By Abigail Marie P. Yraola, Deputy Research Head
\nPHILIPPINE economic activity and infrastructure were thrown into disarray after a multibillion-peso flood control scandal erupted in late 2025, which dampened investor sentiment and stalled key infrastructure pipelines.
\nThe banking sector was not spared from this graft controversy as it may await potential challenges such as returning to the Financial Action Task Force\u2019s (FATF) gray list.
\nDespite the noise and shocks that rocked the local economy during the period, financial institutions have navigated through these choppy waters stronger than expected and managed to stay afloat.
\nIn response, the banking sector\u2019s approach to corruption and governance risks may be noted through implementation of stringent regulatory controls, advanced internal monitoring systems and strategic risk management to ensure financial stability.
\nThe central bank firms its view that the Philippine banking system remains stable and that this financial resilience mirrors strong balance sheet growth, solid profitability, and prudent credit practices.
\nThe Bangko Sentral ng Pilipinas (BSP) said that it monitors indicators of financial soundness such as credit growth, asset quality, liquidity measures, capital adequacy, and profitability to assess the overall financial condition of Philippine banks.
\n\u201cThe BSP also conducts regular stress testing exercises to assess the financial resilience of individual banks and the banking system against shocks or adverse scenarios,\u201d the central bank said in an e-mail interview.
\nSTEERING THROUGH CHOPPY WATERS
\nAsia United Bank Corp. (AUB)President Manuel A. Gomez said that the market views the public infrastructure and flood control disruptions as compounded threats.
\u201c[These act] as both a macroeconomic drag that dampens investor sentiment and a structural risk to financial stability due to the alarming potential of the Philippines returning to the FATF gray list,\u201d he said in an e-mail interview.
\nNicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co., said that the central bank is committed to ensuring financial market stability as this is one BSP\u2019s key pillars of central banking.
\n\u201cBSP continuously monitors banks as well as conditions in the financial market. Of late they have announced some adjustments to their liquidity management tools,\u201d he said in an e-mail.
\nBSP\u2019s role is crucial as it serves as an anchor in the financial system through calibrated monetary policy and strengthened supervision.
\nBanks adjusting their risk capacity amid political uncertainty should be anchored on institutionalized governance, management systems, and internal controls, Development Bank of the Philippines (DBP) President and Chief Executive Officer Michael O. de Jesus said in an e-mail.
\n\u201cThe Bank (DBP) remains proactive in ensuring that its risk capacity remains resilient through periodic review of its risk appetite, capital and risk management limits, and various risk monitoring tools,\u201d he said.
\nFor the Philippine National Bank (PNB), banks are adjusting their Anti-Money Laundering (AML) risk capacity by reassessing their exposure to increased financial crime risks, such as corruption, bribery, and the misuse of public funds.
\n\u201cThe Bank (PNB) adopts necessary additional controls to address the heightened risks through enhanced due diligence, more conservative onboarding decisions, and enhanced transaction\u2011monitoring controls, among others,\u201d PNB said in an e-mail interview.
\nIt added that the adjustments help ensure that banks remain resilient and compliant as political instability raises the likelihood of financial crime threats.
\nFor AUB\u2019s Mr. Gomez, banks manage their risk capacity by maintaining disciplined underwriting standards, building a high-quality asset base, running stress tests under adverse governance/policy scenarios, and maintaining robust contingency plans and governance controls.
\nMr. Gomez also emphasized that on a macroeconomic level, banks monitor inflation trends, the central bank\u2019s policy rate adjustments, and the momentum of public infrastructure spending are some reforms that could stabilize the banking sector.
\nOn the other hand, he added that at the institutional level, banks can stabilize their operations by diversifying fee income which will help reduce reliance on volatile or extraordinary market gains.
\n\u201cFinancial institutions closely monitor core business expansion, such as the growth in commercial lending, which indicates that business confidence has returned to pre-pandemic levels,\u201d he said.
\n\u2018GRAY LIST\u2019 RETURN RISKS
\nThe ongoing graft controversy with flood-control projects puts the country at risk of being placed back in the FATF\u2019s \u201cgray list,\u201d BSP Governor Eli M. Remolona, Jr. said during a media information session held earlier in February.
The country needs to reinforce its defenses to avoid being included by the global financial crime watchdog, especially if this graft controversy shows systemic failures.
\nIn February 2025, the country exited the FATF\u2019s list of jurisdictions under increased monitoring for dirty money risks.
\nBack in June 2021, the Philippines was put under increased monitoring as the financial crime watchdog identified deficiencies in the country\u2019s measures against anti-money laundering/counter terrorism financing activities.
\nThe Anti-Money Laundering Council (AMLC) said that countries included in the FATF gray list is a burdensome process for banks and other financial institutions.
\n\u201cThis process discourages correspondent banking relationships and international financial flows into the country,\u201d it said.
\nThe cost of being included in the FATF\u2019s gray list may harm the investment climate of the country. It may lead to increased compliance burdens, hinder lower cost cross-border transactions and may diminish financial transparency.
\nAdditionally, it may increase monitoring requirements for foreign banks which may result to higher fees and may negatively impact on overseas workers relying on remittances, among others.
\nIt could also lead to lower investor confidence and reduction in foreign direct investments and may lower capital inflows.
\nMr. Gomez of AUB said that this scandal showed that traditional, institution-level AML monitoring often fails to detect procurement-related fraud.
\nCorrupt syndicates, he said, used \u201cghost projects\u201d and fragmented their transactions to evade compliance teams.
\nHe stressed that \u201cto address these gaps, regulatory bodies are pushing for cross-institution intelligence sharing and the BSP has enforced stricter protocols on large cash withdrawals to ensure enhanced due diligence is applied automatically.\u201d
\nFor PNB, the unusually large cash withdrawals and suspicious cash flows exposed potential weaknesses in customer due diligence, transaction monitoring, and compliance with reporting obligations.
\nTo address these weaknesses, financial institutions must adopt stronger AML controls to prevent similar failures, it said.
\nIt highlighted that financial institutions are expected to enhance customer due diligence, particularly for high-risk clients and politically exposed people as well as strengthen transaction monitoring to detect unusual cash flows and repeated large-value withdrawals.
\nPNB also noted that these institutions should strictly comply with the timely reporting of suspicious transactions, especially when accounts linked to public funds show red flags and improve negative news screening and risk reviews.
\nThe bank highlighted that the Philippine government has taken a series of coordinated actions to address issues pertaining to corruption while the AMLC rolled out efforts supporting the government\u2019s asset-recovery drive.
\n\u201cTogether, these actions reflect a multiagency push to strengthen controls over public infrastructure spending,\u201d PNB said.
\nFor AUB, progress must be measured based on FATF-aligned statistics, particularly the number of successful corruption case filings, secured convictions, recovered taxpayer funds, and the transparent resumption of suspended public infrastructure projects.
\n\u201cFor financial institutions, the critical benchmark is the successful deployment of advanced data intelligence and network-level analytics,\u201d Mr. Gomez said.
\nHe also stressed that true progress will be achieved when the banking system can proactively detect and block high-risk public procurement anomalies, assuring stakeholders of fortified resilience against systemic vulnerabilities and illicit exploitation.
\nCALMING THE WATERS
\nCountermeasures to shield or stabilize balance sheets from the risks associated with the corruption mess include banks focusing on \u201csustainable, volume-led growth\u201d by aggressively deploying funds into core commercial lending rather than high-risk sectors, AUB\u2019s Mr. Gomez said.
\u201cFrom a regulatory standpoint, authorities are aggressively freezing illicit assets, the AMLC has secured freeze orders on thousands of accounts and properties.\u201d
\nFor the central bank, it has implemented structural regulatory reforms that have strengthened the banking system.
\nThese reforms have raised prudential standards, improved governance and risk management frameworks, sharpened supervisory tools, and aligned practices with the best global practices.
\n\u201cThe BSP leverages its supervisory and regulatory oversight to assess emerging balance sheet risks,\u201d the central bank said.
\nIt emphasized that the approach is preventive and structural, aimed at identifying affected exposures and ensuring that any governance weaknesses or integrity concerns do not escalate into broader financial stress.
\nAdditionally, the central bank\u2019s policy on large-value cash transactions strengthens transparency and traceability of higher-risk cash activities, reinforcing banks\u2019 obligations under the AML/counterterrorism financing framework.
\n\u201cBy tightening reporting standards and enhancing risk-based monitoring of unusually large or structured cash movements, the BSP helps prevent the misuse of the financial system for illicit purposes,\u201d it said.
\nThese countermeasures reduce vulnerabilities that could undermine institutional resilience and public confidence.
\nThe central bank also emphasized that it remains committed to safeguarding financial stability through a calibrated supervisory approach and targeted regulatory policy reforms.
\nIts current priority regulatory policies are anchored on two pillars: fostering resilience and sustaining relevance.
\n\u201cThese reforms ensure that the banking sector remains sound and stable, relevant, and adaptive to support sustainable and inclusive economic growth.\u201d
\nFor PNB, the BSP recalibrates its policies by implementing strict controls on high-value cash transactions through BSP Circular No. 1218 (Regulation on large value cash transactions) issued in September 2025 in response to heightened risks associated with money laundering and corruption.
\n\u201cThis regulation limits cash withdrawals and similar payouts to P500,000 per customer per banking day unless supported by enhanced due diligence.\u201d
\nIt added that the policy mandates that large value payouts must be conducted through traceable, noncash channels.
\nIn late February, the central bank issued Circular No. 1230, increasing the cash withdrawal threshold to P1 million from P500,000 to focus on higher-risk activity while streamlining the process for legitimate and normal cash transactions, including recurring ones.
\n\u201cThe increase follows consultations with banks and industries, which showed a large number of legitimate cash transactions above the original threshold. These covered payouts, such as payroll, loans, and project-based disbursements,\u201d the BSP said in a press release.
\nFor Mr. Gomez, BSP is sustaining a deliberate monetary easing cycle to offset the economic drag caused by recent governance fallouts and delayed public infrastructure spending from a macroeconomic stimulus perspective.
\nHe added that with the Monetary board reducing its key policy rates, this should lower system-wide borrowing costs, support domestic demand, and catalyze economic growth, provided inflation trajectories remain manageable.
\nThe BSP lowered policy rates by 25 basis points (bps) to 4.25% for a sixth straight meeting in its February policy meeting.
\nThis was the lowest in over three years or since the 3.75% in August 2022.
\nSince its easing cycle in August 2024, the central bank has lowered interest rates by a total of 225 bps, including five straight 25-bp reductions in 2025.
\n\u201cThe BSP is recalibrating by carefully tightening and sequencing macro prudential measures,\u201d said Mr. Gomez.
\nHe added that by communicating clear, transparent policy horizons and reinforcing stringent liquidity and capital adequacy standards, the BSP ensures that institutions maintain the necessary buffers to absorb potential shocks.
\nSTAYING AFLOAT
\nFor DBP\u2019s Mr. de Jesus, strengthening capital adequacy and liquidity, enhancing risk management, diversifying portfolios, and balancing the need for confidentiality and transparency are crucial strategic thrusts for financial institutions.
These can improve money laundering detection capabilities and, in turn, boost consumer trust and confidence in the banking system.
\nFor Mr. Gomez, banks should adopt execution-focused strategies prioritizing disciplined growth, strong funding fundamentals, and diversified recurring income streams.
\n\u201cInvesting in scalable digital platforms helps capture retail growth and improve operational efficiency. Furthermore, institutions must deploy advanced, network-level anti-money laundering intelligence capable of detecting fragmented syndicates to protect the financial system from illicit exploitation,\u201d he said.
\nThe BSP-supervised financial institutions can safeguard the financial system by reinforcing sound governance and risk culture, observing prudent risk-taking, and strengthening operational and cyber resilience.
\n\u201cInstitutions that consistently invest in these fundamentals, while maintaining solid capital and liquidity buffers, are better equipped to absorb shocks and continue supporting households and businesses, even during periods of stress,\u201d the BSP said.
\nThese efforts are complemented by the BSP\u2019s ongoing surveillance, which includes regular stress testing exercises, enhanced supervisory monitoring, and prudential policy enhancements.
