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MONEY sent home by millions of Filipinos working
abroad rose 9.4
percent from a year earlier to $1.4 billion dollars in March, the
Bangko Sentral ng Pilipinas (BSP) said Thursday, adding this was the
highest monthly level to date.
This brought the inflows for the
first three months of the year to $4.0 billion, or 13.2 percent
higher than the year-ago level.
Worker deployments in the first
three months rose 13.6 percent from a year earlier to 263,129.
The higher inflows “reflected
the rising number of Filipino workers abroad, the shifts in skill
composition as well as the growing efficiency of banks and other
financial institutions as remittance channels,” the BSP said.
More than eight million
Filipinos, out of the national population of 90 million, work
abroad.
The US, Saudi Arabia, Britain,
Italy, the United Arab Emirates, Canada, Japan, Singapore, and Hong
Kong were the major sources of remittances, the BSP said.
Moody’s Investors Service said
significant remittance inflows from overseas Filipino workers (OFW)
have been a stable source of banks’ income.
In its Global Banking report, the
credit rating company said banks generated $185 million to $380
million in gross revenues from remittances last year mainly through
delivery charges and the spread charged on foreign exchange rates.
This represent 8 percent to 17
percent of the total operating income of main banks offering
remittance services, particularly Allied Banking Corp., Banco de Oro
Unibank Inc., Bank of the Philippine Islands, Land Bank of the
Philippines, Metropolitan Bank and Trust Co., Philippine National
Bank, and Rizal Commercial Banking Corp.
“The direct revenues generated
by the remittance business have presumably risen, or at least
maintained given the strong growth in remittance flows into the
Philippines over the past two years,” Richard Lung, Moody’s
senior analyst, said.
The rating company said OFWs sent
home on average $350 million, while the average remittance cost
stood at $8 per transaction. The average transaction fee reached
$3.50 and foreign exchange revenues, $144.50.
The BSP expects remittances to
grow to $15.7 billion this year from $14.449 billion last year as
more professional Filipinos go abroad such as medical workers,
engineers, and marine officers and crew.
”In addition, the
combination of rising remittance flows and the renewed interest of
banks in building consumer financial services has helped revive
domestically retail banking products, which have grown faster than
other types of loans,” Lung said. The sharp rise in housing and
auto loans over the past four years has been driven by the rising
demand from OFWs and their beneficiaries, he added.
Moody’s said Philippine banks
derive over 95 percent of their net income from their home markets.
Lending to OFWs provides no
substantial benefit to banks due to geographic diversification.
Retail and small and medium enterprise banking account for less than
12 percent of the total gross loans.
Lung said Philippine banks face
the difficult task of following their clients overseas as it entails
potentially higher compliance costs as regulatory requirements can
differ in each jurisdiction.
“Regulatory barriers as well as
differing business environments have in the past limited the ability
of some Philippine banks to offer full services to OFWs in their
host countries,” he said.
Moody’s estimates that banks
account for 79 percent of remittance transmissions.
However, new entrants and new
technology will erode banks’ dominance and the profits they derive
directly from the remittance business. Wireless phone service
providers have launched lower-cost remittance services via text
messaging through mobile phones.
Moody’s said that if
governments allow temporary Filipino workers to become more
permanent residents, such a development could impact the flow of
remittances as earnings directed to purchasing durables in the
Philippines could be increasingly spent in host countries.
-- AFP and Maricel E. Burgonio
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