonas said.

Mr. Anonas will step down as the president of CTB this year after completing his two-year term. The position will be handed over to Cecilio Paul D. San Pedro, president and CEO of Sterling Bank of Asia, Inc., in March during the chamber’s convention. — K.A.N. Vidal