\n\u201cThe BSP stands ready to implement appropriate measures, as needed, to help mitigate potential shocks, support market confidence, and promote overall financial stability.\u201d
\n", "content_text": "By Abigail Marie P. Yraola, Deputy Research Head\nPHILIPPINE economic activity and infrastructure were thrown into disarray after a multibillion-peso flood control scandal erupted in late 2025, which dampened investor sentiment and stalled key infrastructure pipelines.\nThe banking sector was not spared from this graft controversy as it may await potential challenges such as returning to the Financial Action Task Force\u2019s (FATF) gray list.\nDespite the noise and shocks that rocked the local economy during the period, financial institutions have navigated through these choppy waters stronger than expected and managed to stay afloat.\nIn response, the banking sector\u2019s approach to corruption and governance risks may be noted through implementation of stringent regulatory controls, advanced internal monitoring systems and strategic risk management to ensure financial stability.\nThe central bank firms its view that the Philippine banking system remains stable and that this financial resilience mirrors strong balance sheet growth, solid profitability, and prudent credit practices.\nThe Bangko Sentral ng Pilipinas (BSP) said that it monitors indicators of financial soundness such as credit growth, asset quality, liquidity measures, capital adequacy, and profitability to assess the overall financial condition of Philippine banks.\n\u201cThe BSP also conducts regular stress testing exercises to assess the financial resilience of individual banks and the banking system against shocks or adverse scenarios,\u201d the central bank said in an e-mail interview.\nSTEERING THROUGH CHOPPY WATERS\nAsia United Bank Corp. (AUB)President Manuel A. Gomez said that the market views the public infrastructure and flood control disruptions as compounded threats.\n\u201c[These act] as both a macroeconomic drag that dampens investor sentiment and a structural risk to financial stability due to the alarming potential of the Philippines returning to the FATF gray list,\u201d he said in an e-mail interview.\nNicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co., said that the central bank is committed to ensuring financial market stability as this is one BSP\u2019s key pillars of central banking.\n\u201cBSP continuously monitors banks as well as conditions in the financial market. Of late they have announced some adjustments to their liquidity management tools,\u201d he said in an e-mail.\nBSP\u2019s role is crucial as it serves as an anchor in the financial system through calibrated monetary policy and strengthened supervision.\nBanks adjusting their risk capacity amid political uncertainty should be anchored on institutionalized governance, management systems, and internal controls, Development Bank of the Philippines (DBP) President and Chief Executive Officer Michael O. de Jesus said in an e-mail.\n\u201cThe Bank (DBP) remains proactive in ensuring that its risk capacity remains resilient through periodic review of its risk appetite, capital and risk management limits, and various risk monitoring tools,\u201d he said.\nFor the Philippine National Bank (PNB), banks are adjusting their Anti-Money Laundering (AML) risk capacity by reassessing their exposure to increased financial crime risks, such as corruption, bribery, and the misuse of public funds.\n\u201cThe Bank (PNB) adopts necessary additional controls to address the heightened risks through enhanced due diligence, more conservative onboarding decisions, and enhanced transaction\u2011monitoring controls, among others,\u201d PNB said in an e-mail interview.\nIt added that the adjustments help ensure that banks remain resilient and compliant as political instability raises the likelihood of financial crime threats.\nFor AUB\u2019s Mr. Gomez, banks manage their risk capacity by maintaining disciplined underwriting standards, building a high-quality asset base, running stress tests under adverse governance/policy scenarios, and maintaining robust contingency plans and governance controls.\nMr. Gomez also emphasized that on a macroeconomic level, banks monitor inflation trends, the central bank\u2019s policy rate adjustments, and the momentum of public infrastructure spending are some reforms that could stabilize the banking sector.\nOn the other hand, he added that at the institutional level, banks can stabilize their operations by diversifying fee income which will help reduce reliance on volatile or extraordinary market gains.\n\u201cFinancial institutions closely monitor core business expansion, such as the growth in commercial lending, which indicates that business confidence has returned to pre-pandemic levels,\u201d he said.\n\u2018GRAY LIST\u2019 RETURN RISKS\nThe ongoing graft controversy with flood-control projects puts the country at risk of being placed back in the FATF\u2019s \u201cgray list,\u201d BSP Governor Eli M. Remolona, Jr. said during a media information session held earlier in February.\nThe country needs to reinforce its defenses to avoid being included by the global financial crime watchdog, especially if this graft controversy shows systemic failures.\nIn February 2025, the country exited the FATF\u2019s list of jurisdictions under increased monitoring for dirty money risks.\nBack in June 2021, the Philippines was put under increased monitoring as the financial crime watchdog identified deficiencies in the country\u2019s measures against anti-money laundering/counter terrorism financing activities.\nThe Anti-Money Laundering Council (AMLC) said that countries included in the FATF gray list is a burdensome process for banks and other financial institutions.\n\u201cThis process discourages correspondent banking relationships and international financial flows into the country,\u201d it said.\nThe cost of being included in the FATF\u2019s gray list may harm the investment climate of the country. It may lead to increased compliance burdens, hinder lower cost cross-border transactions and may diminish financial transparency.\nAdditionally, it may increase monitoring requirements for foreign banks which may result to higher fees and may negatively impact on overseas workers relying on remittances, among others.\nIt could also lead to lower investor confidence and reduction in foreign direct investments and may lower capital inflows.\nMr. Gomez of AUB said that this scandal showed that traditional, institution-level AML monitoring often fails to detect procurement-related fraud.\nCorrupt syndicates, he said, used \u201cghost projects\u201d and fragmented their transactions to evade compliance teams.\nHe stressed that \u201cto address these gaps, regulatory bodies are pushing for cross-institution intelligence sharing and the BSP has enforced stricter protocols on large cash withdrawals to ensure enhanced due diligence is applied automatically.\u201d\nFor PNB, the unusually large cash withdrawals and suspicious cash flows exposed potential weaknesses in customer due diligence, transaction monitoring, and compliance with reporting obligations.\nTo address these weaknesses, financial institutions must adopt stronger AML controls to prevent similar failures, it said.\nIt highlighted that financial institutions are expected to enhance customer due diligence, particularly for high-risk clients and politically exposed people as well as strengthen transaction monitoring to detect unusual cash flows and repeated large-value withdrawals.\nPNB also noted that these institutions should strictly comply with the timely reporting of suspicious transactions, especially when accounts linked to public funds show red flags and improve negative news screening and risk reviews.\nThe bank highlighted that the Philippine government has taken a series of coordinated actions to address issues pertaining to corruption while the AMLC rolled out efforts supporting the government\u2019s asset-recovery drive.\n\u201cTogether, these actions reflect a multiagency push to strengthen controls over public infrastructure spending,\u201d PNB said.\nFor AUB, progress must be measured based on FATF-aligned statistics, particularly the number of successful corruption case filings, secured convictions, recovered taxpayer funds, and the transparent resumption of suspended public infrastructure projects.\n\u201cFor financial institutions, the critical benchmark is the successful deployment of advanced data intelligence and network-level analytics,\u201d Mr. Gomez said.\nHe also stressed that true progress will be achieved when the banking system can proactively detect and block high-risk public procurement anomalies, assuring stakeholders of fortified resilience against systemic vulnerabilities and illicit exploitation. \nCALMING THE WATERS\nCountermeasures to shield or stabilize balance sheets from the risks associated with the corruption mess include banks focusing on \u201csustainable, volume-led growth\u201d by aggressively deploying funds into core commercial lending rather than high-risk sectors, AUB\u2019s Mr. Gomez said.\n\u201cFrom a regulatory standpoint, authorities are aggressively freezing illicit assets, the AMLC has secured freeze orders on thousands of accounts and properties.\u201d\nFor the central bank, it has implemented structural regulatory reforms that have strengthened the banking system.\nThese reforms have raised prudential standards, improved governance and risk management frameworks, sharpened supervisory tools, and aligned practices with the best global practices.\n\u201cThe BSP leverages its supervisory and regulatory oversight to assess emerging balance sheet risks,\u201d the central bank said.\nIt emphasized that the approach is preventive and structural, aimed at identifying affected exposures and ensuring that any governance weaknesses or integrity concerns do not escalate into broader financial stress.\nAdditionally, the central bank\u2019s policy on large-value cash transactions strengthens transparency and traceability of higher-risk cash activities, reinforcing banks\u2019 obligations under the AML/counterterrorism financing framework.\n\u201cBy tightening reporting standards and enhancing risk-based monitoring of unusually large or structured cash movements, the BSP helps prevent the misuse of the financial system for illicit purposes,\u201d it said.\nThese countermeasures reduce vulnerabilities that could undermine institutional resilience and public confidence.\nThe central bank also emphasized that it remains committed to safeguarding financial stability through a calibrated supervisory approach and targeted regulatory policy reforms.\nIts current priority regulatory policies are anchored on two pillars: fostering resilience and sustaining relevance.\n\u201cThese reforms ensure that the banking sector remains sound and stable, relevant, and adaptive to support sustainable and inclusive economic growth.\u201d\nFor PNB, the BSP recalibrates its policies by implementing strict controls on high-value cash transactions through BSP Circular No. 1218 (Regulation on large value cash transactions) issued in September 2025 in response to heightened risks associated with money laundering and corruption.\n\u201cThis regulation limits cash withdrawals and similar payouts to P500,000 per customer per banking day unless supported by enhanced due diligence.\u201d\nIt added that the policy mandates that large value payouts must be conducted through traceable, noncash channels.\nIn late February, the central bank issued Circular No. 1230, increasing the cash withdrawal threshold to P1 million from P500,000 to focus on higher-risk activity while streamlining the process for legitimate and normal cash transactions, including recurring ones.\n\u201cThe increase follows consultations with banks and industries, which showed a large number of legitimate cash transactions above the original threshold. These covered payouts, such as payroll, loans, and project-based disbursements,\u201d the BSP said in a press release.\nFor Mr. Gomez, BSP is sustaining a deliberate monetary easing cycle to offset the economic drag caused by recent governance fallouts and delayed public infrastructure spending from a macroeconomic stimulus perspective.\nHe added that with the Monetary board reducing its key policy rates, this should lower system-wide borrowing costs, support domestic demand, and catalyze economic growth, provided inflation trajectories remain manageable.\nThe BSP lowered policy rates by 25 basis points (bps) to 4.25% for a sixth straight meeting in its February policy meeting.\nThis was the lowest in over three years or since the 3.75% in August 2022.\nSince its easing cycle in August 2024, the central bank has lowered interest rates by a total of 225 bps, including five straight 25-bp reductions in 2025.\n\u201cThe BSP is recalibrating by carefully tightening and sequencing macro prudential measures,\u201d said Mr. Gomez.\nHe added that by communicating clear, transparent policy horizons and reinforcing stringent liquidity and capital adequacy standards, the BSP ensures that institutions maintain the necessary buffers to absorb potential shocks.\nSTAYING AFLOAT\nFor DBP\u2019s Mr. de Jesus, strengthening capital adequacy and liquidity, enhancing risk management, diversifying portfolios, and balancing the need for confidentiality and transparency are crucial strategic thrusts for financial institutions.\nThese can improve money laundering detection capabilities and, in turn, boost consumer trust and confidence in the banking system.\nFor Mr. Gomez, banks should adopt execution-focused strategies prioritizing disciplined growth, strong funding fundamentals, and diversified recurring income streams.\n\u201cInvesting in scalable digital platforms helps capture retail growth and improve operational efficiency. Furthermore, institutions must deploy advanced, network-level anti-money laundering intelligence capable of detecting fragmented syndicates to protect the financial system from illicit exploitation,\u201d he said.\nThe BSP-supervised financial institutions can safeguard the financial system by reinforcing sound governance and risk culture, observing prudent risk-taking, and strengthening operational and cyber resilience.\n\u201cInstitutions that consistently invest in these fundamentals, while maintaining solid capital and liquidity buffers, are better equipped to absorb shocks and continue supporting households and businesses, even during periods of stress,\u201d the BSP said.\nThese efforts are complemented by the BSP\u2019s ongoing surveillance, which includes regular stress testing exercises, enhanced supervisory monitoring, and prudential policy enhancements.\n\u201cThe BSP stands ready to implement appropriate measures, as needed, to help mitigate potential shocks, support market confidence, and promote overall financial stability.\u201d", "date_published": "2026-03-16T00:05:32+08:00", "date_modified": "2026-03-16T01:05:01+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2026/03/flood-control.jpg", "tags": [ "Abigail Marie P. Yraola", "Banking Report Q4 2025", "Banking Report", "Research" ], "summary": "PHILIPPINE economic activity and infrastructure were thrown into disarray after a multibillion-peso flood control scandal erupted in late 2025, which dampened investor sentiment and stalled key infrastructure pipelines." }, { "id": "/?p=736254", "url": "/research/2026/03/16/736254/unchained-by-cadena-how-a-blockchain-system-could-relieve-the-banking-sector-of-corruption-woes/", "title": "Unchained by CADENA: How a blockchain system could relieve the banking sector of corruption woes", "content_html": "By Matthew Miguel L. Castillo, Researcher
\nTUNING IN to local news in the late months of 2025 would have had you skimming through scoops on the exposed corruption mess of flood control funds.
\nThe previous 大象传媒 quarterly banking report showed a finer strike the mess had dealt, revealing a dip in the Philippine banking sector\u2019s performances in total assets and total loans.
\nThe Bangko Sentral ng Pilipinas (BSP) said in an e-mail interview that the scenario showed how disruptions in public infrastructure projects could strain contractors and businesses with bank loans \u2014 jeopardizing loan repayment performance as a result.
\nPointing fingers flew, and accusatory bombs landed, hearing after hearing, as public outrage continued to escalate in the streets and social media alike.
\nAmid the chaos and frustration over the lack of developments on the chase came the demand for changes in the system plagued by loopholes exploited by thieves whose trails could not be traced.
\nA proposed fix to the problem was raised last November as Senator Bam Aquino filed Senate Bill 1506 \u2014 the Citizens Access and Disclosure of Expenditures for National Accountability (CADENA) Act, to boost transparency, accountability, and good governance of the state\u2019s handling of public funds.
\nIn December, the bill pushed through its third and final reading in the senate; its counterpart in the House of Representatives (House Bill No. 6761) stays pending at the committee level.
\nIf enacted, the potential law will provide CADENA as a publicly accessible portal to all public budget data required under it.
\nThe portal\u2019s namesake, cadena \u2014 Filipino for \u201cchain\u201d \u2014 is a sly nod to the blockchain system underpinning its rollout.
\nTRIED AND TESTED
\nHenry R. Aguda, secretary of the Department of Information and Communications Technology (DICT), compared a blockchain\u2019s function to that of a series of ledgers that keeps track of transactions.
\u201cEvery blockchain is, at its simplest, a ledger. And every ledger is, at its simplest, a story,\u201d he said in his 2021 book entitled Opening the Archipelago: The Story of Blockchain in the Philippines authored with Cathy Bautista Casas and Nathan J. Marasigan.
\nPaul Soliman, cofounder and chief executive officer of BayaniChain, Inc. (BYC), said in a Viber message that CADENA will allow auditors, regulators, and the public \u201cto confirm that a document [of a transaction] or event exists, has not been altered, and has occurred at a specific time.\u201d
\nHe established BYC after seeing that trust issues surrounding audit trails, document integrity, and reconciliation could be solved through the technical provisions of blockchain ledgers.
\nMr. Soliman, who has studied and applied blockchain technology since 2016, reviewed and refined the bill in its second reading as a selected member of a convened technical working group.
\nThe central bank said that the recent corruption scandal highlighted the needs of \u201ctransparency in company ownership, strong transaction monitoring, and better information systems,\u201d which could be solved by CADENA.
\n\u201cBlockchain introduces a new paradigm: a shared, immutable ledger where records cannot be altered without leaving a trace,\u201d said Mr. Soliman.
\nDATA CHAINMAIL
\nMr. Aguda explains in his 2021 book that the blockchain system works through a cycle of matching and verifying data blocks through unique cryptographic signatures.
These signatures, called hashes, are spread across multiple \u201cnodes of the network\u201d \u2014 allowing independent checking in different sources for a claim to be unanimously confirmed as true.
\nMr. Soliman added that documents and fiscal events could be assigned their own hashes placed on a blockchain ledger, changing how they could be trusted and checked.
\nThis achieves three things: transparency, immutability, and veracity.
\nHe said that the provision of transparency would allow independent verification without exposing sensitive information.
\nImmutability, on the other hand, would be given to documents by denying verification of an altered document with a mismatched hash.
\nWhile veracity may be improved by ensuring data integrity through mathematical means of verifying each hash on top of classic institutional assurance.
\n\u201c[This] creates a verifiable audit layer above government systems […] strengthening trust in how public funds are tracked and reported,\u201d Mr. Soliman said.
\nMr. Aguda\u2019s book supports this, saying that each hash is \u201cinextricably linked to all that came before and after it, allowing for one to trace a way back to the genesis \u2014 the very first block \u2014 from any point in the chain.\u201d
\nPOTENT LINKAGE
\nThe BSP said that universal and commercial banks (U/KBs) face exposure to public project dependencies, stress scenarios involving project suspensions and regulatory disruptions which they must regularly assess in operations.
Section 4 of the bill says that its coverage extends to public-private partnerships (PPP) involved in utilizing, disbursing, and accounting for public funds through national government agencies.
\nThis shows that CADENA brings the promise of helping to monitor and flag rising anomalies among private companies connected with government projects that hold funds in banks.
