LOCAL lenders must seize the benefits of a more competitive and integrated regional banking industry under the Asean Economic Community (AEC) by capitalizing on their strengths, a private bank official said in response to an Asian Development Bank (ADB) presentation at the recent Manila Times business forum.
“We have to look beyond what is happening now and [see]the positive things in integration,” said Angelica Reyes, senior vice president at Metropolitan Bank and Trust Co. (Metrobank).
Reyes, one of the reactors during The Manila Times 4th Business Forum held at the Marriott Hotel in Pasay City on Wednesday last week, agreed with ADB principal economist Thiam Hee Ng’s point that the Asean integration opens opportunities for local banks in the Philippines, as well as regional banks. To realize the vision of One Asean Community, qualified banks will be used as vehicles for maximizing the vast trade and investment potential of the region.
Reyes said that for Philippine banks, one of the positive benefits of the integration is that it will widen the market of bank customers.
“It is a source of growth for our traditional customers because they can actually benefit as well by widening the scope of their businesses,” she said.
With the Philippines said to be entering its demographic sweet spot, the Filipino workforce will have more job opportunities moving forward which, in turn, is good for banks because they can ramp up their consumer lending and source growth not just from corporate lending, the Metrobank executive added.
Banks can also create growth by expanding their credit portfolio to sectors that they do not tap traditionally like the micro, small and medium enterprises, she stressed.
“In a situation where the markets are wider and these types of companies are forced to actually compete and be strong, banks can have more opportunities in lending to these types of institutions,” she said.
Reyes further said the integration can also open opportunities to foreign and local banks to forge partnerships to serve multinationals that may expand their businesses here in the Philippines.
“We are expecting the entry of foreign multinationals and we are prepared to serve those. There is room for partnerships,” she said.
The bank executive explained that when a foreign bank brings in a corporate customer to set up a subsidiary or buy into companies here, they will need the services of a local bank that has the footprint, the network, and the local expertise to comply with the regulations.
To realize these gains, Reyes said banks in the Philippines have to be focused on what they compete in.
“We have to work on capitalizing on our own strengths,” she said, while also adding that local banks really have to work on improving their processes and technology.
“How can we compete if we do not scale up because of our limited technology?” she asked.
Reyes said Philippine banks are behind on technology as an industry and that is something that should be revisited.
She also said Philippine banks should learn more about their neighbors in the Association of Southeast Asian Nations (Asean).
“We need to know about their credit [portfolios]if we want to expand and diversify our portfolios into other markets in Asean. We have to have the capability of learning about their credits and their culture,” she concluded.