\nIn simpler terms, the bill\u2019s provisions could render U/KBs as its passive beneficiaries \u2014 preventing them from facing shocks rooted in PPP corruption.
\n\u201cFrom a financial stability and anti-money-laundering and combating the financing of terrorism (AML/CTF) standpoint, CADENA could help reduce opportunities for misuse of public funds before such risks reach the financial system,\u201d the BSP said.
\nHowever, Mr. Soliman said that banks could also play a critical role in the potential law\u2019s implementation.
\nHe said that banks could \u201cintegrate their settlement records with blockchain verification layers for stronger auditability,\u201d being at the \u201cintersection of financial transactions and institutional trust.\u201d
\nHe added that this would entail banks providing transaction validation data on government financial flows and participating in verification nodes in the network government finance framework.
\n\u201cPrivate entities [\u2026] could contribute independent attestations, validation checkpoints, or monitoring analytics that enhance oversight and public confidence,\u201d he added, saying that\u00a0 blockchain systems support \u201cmulti-stakeholder validation models.\u201d
\n\u201cThis would create stronger alignment between fiscal records and financial settlement systems,\u201d said Mr. Soliman.
\nIn line with this, the BSP said that U/KBs could proactively improve data quality and \u201cenhance AML/CTF safeguards\u201d to face corruption shocks.
\n\u201cThe [flood control mess] also underscored the need to continually strengthen training and internal controls for branch frontliners to ensure the timely identification, escalation, and reporting of unusual transactions,\u201d the central bank said.
\nBINDING ELEMENTS
\nMr. Soliman said that implementation of CADENA would go through a \u201cphased rollout approach.\u201d
The pilot stage would be operational at around six to 12 months from its enactment, focusing on establishing the internal integrity of the system.
\n\u201cThis stage validates the technical architecture, governance model, and verification mechanisms,\u201d he said.
\nHowever, he added that full nationwide implementation would take longer as it would entail coordinated integration among government systems, financial institutions, and regulatory frameworks.
\nThe bill states that full government implementation is expected to take place around three years after it takes effect.
\nAll government entities will be mandated to record and publish to CADENA all data from documents on the National Government budget.
\nThe government agencies involved in its proposed process of disclosing public budget data and their respective functions are also discussed in the bill.
\nThe DICT will handle a dedicated program management office for CADENA and will serve as the secretariat for the National Budget Transparency and Accountability Council (NBTAC).
\nThe NBTAC will be comprised of members from the Department of Budget and Management, Commission on Audit, the Department of Justice, and the Department of Finance.
\nIt will be responsible for monitoring, maintaining, and implementing the law \u2014 ensuring its promised provisions are delivered and outlined purposes fulfilled.
\nConsidering this model, Mr. Soliman said that the main challenges facing the potential law\u2019s effectiveness in the current set-up are institutional rather than technological.
\nHe first cited system interoperability as a possible obstacle, as \u201cgovernment agencies operate different legacy systems.\u201d
\nDigital governance frameworks also need improvement, as execution will need clearer standards on data ownership, validation, and disclosure.
\nFurthermore, he said that technical teams and policy stakeholders would need to build their capacities in handling distributed systems.
\nLastly, he said that regulatory clarity must also be put in mind as findings and records in the system \u201cmust align with legal frameworks for audit and compliance.\u201d
\nFor Mr. Soliman, the daunting scope and challenges of CADENA can be managed with coordinated policy and technical planning.
\nDOWN THE LINE OF SUCCESS
\nMr. Soliman said that the CADENA Act will face the reality of expansion if it passes into law nationwide.
He said that the proposed system would need to be incapacitated and carefully designed in several areas to handle this.
\nFirst, he mentioned that the governance of the network must be carefully defined to clarify those responsible for operating validation of nodes and decision making.
\nHe also highlighted the importance of having data disclosure boundaries to ensure transparency without compromising sensitive fiscal information.
\nFurthermore, he also said that integration standards must be set to make sure different systems in government and finance could interact with the blockchain layer.
\nAnd lastly, he added that operational resistance must be strengthened to maintain redundancy and disaster recovery across the network.
\n\u201cThese considerations are not weaknesses [in the system] but part of responsible system design when building national-scale digital infrastructure,\u201d he said.
\n", "content_text": "By Matthew Miguel L. Castillo, Researcher\nTUNING IN to local news in the late months of 2025 would have had you skimming through scoops on the exposed corruption mess of flood control funds.\nThe previous 大象传媒 quarterly banking report showed a finer strike the mess had dealt, revealing a dip in the Philippine banking sector\u2019s performances in total assets and total loans.\nThe Bangko Sentral ng Pilipinas (BSP) said in an e-mail interview that the scenario showed how disruptions in public infrastructure projects could strain contractors and businesses with bank loans \u2014 jeopardizing loan repayment performance as a result.\nPointing fingers flew, and accusatory bombs landed, hearing after hearing, as public outrage continued to escalate in the streets and social media alike.\nAmid the chaos and frustration over the lack of developments on the chase came the demand for changes in the system plagued by loopholes exploited by thieves whose trails could not be traced.\nA proposed fix to the problem was raised last November as Senator Bam Aquino filed Senate Bill 1506 \u2014 the Citizens Access and Disclosure of Expenditures for National Accountability (CADENA) Act, to boost transparency, accountability, and good governance of the state\u2019s handling of public funds.\nIn December, the bill pushed through its third and final reading in the senate; its counterpart in the House of Representatives (House Bill No. 6761) stays pending at the committee level.\nIf enacted, the potential law will provide CADENA as a publicly accessible portal to all public budget data required under it.\nThe portal\u2019s namesake, cadena \u2014 Filipino for \u201cchain\u201d \u2014 is a sly nod to the blockchain system underpinning its rollout.\nTRIED AND TESTED\nHenry R. Aguda, secretary of the Department of Information and Communications Technology (DICT), compared a blockchain\u2019s function to that of a series of ledgers that keeps track of transactions.\n\u201cEvery blockchain is, at its simplest, a ledger. And every ledger is, at its simplest, a story,\u201d he said in his 2021 book entitled Opening the Archipelago: The Story of Blockchain in the Philippines authored with Cathy Bautista Casas and Nathan J. Marasigan.\nPaul Soliman, cofounder and chief executive officer of BayaniChain, Inc. (BYC), said in a Viber message that CADENA will allow auditors, regulators, and the public \u201cto confirm that a document [of a transaction] or event exists, has not been altered, and has occurred at a specific time.\u201d\nHe established BYC after seeing that trust issues surrounding audit trails, document integrity, and reconciliation could be solved through the technical provisions of blockchain ledgers.\nMr. Soliman, who has studied and applied blockchain technology since 2016, reviewed and refined the bill in its second reading as a selected member of a convened technical working group.\nThe central bank said that the recent corruption scandal highlighted the needs of \u201ctransparency in company ownership, strong transaction monitoring, and better information systems,\u201d which could be solved by CADENA.\n\u201cBlockchain introduces a new paradigm: a shared, immutable ledger where records cannot be altered without leaving a trace,\u201d said Mr. Soliman.\nDATA CHAINMAIL\nMr. Aguda explains in his 2021 book that the blockchain system works through a cycle of matching and verifying data blocks through unique cryptographic signatures.\nThese signatures, called hashes, are spread across multiple \u201cnodes of the network\u201d \u2014 allowing independent checking in different sources for a claim to be unanimously confirmed as true.\nMr. Soliman added that documents and fiscal events could be assigned their own hashes placed on a blockchain ledger, changing how they could be trusted and checked.\nThis achieves three things: transparency, immutability, and veracity.\nHe said that the provision of transparency would allow independent verification without exposing sensitive information.\nImmutability, on the other hand, would be given to documents by denying verification of an altered document with a mismatched hash.\nWhile veracity may be improved by ensuring data integrity through mathematical means of verifying each hash on top of classic institutional assurance.\n\u201c[This] creates a verifiable audit layer above government systems […] strengthening trust in how public funds are tracked and reported,\u201d Mr. Soliman said.\nMr. Aguda\u2019s book supports this, saying that each hash is \u201cinextricably linked to all that came before and after it, allowing for one to trace a way back to the genesis \u2014 the very first block \u2014 from any point in the chain.\u201d\nPOTENT LINKAGE\nThe BSP said that universal and commercial banks (U/KBs) face exposure to public project dependencies, stress scenarios involving project suspensions and regulatory disruptions which they must regularly assess in operations.\nSection 4 of the bill says that its coverage extends to public-private partnerships (PPP) involved in utilizing, disbursing, and accounting for public funds through national government agencies.\nThis shows that CADENA brings the promise of helping to monitor and flag rising anomalies among private companies connected with government projects that hold funds in banks.\nIn simpler terms, the bill\u2019s provisions could render U/KBs as its passive beneficiaries \u2014 preventing them from facing shocks rooted in PPP corruption.\n\u201cFrom a financial stability and anti-money-laundering and combating the financing of terrorism (AML/CTF) standpoint, CADENA could help reduce opportunities for misuse of public funds before such risks reach the financial system,\u201d the BSP said.\nHowever, Mr. Soliman said that banks could also play a critical role in the potential law\u2019s implementation.\nHe said that banks could \u201cintegrate their settlement records with blockchain verification layers for stronger auditability,\u201d being at the \u201cintersection of financial transactions and institutional trust.\u201d\nHe added that this would entail banks providing transaction validation data on government financial flows and participating in verification nodes in the network government finance framework.\n\u201cPrivate entities [\u2026] could contribute independent attestations, validation checkpoints, or monitoring analytics that enhance oversight and public confidence,\u201d he added, saying that\u00a0 blockchain systems support \u201cmulti-stakeholder validation models.\u201d\n\u201cThis would create stronger alignment between fiscal records and financial settlement systems,\u201d said Mr. Soliman.\nIn line with this, the BSP said that U/KBs could proactively improve data quality and \u201cenhance AML/CTF safeguards\u201d to face corruption shocks.\n\u201cThe [flood control mess] also underscored the need to continually strengthen training and internal controls for branch frontliners to ensure the timely identification, escalation, and reporting of unusual transactions,\u201d the central bank said.\nBINDING ELEMENTS\nMr. Soliman said that implementation of CADENA would go through a \u201cphased rollout approach.\u201d\nThe pilot stage would be operational at around six to 12 months from its enactment, focusing on establishing the internal integrity of the system.\n\u201cThis stage validates the technical architecture, governance model, and verification mechanisms,\u201d he said.\nHowever, he added that full nationwide implementation would take longer as it would entail coordinated integration among government systems, financial institutions, and regulatory frameworks.\nThe bill states that full government implementation is expected to take place around three years after it takes effect.\nAll government entities will be mandated to record and publish to CADENA all data from documents on the National Government budget.\nThe government agencies involved in its proposed process of disclosing public budget data and their respective functions are also discussed in the bill.\nThe DICT will handle a dedicated program management office for CADENA and will serve as the secretariat for the National Budget Transparency and Accountability Council (NBTAC).\nThe NBTAC will be comprised of members from the Department of Budget and Management, Commission on Audit, the Department of Justice, and the Department of Finance.\nIt will be responsible for monitoring, maintaining, and implementing the law \u2014 ensuring its promised provisions are delivered and outlined purposes fulfilled.\nConsidering this model, Mr. Soliman said that the main challenges facing the potential law\u2019s effectiveness in the current set-up are institutional rather than technological.\nHe first cited system interoperability as a possible obstacle, as \u201cgovernment agencies operate different legacy systems.\u201d\nDigital governance frameworks also need improvement, as execution will need clearer standards on data ownership, validation, and disclosure.\nFurthermore, he said that technical teams and policy stakeholders would need to build their capacities in handling distributed systems.\nLastly, he said that regulatory clarity must also be put in mind as findings and records in the system \u201cmust align with legal frameworks for audit and compliance.\u201d\nFor Mr. Soliman, the daunting scope and challenges of CADENA can be managed with coordinated policy and technical planning.\nDOWN THE LINE OF SUCCESS\nMr. Soliman said that the CADENA Act will face the reality of expansion if it passes into law nationwide.\nHe said that the proposed system would need to be incapacitated and carefully designed in several areas to handle this.\nFirst, he mentioned that the governance of the network must be carefully defined to clarify those responsible for operating validation of nodes and decision making.\nHe also highlighted the importance of having data disclosure boundaries to ensure transparency without compromising sensitive fiscal information.\nFurthermore, he also said that integration standards must be set to make sure different systems in government and finance could interact with the blockchain layer.\nAnd lastly, he added that operational resistance must be strengthened to maintain redundancy and disaster recovery across the network.\n\u201cThese considerations are not weaknesses [in the system] but part of responsible system design when building national-scale digital infrastructure,\u201d he said.", "date_published": "2026-03-16T00:04:31+08:00", "date_modified": "2026-03-16T01:05:58+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2026/03/blockchain.jpg", "tags": [ "Banking Report Q4 2025", "Matthew Miguel L. Castillo", "Banking Report", "Research" ], "summary": "TUNING IN to local news in the late months of 2025 would have had you skimming through scoops on the exposed corruption mess of flood control funds." }, { "id": "/?p=736246", "url": "/research/2026/03/16/736246/how-a-scandal-broke-philippine-investor-confidence/", "title": "How a scandal broke Philippine investor confidence", "content_html": "A FORMER accountant who invested her savings after being laid off in late 2024 pulled out of the market entirely in early 2026 amid the shakeup seen in last year\u2019s markets.
\n\u201cIt is the realization of how its volatility can ruin your investment in a flash, especially when funds are placed in stocks or balanced equity pools,\u201d said the former multinational bank employee, who requested anonymity.
\nThe Philippine Stock Exchange (PSE) index closed 2025 at 6,052.92 on Dec. 29, down 7.3% or 475.87 points from its end-2024 level of 6,528.79. On Nov. 14, the PSE index plunged to 5,584.35, its weakest close in nearly five and a half years, or since the 5,570.22 close on May 28, 2020.
\nBy comparison, the Standard & Poor\u2019s 500 (S&P 500) index rose by 22.6% to 6,845.49 points by its final trading day on Dec. 31, 2025 from the same day in 2024.
\nHer experience reflects a broader flight to safety that swept through Philippine wealth management in 2025. The Philippine economy has been through a great upset, since President Ferdinand R. Marcos, Jr. said that about 6,000 flood control projects estimated to be worth P350 billion launched since 2022 were anomalous.
\nTURMOIL
\nThe flood-control project scandal\u2019s damages were seen not just in poor infrastructure. It dragged the Philippine economy to a 3% growth in the fourth quarter of 2025, the slowest pace since the 3.8% contraction in the first quarter of 2021 during the coronavirus pandemic, data from the Philippine Statistics Authority (PSA) showed.
Full-year growth settled at 4.4%, the weakest in five years outside the pandemic-induced 9.5% contraction in 2020 and missed the government\u2019s 5.5%- 6.5% target.
\nApproved foreign investments in the Philippines plunged by 50.1% year on year to P272.38 billion in 2025, the sharpest fall in five years, according to the PSA. This was the steepest drop in foreign investments since the 71.3% decline recorded during the pandemic in 2020.
\nEven the Bangko Sentral ng Pilipinas (BSP) delivered a surprise rate cut in October, slashing by 25 basis points to bring the key rate to 4.75%. The Monetary Board said the outlook for domestic economic growth had weakened, reflecting in part the impact on business confidence of governance concerns about public infrastructure spending.
\n\u201cAcross our businesses, we saw a noticeable shift towards liquidity and flexibility,\u201d Philippine National Bank (PNB) said in an e-mailed response. \u201cClients whose risk appetite was already tempered by interest rate volatility and geopolitical uncertainty became even more allocation-conscious.\u201d
\nJoaquin Rossano U. Veluz, a client portfolio manager at Sun Life Investment Management and Trust Co., said investor confidence dropped sharply during the period.
\n\u201cA lot of investors became quite risk-averse in their choice of investments,\u201d Mr. Veluz said in a Teams video call. \u201cMany are prioritizing money market and short-term, capital preservation-type products.\u201d
\nAbout 90% of Sun Life\u2019s assets under management in unit investment trust funds (UITFs) are parked in money market products, Mr. Veluz said. The corruption scandal that erupted in the second half of 2025 prompted many investors to park funds in cash, money market funds, and short-duration bonds.
\n\u201cMany households chose to park funds in cash, money-market funds and short-duration bonds rather than commit to longer-dated instruments,\u201d PNB added.
\nThe former accountant said the market\u2019s poor performance fundamentally changed her saving habits.
\n\u201cInstead of putting my money into high-earning stock-equity investments, including insurance products with market exposure, I will consider investing in vacant land/lots and perhaps gold, if feasible,\u201d she said. \u201cThese are assets that appreciate over time.\u201d
\nNot all investors fled, however. An investment banker at a multinational firm who requested anonymity saw opportunity in the downturn, investing in stocks he assessed as undervalued during 2025.
\n\u201cNow is a good time to purchase companies at a huge discount from intrinsic value,\u201d the investment banker said. \u201cMany companies are even trading at below book value.\u201d
\nWhile he was able to beat the market last year \u2014 losing just 3% over the 10% crash starting from when he started going long \u2014 he said that the blue-chip stocks he bought continue to be undervalued today.
\n\u201cI bought at the absolute bottom, and then it just stayed there.\u201d
\nCOMMON PITFALLS
\nWealth managers identified emotional decision-making as the primary risk facing investors during periods of market stress.
\u201cThe greatest risk we observe is emotional decision-making,\u201d PNB said. \u201cSensational headlines can trigger panic selling or excessive defensiveness, both of which undermine long-term returns.\u201d
\nMr. Veluz said the most dangerous mistake he observes among Filipino investors is the absence of clear financial goals.
\n\u201cWhen you ask them why they invest, they don\u2019t know,\u201d he said. \u201cBecause investing for retirement is entirely different from investing for a goal that\u2019s three to five years away.\u201d
\nThe lack of planning distorts decision-making and leaves investors vulnerable to market swings, he added.
\n\u201cNot having a plan or a goal distorts your decision-making and leaves you without a clear sense of how to approach investing,\u201d Mr. Veluz said.
\nBeyond the absence of goals, Mr. Veluz identified two other common mistakes: lack of discipline and susceptibility to investment fads.
\n\u201cWhatever is trending, everyone wants in,\u201d he said. \u201cRight now, it\u2019s probably gold and tech. Even if, first, your risk profile doesn\u2019t fit that type of investment, and second, if your current portfolio is small, do you really want to allocate a substantial portion to an illiquid instrument?\u201d
\nThe flood control scandal, which involved billions of pesos in alleged corruption, left many investors questioning whether saving made sense at all. The former accountant said she has lost faith in investing in local publicly listed companies entirely.
\n\u201cThere was this relationship manager of a major bank who gave advice never to invest in the local publicly listed companies,\u201d she said.
\n\u201cIt\u2019s quite disheartening, to be honest,\u201d Mr. Veluz said. \u201cBut we advise our clients to focus on what they can control \u2014 and that is how much they save and where they invest those savings.\u201d
\nPNB emphasized that consistent contributions compound over time regardless of political or economic turbulence.
\n\u201cThe scandal underscored the importance of anchoring saving on personal goals rather than on circumstances beyond one\u2019s control,\u201d the bank said. \u201cWe remind clients that they save and invest to secure their family\u2019s future and their own, not to endorse institutions.\u201d
\nLOOKING AHEAD
\nFor clients specifically worried about corruption-driven volatility, PNB emphasized the importance of assessments.
\u201cBefore recommending specific instruments, we undertake a thorough client suitability assessment of each client\u2019s goals, time horizon, sophistication, and risk tolerance,\u201d the bank said.
\nFor conservative investors, PNB said it emphasizes government securities and investment-grade corporate bonds to provide regular income and principal stability.
\n\u201cDiversified fixed income funds can further spread risk across sectors and maturities,\u201d the bank added.
\nWhen corruption shocks coincide with other economic pressures, the bank advised measured adjustments.
\n\u201cWhen corruption-related shocks coincide with inflation, currency weakness or other macroeconomic pressures, the instinct may be to overhaul the entire portfolio,\u201d PNB said. \u201cWe counsel against drastic shifts.\u201d
\nMr. Veluz said wealth managers are steering clients toward diversified portfolios with increased global exposure.
\n\u201cSince the local market is affected by corruption and weakened investor confidence, we always advise our clients to take a more holistic, diversified approach to their portfolios,\u201d he said. \u201cNumber one: you have to get global exposure.\u201d
\nHe said Filipino investors are beginning to appreciate the need for diversification after the Philippine market\u2019s poor performance relative to global markets in recent years.
\n\u201cFrom 2005 to 2015, the Philippine market returned around 18\u201319%,\u201d he said. \u201cBut from 2015 to 2025, that flipped. The Philippine market was flat to negative. The global market was around high double digits.\u201d
\nAsset managers have responded by rolling out more products that give Filipinos exposure to global funds, increasingly offering them in pesos to reach a wider investor base.
\n\u201cBefore, a lot of these funds were only available in US dollars,\u201d Mr. Veluz said. \u201cNow they\u2019re offering them in peso and through more channels.\u201d
\nHe added that diversifying to offshore markets actually lowers portfolio volatility.
\n\u201cThe S&P 500 companies are actually higher quality than local PSE index (PSEi) names,\u201d Mr. Veluz said. \u201cSo by diversifying some of that local exposure, you\u2019re actually lowering your volatility.\u201d
\nOn emergency fund targets, PNB said the traditional benchmark of six to twelve months of essential expenses remains prudent, with the exact target adjusted for job stability and number of dependents.
\n\u201cThere is no universal formula for emergency funds because incomes and spending patterns vary widely,\u201d the bank said. \u201cNevertheless, rising inflation and market volatility call for deeper liquidity buffers.\u201d
\nMr. Veluz said his firm recommends three to six months of monthly income set aside in highly liquid instruments.
\n\u201cBut I think the reality is that Filipino households and investors still want guaranteed-type returns and guaranteed-type products,\u201d he said. \u201cA lot of them are in money market, time deposits, and current account savings accounts.\u201d
\nThe former accountant said she still believes in saving despite current economic conditions, but through more traditional vehicles.
\n\u201cIt may be wiser to place excess funds in more traditional investment vehicles such as money\u2011market funds, bonds, raw land, or even gold,\u201d she said.
\nThe investment banker took the opposite view.
\n\u201cI suggest investing instead of saving,\u201d he said. \u201cAgain now is a great time to accumulate assets at high discounts to intrinsic value.\u201d
\nDespite the challenges of 2025, wealth managers see potential for recovery in 2026, provided certain conditions are met.
\n\u201cThe PSEi has a chance to perform well,\u201d Mr. Veluz said. \u201cWhy? Because the peso has started to appreciate.\u201d
\nHe said foreign investors may return to bargain hunt given how low valuations have become compared to regional neighbors.
\n\u201cWhether foreign flows actually return will still depend on how the economy and the country perform,\u201d Mr. Veluz said. \u201cWe need to see a swift recovery, or at the very least, a stabilization of gross domestic product.\u201d
\nThe missing link remains government spending and resolution of the corruption issue, he added.
\n\u201cThere needs to be some semblance of accountability \u2014 that people will face consequences for this corruption,\u201d Mr. Veluz said. \u201cThat would hopefully unlock a virtuous cycle: consumers start spending again, businesses start looking at expansion and hiring, and investors begin to feel that the worst is over.\u201d
\nThe former accountant called for an independent watchdog group outside the control of politicians or big companies that could check, investigate, and stop suspicious activities immediately.
\n\u201cViolators will then be caught early and not years later when the damage is already done,\u201d she said. \u201cBut for it to work, whistleblowers must be fully protected so insiders can safely report wrongdoing without fear of losing their jobs or being harassed.\u201d
\nThe investment banker disagreed on the need for new regulations.
\n\u201cThe laws and rules and regulations are robust enough to prevent scandals and fraud,\u201d he said. \u201cThe institutions are strong in a vacuum. But the problem is that the people running them are not incorruptible nor infallible.\u201d
\nFor investors navigating the current environment, both wealth managers emphasized the importance of staying disciplined and maintaining a long-term perspective.
\n\u201cLong term investors who stay invested through volatility historically fare better than those who jump in and out of markets,\u201d PNB said.
\nMr. Veluz said the key message for 2026 is simple.
\n\u201cThey should focus on staying the course and staying diversified,\u201d he said. \u2014 Pierce Oel A. Montalvo
\n", "content_text": "A FORMER accountant who invested her savings after being laid off in late 2024 pulled out of the market entirely in early 2026 amid the shakeup seen in last year\u2019s markets.\n\u201cIt is the realization of how its volatility can ruin your investment in a flash, especially when funds are placed in stocks or balanced equity pools,\u201d said the former multinational bank employee, who requested anonymity.\nThe Philippine Stock Exchange (PSE) index closed 2025 at 6,052.92 on Dec. 29, down 7.3% or 475.87 points from its end-2024 level of 6,528.79. On Nov. 14, the PSE index plunged to 5,584.35, its weakest close in nearly five and a half years, or since the 5,570.22 close on May 28, 2020.\nBy comparison, the Standard & Poor\u2019s 500 (S&P 500) index rose by 22.6% to 6,845.49 points by its final trading day on Dec. 31, 2025 from the same day in 2024.\nHer experience reflects a broader flight to safety that swept through Philippine wealth management in 2025. The Philippine economy has been through a great upset, since President Ferdinand R. Marcos, Jr. said that about 6,000 flood control projects estimated to be worth P350 billion launched since 2022 were anomalous.\nTURMOIL\nThe flood-control project scandal\u2019s damages were seen not just in poor infrastructure. It dragged the Philippine economy to a 3% growth in the fourth quarter of 2025, the slowest pace since the 3.8% contraction in the first quarter of 2021 during the coronavirus pandemic, data from the Philippine Statistics Authority (PSA) showed.\nFull-year growth settled at 4.4%, the weakest in five years outside the pandemic-induced 9.5% contraction in 2020 and missed the government\u2019s 5.5%- 6.5% target.\nApproved foreign investments in the Philippines plunged by 50.1% year on year to P272.38 billion in 2025, the sharpest fall in five years, according to the PSA. This was the steepest drop in foreign investments since the 71.3% decline recorded during the pandemic in 2020.\nEven the Bangko Sentral ng Pilipinas (BSP) delivered a surprise rate cut in October, slashing by 25 basis points to bring the key rate to 4.75%. The Monetary Board said the outlook for domestic economic growth had weakened, reflecting in part the impact on business confidence of governance concerns about public infrastructure spending.\n\u201cAcross our businesses, we saw a noticeable shift towards liquidity and flexibility,\u201d Philippine National Bank (PNB) said in an e-mailed response. \u201cClients whose risk appetite was already tempered by interest rate volatility and geopolitical uncertainty became even more allocation-conscious.\u201d\nJoaquin Rossano U. Veluz, a client portfolio manager at Sun Life Investment Management and Trust Co., said investor confidence dropped sharply during the period.\n\u201cA lot of investors became quite risk-averse in their choice of investments,\u201d Mr. Veluz said in a Teams video call. \u201cMany are prioritizing money market and short-term, capital preservation-type products.\u201d\nAbout 90% of Sun Life\u2019s assets under management in unit investment trust funds (UITFs) are parked in money market products, Mr. Veluz said. The corruption scandal that erupted in the second half of 2025 prompted many investors to park funds in cash, money market funds, and short-duration bonds.\n\u201cMany households chose to park funds in cash, money-market funds and short-duration bonds rather than commit to longer-dated instruments,\u201d PNB added.\nThe former accountant said the market\u2019s poor performance fundamentally changed her saving habits.\n\u201cInstead of putting my money into high-earning stock-equity investments, including insurance products with market exposure, I will consider investing in vacant land/lots and perhaps gold, if feasible,\u201d she said. \u201cThese are assets that appreciate over time.\u201d\nNot all investors fled, however. An investment banker at a multinational firm who requested anonymity saw opportunity in the downturn, investing in stocks he assessed as undervalued during 2025.\n\u201cNow is a good time to purchase companies at a huge discount from intrinsic value,\u201d the investment banker said. \u201cMany companies are even trading at below book value.\u201d\nWhile he was able to beat the market last year \u2014 losing just 3% over the 10% crash starting from when he started going long \u2014 he said that the blue-chip stocks he bought continue to be undervalued today.\n\u201cI bought at the absolute bottom, and then it just stayed there.\u201d\nCOMMON PITFALLS\nWealth managers identified emotional decision-making as the primary risk facing investors during periods of market stress.\n\u201cThe greatest risk we observe is emotional decision-making,\u201d PNB said. \u201cSensational headlines can trigger panic selling or excessive defensiveness, both of which undermine long-term returns.\u201d\nMr. Veluz said the most dangerous mistake he observes among Filipino investors is the absence of clear financial goals.\n\u201cWhen you ask them why they invest, they don\u2019t know,\u201d he said. \u201cBecause investing for retirement is entirely different from investing for a goal that\u2019s three to five years away.\u201d\nThe lack of planning distorts decision-making and leaves investors vulnerable to market swings, he added.\n\u201cNot having a plan or a goal distorts your decision-making and leaves you without a clear sense of how to approach investing,\u201d Mr. Veluz said.\nBeyond the absence of goals, Mr. Veluz identified two other common mistakes: lack of discipline and susceptibility to investment fads.\n\u201cWhatever is trending, everyone wants in,\u201d he said. \u201cRight now, it\u2019s probably gold and tech. Even if, first, your risk profile doesn\u2019t fit that type of investment, and second, if your current portfolio is small, do you really want to allocate a substantial portion to an illiquid instrument?\u201d\nThe flood control scandal, which involved billions of pesos in alleged corruption, left many investors questioning whether saving made sense at all. The former accountant said she has lost faith in investing in local publicly listed companies entirely.\n\u201cThere was this relationship manager of a major bank who gave advice never to invest in the local publicly listed companies,\u201d she said.\n\u201cIt\u2019s quite disheartening, to be honest,\u201d Mr. Veluz said. \u201cBut we advise our clients to focus on what they can control \u2014 and that is how much they save and where they invest those savings.\u201d\nPNB emphasized that consistent contributions compound over time regardless of political or economic turbulence.\n\u201cThe scandal underscored the importance of anchoring saving on personal goals rather than on circumstances beyond one\u2019s control,\u201d the bank said. \u201cWe remind clients that they save and invest to secure their family\u2019s future and their own, not to endorse institutions.\u201d\nLOOKING AHEAD\nFor clients specifically worried about corruption-driven volatility, PNB emphasized the importance of assessments.\n\u201cBefore recommending specific instruments, we undertake a thorough client suitability assessment of each client\u2019s goals, time horizon, sophistication, and risk tolerance,\u201d the bank said.\nFor conservative investors, PNB said it emphasizes government securities and investment-grade corporate bonds to provide regular income and principal stability.\n\u201cDiversified fixed income funds can further spread risk across sectors and maturities,\u201d the bank added.\nWhen corruption shocks coincide with other economic pressures, the bank advised measured adjustments.\n\u201cWhen corruption-related shocks coincide with inflation, currency weakness or other macroeconomic pressures, the instinct may be to overhaul the entire portfolio,\u201d PNB said. \u201cWe counsel against drastic shifts.\u201d\nMr. Veluz said wealth managers are steering clients toward diversified portfolios with increased global exposure.\n\u201cSince the local market is affected by corruption and weakened investor confidence, we always advise our clients to take a more holistic, diversified approach to their portfolios,\u201d he said. \u201cNumber one: you have to get global exposure.\u201d\nHe said Filipino investors are beginning to appreciate the need for diversification after the Philippine market\u2019s poor performance relative to global markets in recent years.\n\u201cFrom 2005 to 2015, the Philippine market returned around 18\u201319%,\u201d he said. \u201cBut from 2015 to 2025, that flipped. The Philippine market was flat to negative. The global market was around high double digits.\u201d\nAsset managers have responded by rolling out more products that give Filipinos exposure to global funds, increasingly offering them in pesos to reach a wider investor base.\n\u201cBefore, a lot of these funds were only available in US dollars,\u201d Mr. Veluz said. \u201cNow they\u2019re offering them in peso and through more channels.\u201d\nHe added that diversifying to offshore markets actually lowers portfolio volatility.\n\u201cThe S&P 500 companies are actually higher quality than local PSE index (PSEi) names,\u201d Mr. Veluz said. \u201cSo by diversifying some of that local exposure, you\u2019re actually lowering your volatility.\u201d\nOn emergency fund targets, PNB said the traditional benchmark of six to twelve months of essential expenses remains prudent, with the exact target adjusted for job stability and number of dependents.\n\u201cThere is no universal formula for emergency funds because incomes and spending patterns vary widely,\u201d the bank said. \u201cNevertheless, rising inflation and market volatility call for deeper liquidity buffers.\u201d\nMr. Veluz said his firm recommends three to six months of monthly income set aside in highly liquid instruments.\n\u201cBut I think the reality is that Filipino households and investors still want guaranteed-type returns and guaranteed-type products,\u201d he said. \u201cA lot of them are in money market, time deposits, and current account savings accounts.\u201d\nThe former accountant said she still believes in saving despite current economic conditions, but through more traditional vehicles.\n\u201cIt may be wiser to place excess funds in more traditional investment vehicles such as money\u2011market funds, bonds, raw land, or even gold,\u201d she said.\nThe investment banker took the opposite view.\n\u201cI suggest investing instead of saving,\u201d he said. \u201cAgain now is a great time to accumulate assets at high discounts to intrinsic value.\u201d\nDespite the challenges of 2025, wealth managers see potential for recovery in 2026, provided certain conditions are met.\n\u201cThe PSEi has a chance to perform well,\u201d Mr. Veluz said. \u201cWhy? Because the peso has started to appreciate.\u201d\nHe said foreign investors may return to bargain hunt given how low valuations have become compared to regional neighbors.\n\u201cWhether foreign flows actually return will still depend on how the economy and the country perform,\u201d Mr. Veluz said. \u201cWe need to see a swift recovery, or at the very least, a stabilization of gross domestic product.\u201d\nThe missing link remains government spending and resolution of the corruption issue, he added.\n\u201cThere needs to be some semblance of accountability \u2014 that people will face consequences for this corruption,\u201d Mr. Veluz said. \u201cThat would hopefully unlock a virtuous cycle: consumers start spending again, businesses start looking at expansion and hiring, and investors begin to feel that the worst is over.\u201d\nThe former accountant called for an independent watchdog group outside the control of politicians or big companies that could check, investigate, and stop suspicious activities immediately.\n\u201cViolators will then be caught early and not years later when the damage is already done,\u201d she said. \u201cBut for it to work, whistleblowers must be fully protected so insiders can safely report wrongdoing without fear of losing their jobs or being harassed.\u201d\nThe investment banker disagreed on the need for new regulations.\n\u201cThe laws and rules and regulations are robust enough to prevent scandals and fraud,\u201d he said. \u201cThe institutions are strong in a vacuum. But the problem is that the people running them are not incorruptible nor infallible.\u201d\nFor investors navigating the current environment, both wealth managers emphasized the importance of staying disciplined and maintaining a long-term perspective.\n\u201cLong term investors who stay invested through volatility historically fare better than those who jump in and out of markets,\u201d PNB said.\nMr. Veluz said the key message for 2026 is simple.\n\u201cThey should focus on staying the course and staying diversified,\u201d he said. \u2014 Pierce Oel A. Montalvo", "date_published": "2026-03-16T00:03:59+08:00", "date_modified": "2026-03-16T01:07:43+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2026/03/asia-businessmen-businesswomen-meeting-brainstorming-ideas-conducting-business-presentation-project-colleagues-working-together-plan-success-strategy-enjoy-teamwork-small-modern-night-office-2.jpg", "tags": [ "Banking Report Q4 2025", "Pierce Oel A. Montalvo", "Banking Report", "Research" ] }, { "id": "/?p=736245", "url": "/research/2026/03/16/736245/growth-concerns-governance-issues-drag-markets-in-fourth-quarter/", "title": "Growth concerns, governance issues drag markets in fourth quarter", "content_html": "\r\n \r\n\r\nBy Heather Caitlin P. Ma\u00f1ago, Researcher
\nPHILIPPINE financial markets ended 2025 on a subdued note, as lingering concerns over domestic growth momentum and governance-related uncertainties offset the tailwinds from a sustained monetary easing cycle.
\nHowever, analysts warned that escalating Middle East tensions, which drove up global oil prices in early March, could trigger downturns in the local financial markets this year.
\nIn the fourth quarter, the bellwether Philippine Stock Exchange index (PSEi) closed at 6,052.92. This was lower by 7.3% from 6,528.79 at the end of 2024.
\nMeanwhile, data from the Bankers Association of the Philippines showed the peso closed at P58.79 to the dollar in the October-to-December period, weakening by 1.6% from a year earlier.
\nYields on government securities slipped by 44.04 basis points (bps) on an annual basis based on the PHP Bloomberg Valuation Service Reference Rates (BVAL) published on the Philippine Dealing System\u2019s website.
\nDuring the period, domestic markets were influenced by a tension between aggressive monetary easing and a sharp deceleration in economic activity, said analysts.
\n\u201cOverall, the quarter was defined by the tension between supportive monetary settings on one hand and deteriorating growth momentum and weak sentiment on the other,\u201d said Union Bank of the Philippines (UnionBank) Chief Economist Ruben Carlo O. Asuncion.
\nMetropolitan Bank & Trust Co. (Metrobank) Chief Economist Nicholas Antonio T. Mapa attributed the subdued market performance to \u201cdeclining consumer and business sentiment\u201d as concerns shifted from global factors to domestic economic activity.
\n\u201cMacro drivers include sluggish GDP (gross domestic product) growth, benign inflation, and policy rate cuts,\u201d said Security Bank Corp. Chief Economist Angelo B. Taningco.
\nThe Philippine Statistics Authority (PSA) reported on that the fourth-quarter gross domestic product expanded by 3%, slowing down from 5.3% in the fourth quarter of 2024 and the revised 3.9% print in the third quarter of 2025.
\nIn 2025, the economy expanded by 4.4%, much weaker than the 5.7% growth in 2024.
\nThis was the weakest pace in five years, or since the 9.5% contraction in 2020 at the height of the pandemic. Excluding the pandemic, it was the slowest growth since the 3.9% expansion in 2011.
\nPSA data also showed that headline inflation quickened to 1.8% in December from 1.5% in November but slowed from 2.9% in December 2024.
\nDecember\u2019s figure was the fastest since February 2025, although it matched the 1.8% print in March 2025.
\nDecember marked the tenth consecutive month that inflation undershot the Bangko Sentral ng Pilipinas\u2019 (BSP) 2-4% target.
\nLatest PSA data showed inflation rising to 2.4% in February 2026 from 2% in January and 2.1% a year earlier \u2014 the highest since January 2025.
\n\u201cWith inflation below target and even lower than the tolerance band, BSP opted to lower policy rates to bolster sagging growth momentum,\u201d said Metrobank\u2019s Mr. Mapa.
\nBy end\u20112025, the BSP had lowered its benchmark policy rate by 25 bps to 4.5%, its lowest level since September 2022.
\nIn February 2026, the Monetary Board cut the rate by another 25 bps to 4.25%, the lowest since August 2022.
\nThis brought the BSP\u2019s total reductions to 225 bps since it began its series of monetary policy easing in August 2024.
\n\u201cThe BSP\u2019s two policy rate cuts in Q4 2025 helped support confidence in the domestic economy. Improved investor sentiment likely contributed to gains in select financial markets,\u201d the BSP said in an e-mail.
\nSun Life Investment Management and Trust Corp. economist Patrick M. Ella said the rate cuts and easing inflation helped push yields lower. However, he noted that further declines in the yield curve did not materialize due to uncertainty over potential US rate cuts.
\nFrom October to December, the US Federal Reserve implemented two interest rate cuts \u2014 one in late October, which lowered the federal funds rate to 3.75%-4%, and another in December, which further reduced it to 3.5%-3.75%, completing the Fed\u2019s three rate cuts for 2025.
\nGOVERNANCE AND SENTIMENT
\nSentiment was particularly bruised by the flood control corruption scandal and investigations into infrastructure spending.
The local stock barometer was characterized by \u201cthin trading volumes, persistent foreign outflows, and lingering concerns over economic growth,\u201d according to Mr. Asuncion.
\nMichael L. Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), pointed to tightened infrastructure spending amid the fiasco, alongside political uncertainties that dampened investor confidence.
\nPhilippine government spending on infrastructure fell for a fifth straight month in November.
\nState disbursements for infrastructure and other capital outlays plunged 45.2% to P48 billion from a year earlier, according to data released by the Department of Budget and Management (DBM) on Jan. 31.
\nMetrobank\u2019s Mr. Mapa said that 2025 market issues were distinct from the global factors of the previous year, appearing instead to be driven by \u201cconcerns on slowing economic activity and fading confidence.\u201d
\nROAD AHEAD FOR 2026
\nAnalysts expect remittances, tourism recovery, and resilient business process outsourcing firms (BPOs) to provide support, but they stressed that the broader economic outlook will depend on how quickly confidence rebounds from the governance shocks of late 2025.
\u201cIn 2026, market sentiment and financial conditions will depend on the interaction between domestic fundamentals and global developments. A key domestic driver will be how quickly confidence rebounds from recent governance shocks, hinging on the pace and credibility of governance reforms,\u201d said the central bank.
\nRCBC\u2019s Mr. Ricafort forecasts GDP growth to pick up to 5.3%-5.8% this year, driven by a P1.44-trillion \u201ccatch-up\u201d government spending plan in the first quarter.
\nFinance Secretary Frederick D. Go said the government plans to spend P1.44 trillion in the first quarter as part of catch-up efforts to support the economy after last year\u2019s growth slowdown.
\nThe planned first-quarter outlay under the P6.793\u2011trillion national budget will help drive economic activity to meet the government\u2019s GDP growth target, Mr. Go said at a Foreign Correspondents Association of the Philippines event on Feb. 2.
\nThe government is targeting 5%-6% GDP growth this year.
\n\u201cThe trajectory of economic recovery will depend heavily on how quickly public spending normalizes and whether confidence can be rebuilt following governance-related disruptions,\u201d Mr. Asuncion said.
\nSecurity Bank\u2019s Mr. Taningco warned that \u201cexcessive rate cuts may carry risks as inflation could rise again in 2026,\u201d suggesting a gradual easing path that could bring the policy rate down to 4%.
\nOIL PRICE SHOCK
\nMeanwhile, escalating geopolitical tensions in the Middle East, alongside soaring global oil prices, have introduced additional risks to the market.
\u201cOverall, oil prices will remain an important swing factor shaping policy expectations, currency performance, and sector leadership through 2026,\u201d said UnionBank\u2019s Mr. Asuncion.
\nIn the first quarter, higher fuel costs may push inflation upward, limiting expectations of deeper BSP rate cuts and nudging bond yields higher. These same dynamics could also pressure the peso by widening the trade deficit, particularly if energy imports continue to outpace export receipts, he said.
\nBeyond the first quarter, Mr. Asuncion added that market conditions will depend heavily on second\u2011round effects.
\n\u201cIf oil-driven inflation proves contained and demand conditions soften, the BSP should still have room to recalibrate policy later in the year, which would be supportive for bonds and rate-sensitive equities. However, a prolonged oil shock would favor defensives and energy-linked names, while keeping [foreign exchange] and equities more volatile,\u201d he said.
\nSecurity Bank\u2019s Mr. Taningco emphasized that the Philippines is particularly vulnerable to high global oil prices, given its status as a net oil importer and its heavy reliance on Middle Eastern crude.
\nAccording to Department of Energy data, about 98% of the country\u2019s oil imports come from the region.
\nFIXED-INCOME MARKET
\nBSP: The BSP expects that improving growth prospects and manageable inflation will support market confidence.
Mr. Asuncion: The outlook for fixed income remains favorable, with easing inflation, supportive monetary policy, and steady demand for longer\u2011dated securities expected to keep yields contained. The curve is positioned for further flattening as investors continue to price in accommodative policy settings. Healthy liquidity conditions and strong demand in auctions should persist, barring any major supply surprises. Overall, fixed income is likely to outperform other asset classes in early 2026 as markets continue to digest the full effects of the easing cycle.
\nMr. Mapa: The mix of policy easing from the BSP (although limited) and an eventual pickup in inflation should result in a steepening of the yield curve.
\nMr. Ella: Taking its cue from the direction of Fed policy.
\nMr. Taningco: Expecting downward pressure this first quarter largely due to risk-off sentiment triggered by the Middle East war, which sparked an oil price shock.
\nMr. Ricafort: Fixed-income market remains positive, characterized by high demand for government securities and a trend toward lower yields. Future BSP rate cut/s possible amid relatively slower local economic growth/recovery and could match future Fed rate cut/s expected in the latter part of 2026 to better manage interest rate differentials.
\nEQUITIES
\nBSP: Equity market activity will be influenced by the interaction between domestic fundamentals and global developments, including how quickly confidence rebounds from recent governance shocks.
Mr. Asuncion: The equities market enters the first quarter of 2026 on a cautiously constructive footing. While lower interest rates and benign inflation create a supportive valuation environment, investors are likely to remain selective until clearer evidence of an economic turnaround emerges. The market may see intermittent rallies driven by rate\u2011sensitive sectors and improving sentiment, but sustained upward momentum will depend on better macro data \u2014 particularly on government spending, corporate earnings guidance, and consumer demand conditions.
\nMr. Ella: Taking its cue from domestic GDP and the direction of Fed policy. We have just begun with corporate earnings season so that will influence the first quarter.
\nMr. Taningco: Expecting downward pressure this first quarter largely due to risk-off sentiment triggered by the Middle East war, which sparked an oil price shock.
\nMr. Ricafort: PSEi has shown signs of a firm recovery, completely erasing losses from late 2025 as it trades above the 6,000 mark amid continued market optimism about possible inclusion of Philippine government bonds into the JPMorgan Emerging Market Bond Index that would entail additional foreign buying of Philippine government bonds worth about US$3 billion and mostly better local corporate earnings results by local listed companies recently that could fundamentally support valuations.
\nFOREIGN EXCHANGE (FX) MARKET
\nBSP: Expects the economy to be buffered from external headwinds by robust remittance inflows, a recovery in tourism, and resilient service export revenues (especially from BPOs).
Mr. Asuncion: The peso is expected to trade within a relatively stable range during the first quarter, influenced by a combination of supportive domestic inflation dynamics, a more patient Federal Reserve, and improving risk sentiment. However, without a clear rebound in domestic growth, significant appreciation is unlikely. The currency is likely to move within the upper\u2011P57 to P59 band, with modest strengthening possible if global dollar conditions soften and if early economic indicators point to recovering domestic activity.
\nMr. Mapa: We could see the FX market impacted by overall direction of the US dollar as well as on BSP policy direction.
\nMr. Ella: Taking its cue from the direction of Fed policy.
\nMr. Taningco: Expecting downward pressure this first quarter largely due to risk-off sentiment triggered by Middle East war, which sparked an oil price shock.
\nMr. Ricafort: Provided that inflation remains stable and within the BSP\u2019s inflation target range of 2%-4%, the peso exchange rate vs. the US dollar remains relatively stable or stronger; also, within the acceptable monetary and fiscal policy space.
\n", "content_text": "1 of 4\r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n\r\n \r\n \nBy Heather Caitlin P. Ma\u00f1ago, Researcher\nPHILIPPINE financial markets ended 2025 on a subdued note, as lingering concerns over domestic growth momentum and governance-related uncertainties offset the tailwinds from a sustained monetary easing cycle.\nHowever, analysts warned that escalating Middle East tensions, which drove up global oil prices in early March, could trigger downturns in the local financial markets this year.\nIn the fourth quarter, the bellwether Philippine Stock Exchange index (PSEi) closed at 6,052.92. This was lower by 7.3% from 6,528.79 at the end of 2024.\nMeanwhile, data from the Bankers Association of the Philippines showed the peso closed at P58.79 to the dollar in the October-to-December period, weakening by 1.6% from a year earlier.\nYields on government securities slipped by 44.04 basis points (bps) on an annual basis based on the PHP Bloomberg Valuation Service Reference Rates (BVAL) published on the Philippine Dealing System\u2019s website.\nDuring the period, domestic markets were influenced by a tension between aggressive monetary easing and a sharp deceleration in economic activity, said analysts.\n\u201cOverall, the quarter was defined by the tension between supportive monetary settings on one hand and deteriorating growth momentum and weak sentiment on the other,\u201d said Union Bank of the Philippines (UnionBank) Chief Economist Ruben Carlo O. Asuncion.\nMetropolitan Bank & Trust Co. (Metrobank) Chief Economist Nicholas Antonio T. Mapa attributed the subdued market performance to \u201cdeclining consumer and business sentiment\u201d as concerns shifted from global factors to domestic economic activity.\n\u201cMacro drivers include sluggish GDP (gross domestic product) growth, benign inflation, and policy rate cuts,\u201d said Security Bank Corp. Chief Economist Angelo B. Taningco.\nThe Philippine Statistics Authority (PSA) reported on that the fourth-quarter gross domestic product expanded by 3%, slowing down from 5.3% in the fourth quarter of 2024 and the revised 3.9% print in the third quarter of 2025.\nIn 2025, the economy expanded by 4.4%, much weaker than the 5.7% growth in 2024.\nThis was the weakest pace in five years, or since the 9.5% contraction in 2020 at the height of the pandemic. Excluding the pandemic, it was the slowest growth since the 3.9% expansion in 2011.\nPSA data also showed that headline inflation quickened to 1.8% in December from 1.5% in November but slowed from 2.9% in December 2024.\nDecember\u2019s figure was the fastest since February 2025, although it matched the 1.8% print in March 2025.\nDecember marked the tenth consecutive month that inflation undershot the Bangko Sentral ng Pilipinas\u2019 (BSP) 2-4% target.\nLatest PSA data showed inflation rising to 2.4% in February 2026 from 2% in January and 2.1% a year earlier \u2014 the highest since January 2025.\n\u201cWith inflation below target and even lower than the tolerance band, BSP opted to lower policy rates to bolster sagging growth momentum,\u201d said Metrobank\u2019s Mr. Mapa.\nBy end\u20112025, the BSP had lowered its benchmark policy rate by 25 bps to 4.5%, its lowest level since September 2022.\nIn February 2026, the Monetary Board cut the rate by another 25 bps to 4.25%, the lowest since August 2022.\nThis brought the BSP\u2019s total reductions to 225 bps since it began its series of monetary policy easing in August 2024.\n\u201cThe BSP\u2019s two policy rate cuts in Q4 2025 helped support confidence in the domestic economy. Improved investor sentiment likely contributed to gains in select financial markets,\u201d the BSP said in an e-mail.\nSun Life Investment Management and Trust Corp. economist Patrick M. Ella said the rate cuts and easing inflation helped push yields lower. However, he noted that further declines in the yield curve did not materialize due to uncertainty over potential US rate cuts.\nFrom October to December, the US Federal Reserve implemented two interest rate cuts \u2014 one in late October, which lowered the federal funds rate to 3.75%-4%, and another in December, which further reduced it to 3.5%-3.75%, completing the Fed\u2019s three rate cuts for 2025.\nGOVERNANCE AND SENTIMENT\nSentiment was particularly bruised by the flood control corruption scandal and investigations into infrastructure spending.\nThe local stock barometer was characterized by \u201cthin trading volumes, persistent foreign outflows, and lingering concerns over economic growth,\u201d according to Mr. Asuncion.\nMichael L. Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), pointed to tightened infrastructure spending amid the fiasco, alongside political uncertainties that dampened investor confidence.\nPhilippine government spending on infrastructure fell for a fifth straight month in November.\nState disbursements for infrastructure and other capital outlays plunged 45.2% to P48 billion from a year earlier, according to data released by the Department of Budget and Management (DBM) on Jan. 31.\nMetrobank\u2019s Mr. Mapa said that 2025 market issues were distinct from the global factors of the previous year, appearing instead to be driven by \u201cconcerns on slowing economic activity and fading confidence.\u201d\nROAD AHEAD FOR 2026\nAnalysts expect remittances, tourism recovery, and resilient business process outsourcing firms (BPOs) to provide support, but they stressed that the broader economic outlook will depend on how quickly confidence rebounds from the governance shocks of late 2025.\n\u201cIn 2026, market sentiment and financial conditions will depend on the interaction between domestic fundamentals and global developments. A key domestic driver will be how quickly confidence rebounds from recent governance shocks, hinging on the pace and credibility of governance reforms,\u201d said the central bank.\nRCBC\u2019s Mr. Ricafort forecasts GDP growth to pick up to 5.3%-5.8% this year, driven by a P1.44-trillion \u201ccatch-up\u201d government spending plan in the first quarter.\nFinance Secretary Frederick D. Go said the government plans to spend P1.44 trillion in the first quarter as part of catch-up efforts to support the economy after last year\u2019s growth slowdown.\nThe planned first-quarter outlay under the P6.793\u2011trillion national budget will help drive economic activity to meet the government\u2019s GDP growth target, Mr. Go said at a Foreign Correspondents Association of the Philippines event on Feb. 2.\nThe government is targeting 5%-6% GDP growth this year.\n\u201cThe trajectory of economic recovery will depend heavily on how quickly public spending normalizes and whether confidence can be rebuilt following governance-related disruptions,\u201d Mr. Asuncion said.\nSecurity Bank\u2019s Mr. Taningco warned that \u201cexcessive rate cuts may carry risks as inflation could rise again in 2026,\u201d suggesting a gradual easing path that could bring the policy rate down to 4%.\nOIL PRICE SHOCK\nMeanwhile, escalating geopolitical tensions in the Middle East, alongside soaring global oil prices, have introduced additional risks to the market.\n\u201cOverall, oil prices will remain an important swing factor shaping policy expectations, currency performance, and sector leadership through 2026,\u201d said UnionBank\u2019s Mr. Asuncion.\nIn the first quarter, higher fuel costs may push inflation upward, limiting expectations of deeper BSP rate cuts and nudging bond yields higher. These same dynamics could also pressure the peso by widening the trade deficit, particularly if energy imports continue to outpace export receipts, he said.\nBeyond the first quarter, Mr. Asuncion added that market conditions will depend heavily on second\u2011round effects.\n\u201cIf oil-driven inflation proves contained and demand conditions soften, the BSP should still have room to recalibrate policy later in the year, which would be supportive for bonds and rate-sensitive equities. However, a prolonged oil shock would favor defensives and energy-linked names, while keeping [foreign exchange] and equities more volatile,\u201d he said.\nSecurity Bank\u2019s Mr. Taningco emphasized that the Philippines is particularly vulnerable to high global oil prices, given its status as a net oil importer and its heavy reliance on Middle Eastern crude.\nAccording to Department of Energy data, about 98% of the country\u2019s oil imports come from the region.\nFIXED-INCOME MARKET\nBSP: The BSP expects that improving growth prospects and manageable inflation will support market confidence.\nMr. Asuncion: The outlook for fixed income remains favorable, with easing inflation, supportive monetary policy, and steady demand for longer\u2011dated securities expected to keep yields contained. The curve is positioned for further flattening as investors continue to price in accommodative policy settings. Healthy liquidity conditions and strong demand in auctions should persist, barring any major supply surprises. Overall, fixed income is likely to outperform other asset classes in early 2026 as markets continue to digest the full effects of the easing cycle.\nMr. Mapa: The mix of policy easing from the BSP (although limited) and an eventual pickup in inflation should result in a steepening of the yield curve.\nMr. Ella: Taking its cue from the direction of Fed policy.\nMr. Taningco: Expecting downward pressure this first quarter largely due to risk-off sentiment triggered by the Middle East war, which sparked an oil price shock.\nMr. Ricafort: Fixed-income market remains positive, characterized by high demand for government securities and a trend toward lower yields. Future BSP rate cut/s possible amid relatively slower local economic growth/recovery and could match future Fed rate cut/s expected in the latter part of 2026 to better manage interest rate differentials.\nEQUITIES\nBSP: Equity market activity will be influenced by the interaction between domestic fundamentals and global developments, including how quickly confidence rebounds from recent governance shocks.\nMr. Asuncion: The equities market enters the first quarter of 2026 on a cautiously constructive footing. While lower interest rates and benign inflation create a supportive valuation environment, investors are likely to remain selective until clearer evidence of an economic turnaround emerges. The market may see intermittent rallies driven by rate\u2011sensitive sectors and improving sentiment, but sustained upward momentum will depend on better macro data \u2014 particularly on government spending, corporate earnings guidance, and consumer demand conditions.\nMr. Ella: Taking its cue from domestic GDP and the direction of Fed policy. We have just begun with corporate earnings season so that will influence the first quarter.\nMr. Taningco: Expecting downward pressure this first quarter largely due to risk-off sentiment triggered by the Middle East war, which sparked an oil price shock.\nMr. Ricafort: PSEi has shown signs of a firm recovery, completely erasing losses from late 2025 as it trades above the 6,000 mark amid continued market optimism about possible inclusion of Philippine government bonds into the JPMorgan Emerging Market Bond Index that would entail additional foreign buying of Philippine government bonds worth about US$3 billion and mostly better local corporate earnings results by local listed companies recently that could fundamentally support valuations.\nFOREIGN EXCHANGE (FX) MARKET\nBSP: Expects the economy to be buffered from external headwinds by robust remittance inflows, a recovery in tourism, and resilient service export revenues (especially from BPOs).\nMr. Asuncion: The peso is expected to trade within a relatively stable range during the first quarter, influenced by a combination of supportive domestic inflation dynamics, a more patient Federal Reserve, and improving risk sentiment. However, without a clear rebound in domestic growth, significant appreciation is unlikely. The currency is likely to move within the upper\u2011P57 to P59 band, with modest strengthening possible if global dollar conditions soften and if early economic indicators point to recovering domestic activity.\nMr. Mapa: We could see the FX market impacted by overall direction of the US dollar as well as on BSP policy direction.\nMr. Ella: Taking its cue from the direction of Fed policy.\nMr. Taningco: Expecting downward pressure this first quarter largely due to risk-off sentiment triggered by Middle East war, which sparked an oil price shock.\nMr. Ricafort: Provided that inflation remains stable and within the BSP\u2019s inflation target range of 2%-4%, the peso exchange rate vs. the US dollar remains relatively stable or stronger; also, within the acceptable monetary and fiscal policy space.", "date_published": "2026-03-16T00:02:55+08:00", "date_modified": "2026-03-16T01:42:25+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2026/03/4QBR2025-Banking_Infog-01-thumb.jpg", "tags": [ "Banking Report Q4 2025", "Heather Caitlin P. Ma\u00f1ago", "Banking Report", "Research" ], "summary": "PHILIPPINE financial markets ended 2025 on a subdued note, as lingering concerns over domestic growth momentum and governance-related uncertainties offset the tailwinds from a sustained monetary easing cycle." }, { "id": "/?p=736244", "url": "/research/2026/03/16/736244/economic-slowdown-rate-cuts-weigh-on-listed-banks/", "title": "Economic slowdown, rate cuts weigh on listed banks", "content_html": "![\"\"](\"/wp-content/uploads/2026/03/Analysts-UPDATE-scaled.jpg\")
By Isa Jane D. Acabal, Researcher
LISTED big banks fell in the fourth quarter of 2025 as weak economic growth dampened investors\u2019 sentiment and policy rate cuts put pressure on banks\u2019 lending margins, analysts said.
\nThe Philippine Stock Exchange index (PSEi) inched down by 7.3% year on year to 6,052.92 at the end of the fourth quarter.
\nMeanwhile, the financials subindex, which includes the banks, also declined by 5.1% annually to 2,048.47 during the quarter.
\nAs of end-December, the share prices of seven out of 13 listed universal and commercial banks (U/KBs) contracted year on year.
\nAmong the decliners were Asia United Bank Corp. (AUB), Union Bank of the Philippines and Security Bank Corp.
\nOn the other hand, six listed U/KBs posted annual growth in their share prices during the period.
\nIn a statement sent to\u00a0大象传媒, AUB President Manuel A. Gomez, AUB\u2019s price movement resulted from the 100% stock dividend declared on June 2025.
\n\u201cThis dividend doubled the number of outstanding shares, so the PSE automatically adjusted our stock price on the July 24 ex-dividend date to keep the overall market value balanced. AUB\u2019s closing price before the adjustment (July 23, 2025) was P91.50, meaning the base price was adjusted to P45.75 per share. Payment date was on August 15, 2025 to shareholders as of July 25, 2025, record date,\u201d Mr. Gomez said in an e-mail.
\n\u201cWhen evaluating the stock\u2019s performance, AUB actually experienced growth, not a decline, during this period. In December 2024, its normalized price was P30.75 (which was P61.50 per share pre-stock dividend),\u201d he added.
\n\u201cBy the end of December 2025, this price increased to P39.20 per share, a 27% increase year-on-year.\u201d
\nAggregate net income of U/KBs grew 4.1% to P381.18 billion as of end-December from P366.02 billion in the same period in 2024, data from the Bangko Sentral ng Pilipinas (BSP) showed.
\nGross total loan portfolio of these big lenders rose by 11.2% to P15.80 trillion as of end-December 2025 from P14.20 trillion in the previous year.
\nThe big bank\u2019s gross nonperforming loan (NPL) ratio narrowed down to 2.80% as of end-December 2025 from 2.99% a year ago.
\nThe big banks\u2019 net interest margin (NIM) \u2014 a ratio that measures banks\u2019 efficiency in investing their fund by dividing annualized net interest income to average earning asset \u2014 inched up to 4.18% in the fourth quarter from 4.04% in the same period a year earlier.
\nProvision for credit losses by these big banks reached P157.95 billion, up by 56.2% from P101.15 billion in December 2024.
\n\u201cA softer gross domestic product (GDP) print heightened geopolitical tensions, and a declining interest rate environment weighed on bank stocks in [the fourth quarter of 2025],\u201d Jarrod Leighton M. Tin, an equity research analyst at DragonFi Securities, Inc., said in a Viber message.
\nMr. Tin said the weak economic growth cast doubt on whether banks can sustain double-digit loan growths this year, citing strong correlation between GDP and credit demand.
\nThe Philippine economy grew by 3% in the fourth quarter, slower than the 5.3% growth in the same period in 2024 and the revised 3.9% in the third quarter. This brought full-year 2025 GDP to 4.4%, the weakest in five years.
\nUnicapital Securities, Inc. Research Head Wendy B. Estacio-Cruz said the slower economic growth weakened investor confidence in equities, especially bank stocks.
\n\u201cThe softer economic momentum likely tempered credit demand and weighed on corporate profitability, which are critical to banks\u2019 earnings growth,\u201d Ms. Estacio-Cruz said in an e-mail.
\nAccording to Kervin Laurence Sisayan, head of research at Maybank Securities Philippines, Inc., the slower GDP print signals a potentially \u201cweaker loan growth for the financial industry.\u201d
\n![\"\"](\"/wp-content/uploads/2026/03/Bank_Share.jpg\")
RATE CUTS
\nThe BSP\u2019s continued rate cuts also weighed on banks\u2019 NIMs and profitability, analysts added.
\u201cThe decline in interest rate policy has reduced the funding cost of banks in general. On the flip side, it also puts downward pressure on earnings yield and overall put downward pressure on [NIMs],\u201d Mr. Sisayan said.
\nKey policy rate stood at an over three-year low of 4.5% by the end of 2025. Meanwhile, inflation increased to 1.8% in December, but full-year average eased to 1.7% in 2025 \u2014 the slowest in nine years.
\nOn Feb. 19, the Monetary Board lowered the target reverse repurchase rate by another 25 basis points (bps) to 4.25%. The BSP has reduced key interest rate by a total of 225 bps since it started its monetary policy easing in August 2024.
\n\u201cWhile lower rates likely supported loan demand and borrowers\u2019 repayment capacity amid low inflation, they also compressed net interest margins as asset yields repriced faster than funding costs,\u201d Ms. Estacio-Cruz said.
\nShe said this resulted in \u201ctighter spreads and more cautious lending behavior.\u201d
\nLinncon M. Lahip, equity analyst at Regina Capital Development Corp., said the stable inflation signaled a slower yet steady economic environment.
\n\u201cHowever, despite the easing environment, loan growth is beginning to slow down and may signal that it has already reached its peak, signaling a more cautious phase for the sector,\u201d he added.
\nMr. Tin said banks have been \u201cpartially mitigating\u201d pressure from lower rates by \u201cshifting their loan mix toward higher-yielding consumer segments, supporting asset yields.\u201d
\nHe noted that with benign inflation and subpar GDP growth, the central bank may have room for further rate reductions to spur demand and bolster economic activity.
\nChinabank Securities Corp. Research Associate Ralph Jonathan B. Fausto said that while rate cuts amid benign inflation supported credit demand and consumption, investors remained concerned on growth uncertainties and weak sentiment.
\nThis weighed on loan demand prospects and banks\u2019 profit outlook, he said.
\nJash Matthew M. Baylon, equity analyst at The First Resources Management and Securities Corp., noted that flood control corruption scandal during the second half of 2025 resulted to weaker net foreign investments, affecting the financial sector\u2019s operations and flows.
\n\u201cThe weaker business confidence and foreign direct investments also put pressure [on] our local currency to weaken, reaching the high at P59 per dollar,\u201d he said.
\nMr. Baylon said that given the pressure on banks\u2019 NIM, the sector\u2019s net interest rate profit may decline, leading to slower growth in earnings.
\n\u201cBut on the positive note, the lower rates could boost more spending and investments, which could translate to higher loan volume,\u201d he added.
\n\u201cGeopolitical developments further dampened overall investor sentiment, with risk-off flows pressuring the broader market, including the banking sector,\u201d Mr. Tin said.
\nSTANDOUTS
\nDespite headwinds, Mr. Baylon said banks\u2019 performance \u201cshowed a modest recovery\u201d in the fourth quarter compared to the July-to-September period, as holiday season remittances and consumer credit fueled spending.
According to Mr. Fausto, midsized banks like EW and PNB stood out during the quarter.
\n\u201cEW benefited from resilient core lending income, supported by its established consumer portfolio despite increasing competition in the space. PNB saw its profitability bolstered by lower provisions, as the bank implemented its dynamic risk management strategy to improve asset quality and stabilize NPLs,\u201d he said.
\nMeanwhile, Mr. Tin said the Bank of the Philippine Islands also stood out in the fourth quarter, citing resilient NIM amid low-interest rate environment.
\n\u201cThe continued repricing of the loan book toward higher-yielding consumer segments \u2014 where average yields exceed 12% \u2014 provides a structural buffer to net interest income should the BSP deliver further rate cuts,\u201d he said.
\nFor Mr. Lahip, banks that gained a larger share of consumer lending stood out as they benefited from higher-yielding retail products like credit cards and personal loans.
\n\u201cIn addition, we think that those banks who also saw support from growing fee-based revenues tied to increased card usage and transaction volumes also stood out while maintaining disciplined risk management and adequate provisioning, enabling them to preserve asset quality and sustain profitability despite the inherently higher risks associated with consumer lending,\u201d Mr. Lahip added.
\nMs. Estacio-Cruz said that banks with strong current account and savings account franchise and diversified income stream stood out during the quarter because they were \u201cbetter positioned\u201d to withstand the margin pressure from lower interest rates.
\n\u201cBanks with solid consumer and MSME [micro, small, medium enterprise] loan exposure performed relatively well, supported by steady loan growth and resilient fee-based income from cards, bancassurance, and transaction banking,\u201d she said.
\n\u201cSome banks also benefited from treasury and trading gains amid market volatility, which helped offset pressure on core interest income,\u201d she added.
\nOUTLOOK
\nMs. Estacio-Cruz expects listed big banks to record growth in year-on-year earnings for the first quarter of 2026, supported by steady loan expansion, resilient consumer demand, and still-benign inflation.
\u201cHowever, margin growth may remain constrained as the full impact of the 2025 rate cuts continues to filter through balance sheets, keeping net interest margins relatively tight,\u201d she added.
\nFor full-year 2026, Ms. Estacio-Cruz forecasts gradual improvement in banks\u2019 performance \u201cdriven by stronger credit demand, potential margin stabilization if policy rates hold or eventually normalize, and continued growth in fee-based income.\u201d
\nMr. Lahip, on the other hand, expects banks to continue expanding to higher-yielding loans and fee-based income.
\n\u201cAt the same time, sustained investments in IT and digital infrastructure will remain crucial to enhance operational efficiency, strengthen risk management, and support long-term customer acquisition,\u201d Mr. Lahip added.
\nMr. Sisayan sees \u201cslightly muted\u201d loan growth for the first quarter of 2026, noting the slower economic growth in the fourth quarter.
\n\u201cWhile double-digit loan and net income growth remain achievable, we would not be surprised to see expansion taper to the high single-digit range as normalization sets in,\u201d Mr. Tin said.
\nAccording to Mr. Tin, investors should monitor upcoming GDP prints and policy rates.
\n\u201cIf 4% proves to be the BSP\u2019s terminal rate, margin pressure may stabilize; however, further easing could drive additional NIM compression, particularly if banks are unable to recalibrate their asset mix and funding structure efficiently,\u201d he added.
\nApart from macroeconomic factors, First Resources\u2019 Mr. Baylon said investors should also monitor geopolitical risks, updates on local corruption issues, and peso movement against the dollars.
\nMeanwhile, Chinabank\u2019s Mr. Fausto said investors are likely to stay focused on loan growth, NIM resilience, and asset quality.
\n\u201cThe key question for investors is whether growth can be sustained despite prospects for lower NIMs and increasing credit costs,\u201d he said.
\n", "content_text": "By Isa Jane D. Acabal, Researcher\nLISTED big banks fell in the fourth quarter of 2025 as weak economic growth dampened investors\u2019 sentiment and policy rate cuts put pressure on banks\u2019 lending margins, analysts said.\nThe Philippine Stock Exchange index (PSEi) inched down by 7.3% year on year to 6,052.92 at the end of the fourth quarter.\nMeanwhile, the financials subindex, which includes the banks, also declined by 5.1% annually to 2,048.47 during the quarter.\nAs of end-December, the share prices of seven out of 13 listed universal and commercial banks (U/KBs) contracted year on year.\nAmong the decliners were Asia United Bank Corp. (AUB), Union Bank of the Philippines and Security Bank Corp.\nOn the other hand, six listed U/KBs posted annual growth in their share prices during the period.\nIn a statement sent to\u00a0大象传媒, AUB President Manuel A. Gomez, AUB\u2019s price movement resulted from the 100% stock dividend declared on June 2025.\n\u201cThis dividend doubled the number of outstanding shares, so the PSE automatically adjusted our stock price on the July 24 ex-dividend date to keep the overall market value balanced. AUB\u2019s closing price before the adjustment (July 23, 2025) was P91.50, meaning the base price was adjusted to P45.75 per share. Payment date was on August 15, 2025 to shareholders as of July 25, 2025, record date,\u201d Mr. Gomez said in an e-mail.\n\u201cWhen evaluating the stock\u2019s performance, AUB actually experienced growth, not a decline, during this period. In December 2024, its normalized price was P30.75 (which was P61.50 per share pre-stock dividend),\u201d he added.\n\u201cBy the end of December 2025, this price increased to P39.20 per share, a 27% increase year-on-year.\u201d\nAggregate net income of U/KBs grew 4.1% to P381.18 billion as of end-December from P366.02 billion in the same period in 2024, data from the Bangko Sentral ng Pilipinas (BSP) showed.\nGross total loan portfolio of these big lenders rose by 11.2% to P15.80 trillion as of end-December 2025 from P14.20 trillion in the previous year.\nThe big bank\u2019s gross nonperforming loan (NPL) ratio narrowed down to 2.80% as of end-December 2025 from 2.99% a year ago.\nThe big banks\u2019 net interest margin (NIM) \u2014 a ratio that measures banks\u2019 efficiency in investing their fund by dividing annualized net interest income to average earning asset \u2014 inched up to 4.18% in the fourth quarter from 4.04% in the same period a year earlier.\nProvision for credit losses by these big banks reached P157.95 billion, up by 56.2% from P101.15 billion in December 2024.\n\u201cA softer gross domestic product (GDP) print heightened geopolitical tensions, and a declining interest rate environment weighed on bank stocks in [the fourth quarter of 2025],\u201d Jarrod Leighton M. Tin, an equity research analyst at DragonFi Securities, Inc., said in a Viber message.\nMr. Tin said the weak economic growth cast doubt on whether banks can sustain double-digit loan growths this year, citing strong correlation between GDP and credit demand.\nThe Philippine economy grew by 3% in the fourth quarter, slower than the 5.3% growth in the same period in 2024 and the revised 3.9% in the third quarter. This brought full-year 2025 GDP to 4.4%, the weakest in five years.\nUnicapital Securities, Inc. Research Head Wendy B. Estacio-Cruz said the slower economic growth weakened investor confidence in equities, especially bank stocks.\n\u201cThe softer economic momentum likely tempered credit demand and weighed on corporate profitability, which are critical to banks\u2019 earnings growth,\u201d Ms. Estacio-Cruz said in an e-mail.\nAccording to Kervin Laurence Sisayan, head of research at Maybank Securities Philippines, Inc., the slower GDP print signals a potentially \u201cweaker loan growth for the financial industry.\u201d\n\nRATE CUTS\nThe BSP\u2019s continued rate cuts also weighed on banks\u2019 NIMs and profitability, analysts added.\n\u201cThe decline in interest rate policy has reduced the funding cost of banks in general. On the flip side, it also puts downward pressure on earnings yield and overall put downward pressure on [NIMs],\u201d Mr. Sisayan said.\nKey policy rate stood at an over three-year low of 4.5% by the end of 2025. Meanwhile, inflation increased to 1.8% in December, but full-year average eased to 1.7% in 2025 \u2014 the slowest in nine years.\nOn Feb. 19, the Monetary Board lowered the target reverse repurchase rate by another 25 basis points (bps) to 4.25%. The BSP has reduced key interest rate by a total of 225 bps since it started its monetary policy easing in August 2024.\n\u201cWhile lower rates likely supported loan demand and borrowers\u2019 repayment capacity amid low inflation, they also compressed net interest margins as asset yields repriced faster than funding costs,\u201d Ms. Estacio-Cruz said.\nShe said this resulted in \u201ctighter spreads and more cautious lending behavior.\u201d\nLinncon M. Lahip, equity analyst at Regina Capital Development Corp., said the stable inflation signaled a slower yet steady economic environment.\n\u201cHowever, despite the easing environment, loan growth is beginning to slow down and may signal that it has already reached its peak, signaling a more cautious phase for the sector,\u201d he added.\nMr. Tin said banks have been \u201cpartially mitigating\u201d pressure from lower rates by \u201cshifting their loan mix toward higher-yielding consumer segments, supporting asset yields.\u201d\nHe noted that with benign inflation and subpar GDP growth, the central bank may have room for further rate reductions to spur demand and bolster economic activity.\nChinabank Securities Corp. Research Associate Ralph Jonathan B. Fausto said that while rate cuts amid benign inflation supported credit demand and consumption, investors remained concerned on growth uncertainties and weak sentiment.\nThis weighed on loan demand prospects and banks\u2019 profit outlook, he said.\nJash Matthew M. Baylon, equity analyst at The First Resources Management and Securities Corp., noted that flood control corruption scandal during the second half of 2025 resulted to weaker net foreign investments, affecting the financial sector\u2019s operations and flows.\n\u201cThe weaker business confidence and foreign direct investments also put pressure [on] our local currency to weaken, reaching the high at P59 per dollar,\u201d he said.\nMr. Baylon said that given the pressure on banks\u2019 NIM, the sector\u2019s net interest rate profit may decline, leading to slower growth in earnings.\n\u201cBut on the positive note, the lower rates could boost more spending and investments, which could translate to higher loan volume,\u201d he added.\n\u201cGeopolitical developments further dampened overall investor sentiment, with risk-off flows pressuring the broader market, including the banking sector,\u201d Mr. Tin said.\nSTANDOUTS\nDespite headwinds, Mr. Baylon said banks\u2019 performance \u201cshowed a modest recovery\u201d in the fourth quarter compared to the July-to-September period, as holiday season remittances and consumer credit fueled spending.\nAccording to Mr. Fausto, midsized banks like EW and PNB stood out during the quarter.\n\u201cEW benefited from resilient core lending income, supported by its established consumer portfolio despite increasing competition in the space. PNB saw its profitability bolstered by lower provisions, as the bank implemented its dynamic risk management strategy to improve asset quality and stabilize NPLs,\u201d he said.\nMeanwhile, Mr. Tin said the Bank of the Philippine Islands also stood out in the fourth quarter, citing resilient NIM amid low-interest rate environment.\n\u201cThe continued repricing of the loan book toward higher-yielding consumer segments \u2014 where average yields exceed 12% \u2014 provides a structural buffer to net interest income should the BSP deliver further rate cuts,\u201d he said.\nFor Mr. Lahip, banks that gained a larger share of consumer lending stood out as they benefited from higher-yielding retail products like credit cards and personal loans.\n\u201cIn addition, we think that those banks who also saw support from growing fee-based revenues tied to increased card usage and transaction volumes also stood out while maintaining disciplined risk management and adequate provisioning, enabling them to preserve asset quality and sustain profitability despite the inherently higher risks associated with consumer lending,\u201d Mr. Lahip added.\nMs. Estacio-Cruz said that banks with strong current account and savings account franchise and diversified income stream stood out during the quarter because they were \u201cbetter positioned\u201d to withstand the margin pressure from lower interest rates.\n\u201cBanks with solid consumer and MSME [micro, small, medium enterprise] loan exposure performed relatively well, supported by steady loan growth and resilient fee-based income from cards, bancassurance, and transaction banking,\u201d she said.\n\u201cSome banks also benefited from treasury and trading gains amid market volatility, which helped offset pressure on core interest income,\u201d she added.\nOUTLOOK\nMs. Estacio-Cruz expects listed big banks to record growth in year-on-year earnings for the first quarter of 2026, supported by steady loan expansion, resilient consumer demand, and still-benign inflation.\n\u201cHowever, margin growth may remain constrained as the full impact of the 2025 rate cuts continues to filter through balance sheets, keeping net interest margins relatively tight,\u201d she added.\nFor full-year 2026, Ms. Estacio-Cruz forecasts gradual improvement in banks\u2019 performance \u201cdriven by stronger credit demand, potential margin stabilization if policy rates hold or eventually normalize, and continued growth in fee-based income.\u201d\nMr. Lahip, on the other hand, expects banks to continue expanding to higher-yielding loans and fee-based income.\n\u201cAt the same time, sustained investments in IT and digital infrastructure will remain crucial to enhance operational efficiency, strengthen risk management, and support long-term customer acquisition,\u201d Mr. Lahip added.\nMr. Sisayan sees \u201cslightly muted\u201d loan growth for the first quarter of 2026, noting the slower economic growth in the fourth quarter.\n\u201cWhile double-digit loan and net income growth remain achievable, we would not be surprised to see expansion taper to the high single-digit range as normalization sets in,\u201d Mr. Tin said.\nAccording to Mr. Tin, investors should monitor upcoming GDP prints and policy rates.\n\u201cIf 4% proves to be the BSP\u2019s terminal rate, margin pressure may stabilize; however, further easing could drive additional NIM compression, particularly if banks are unable to recalibrate their asset mix and funding structure efficiently,\u201d he added.\nApart from macroeconomic factors, First Resources\u2019 Mr. Baylon said investors should also monitor geopolitical risks, updates on local corruption issues, and peso movement against the dollars.\nMeanwhile, Chinabank\u2019s Mr. Fausto said investors are likely to stay focused on loan growth, NIM resilience, and asset quality.\n\u201cThe key question for investors is whether growth can be sustained despite prospects for lower NIMs and increasing credit costs,\u201d he said.", "date_published": "2026-03-16T00:01:54+08:00", "date_modified": "2026-03-18T16:35:18+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2026/03/Analysts-UPDATE-thumb.jpg", "tags": [ "Banking Report Q4 2025", "Isa Jane D. Acabal", "Banking Report", "Research" ], "summary": "LISTED big banks fell in the fourth quarter of 2025 as weak economic growth dampened investors\u2019 sentiment and policy rate cuts put pressure on banks\u2019 lending margins, analysts said." }, { "id": "/?p=736274", "url": "/infographics/2026/03/16/736274/listed-u-kbs-shares-yearly-gains-and-losses-as-of-end-december-2025/", "title": "Listed U/KBs\u2019 shares: yearly gains and losses as of end-December 2025", "content_html": "LISTED big banks fell in the fourth quarter of 2025 as weak economic growth dampened investors\u2019 sentiment and policy rate cuts put pressure on banks\u2019 lending margins, analysts said. Read the full story.
\n
By Pierce Oel A. Montalvo, Researcher
\nON THE SIDELINES of The Asian Banker\u2019s Finance Philippines 2025 forum in August, Bankers Association of the Philippines (BAP) President Jose Teodoro K. Limcaoco told reporters that mandatory credit lending rules and strict bank secrecy laws \u201chave become constraints in today\u2019s labor-driven financial marketplace.\u201d
\n\u201cBy modernizing these laws, we create a fertile ground for tech-driven analytics, smart risk management, better credit assessment, and a more competitive and transparent banking sector,\u201d added Mr. Limcaoco, who also serves as the president and chief executive officer of the Bank of Philippine Islands.
\nThese calls for reform continue to echo throughout the banking industry. Last October, six major business groups in the Philippines, including the Makati Business Club (MBC) and the Management Association of the Philippines (MAP), signed a joint statement calling to amend the country\u2019s bank secrecy laws.
\nLikewise, mandatory credit lending policies continue to be dragged into practice. The Asian Development Bank said that credit for micro, small, and medium enterprises (MSMEs) remained limited in the Philippines during 2024.
\n\u201cThe continued enforcement of the Magna Carta\u2019s remaining provisions, alongside central bank oversight, underscores the government\u2019s ongoing commitment to MSME development,\u201d it said regarding the Philippines in its Asia Small and Medium-Sized Enterprise Monitor 2025 report. \u201cHowever, the stalled legislative amendments highlight the need for renewed policy attention to ensure the law remains responsive and effective in addressing current MSME challenges.\u201d
\nWith players, policy groups, and regulators of the banking industry all pointing in the same direction, the question is no longer whether reform should happen \u2014 but when, and how.
\nBANK SECRECY
\n\u201cThe language of existing laws on bank secrecy makes the Philippines the only country to still have restrictive bank secrecy policy,\u201d the Bangko Sentral ng Pilipinas (BSP) said in its 2024 legal primer on the laws on secrecy of bank deposits.
The primer cites three republic acts (RAs) that define the country\u2019s bank secrecy laws: RA 1405 or the Law on Secrecy of Bank Deposits, RA 6426 or the Foreign Currency Deposit Act, and RA 8367 or the Revised Nonstock Savings and Loan Association Act of 1997.
\nRA 1405, enacted in 1955, was intended to encourage public investment in government securities and discourage private hoarding after World War II.
\nPassed later in 1972, RA 6426 aimed to attract foreign currency deposits from overseas Filipinos to address the country\u2019s dollar deficit and boost international reserves.
\nHowever, the primer notes that more than half a century after their enactment, the conditions that once prevailed no longer exist, rendering the laws outdated for their original purpose.
\nThe primer also cites the 2011 declaration by the Group of Twenty (G20) that the \u201cera of bank secrecy is over\u201d after endorsing standards on transparency and exchange of information. In 2014, the Organisation for Economic Co-operation and Development released the standard for automatic exchange of information as the new global standard for combating tax evasion and money laundering.
\nNow, the central bank is rocking the boat. The BSP resumed its push to reform these laws, BSP General Counsel Roberto L. Figueroa said at a House briefing last September.
\nThe primer also mentioned that as of the document\u2019s creation, the central bank is collaborating with BAP, MAP, MBC, and the Chamber of Thrift Banks (CTB) to propose the repeal of bank secrecy laws.
\nThe Securities and Exchange Commission (SEC) also backed amendments to RA 1405 to fight corruption.
\n\u201cThe bank secrecy law has often been used as a shield for owners of bank accounts in cases of violations of RA 8799, or the Securities Regulation Code and RA 11232, or the Revised Corporation Code of the Philippines,\u201d the SEC said in a press release last September.
\n\u201cLifting the bank secrecy provision will remove the greatest obstacle for authorities and regulators, to go after tax evasion and money laundering associated with corruption and other criminal activities,\u201d said Filomeno S. Sta. Ana III, executive director of economic research and policy group Action for Economic Reforms (AER), in an e-mail message.
\n\u201cCorrupt politicians, tax evaders, and other criminal elements have exploited the bank secrecy provision to keep law enforcers at bay.\u201d
\nThrift banks are also burdened by the bank secrecy laws. Suzanne I. Felix, executive director of the CTB, said that the \u201cstrict\u201d secrecy laws can slow fraud investigations in smaller banks that lack big in-house investigative teams.
\n\u201cThe CTB strongly supports calibrated reforms to the Bank Secrecy Law that uphold depositor confidentiality while enabling effective enforcement of anti-money laundering, fraud prevention, and prudential supervision measures.\u201d
\nMANDATED CREDIT
\nDespite being enacted 17 years ago, RA 9501 (the Magna Carta for MSMEs) remains largely unimplemented.
BSP data show that while bank loans for MSMEs grew by 7.1% to P536.51 billion as of end-June 2025, this was only 4.5% of their total loan portfolio of P12.05 trillion \u2014 still below the 10% overall requirement for banks under the Magna Carta for such enterprises.
\nUnder the Magna Carta, banks were required to direct 8% of their lending to micro and small enterprises and another 2% to medium-sized businesses. The mandatory allocation ended in June 2018 after its 10-year term expired, though the BSP still monitors MSME lending as part of its oversight responsibilities.
\nBenel D. Lagua, a member of the Financial Executives of the Philippines and an independent director in progressive banks, said that the one-size-fits-all mandate \u201cignored radically different business models, risk appetites, and geographic footprints.\u201d
\n\u201cRural and cooperative banks serve naturally micro clients, while large banks found it cheaper to pay penalties than build costly retail underwriting systems.\u201d
\nThe gap between mandate and reality is even starker when broken down by enterprise size. According to data cited by Ma. Aurora D. Geotina-Garcia, president of Mageo Consulting, Inc., 2024 figures show that only 1.8% of the mandated total loan portfolio went to micro and small enterprises \u2014 far below the 8% requirement. Medium businesses fared better at 2.83%, exceeding the 2% target.
\n\u201cOver time, most banks have opted to incur penalties for noncompliance instead of fulfilling the 10% lending mandate,\u201d Ms. Geotina-Garcia said in an e-mail interview. \u201cThis is due to the perceived risks of lending to micro and small businesses.\u201d
\nFurthermore, research by Luis F. Dumlao, an associate professor of economics at the Ateneo de Manila University, shows agricultural lending declined to 9.5% by 2022 from 21.7% of bank portfolios in 2012, a drop that occurred even as mandates remained in place.
\nIn an e-mail interview, Mr. Dumlao said that \u201cthe cost of doing business of paying the penalty has been less than the actuarial cost of default of lending to target lenders.\u201d
\nHis research calculates that for mandatory credit allocation to work effectively with government guarantees covering 100% of plus risk-free interest, it would cost taxpayers approximately P300 billion for the agricultural sector alone \u2014 vastly exceeding the P2.75-billion budget allocation prescribed by the Department of Budget and Management.
\n\u201cThe politically and fiscally feasible approach to finding how much government should guarantee is how much political capital politicians are willing to give up either by raising taxes or by reallocating budget,\u201d Mr. Dumlao said, comparing it to the concept of \u201cstatistical value of life\u201d in policy decisions.
\nThe thrift banking industry presents a more nuanced picture. Total compliance for micro and small enterprises among thrift banks grew from P22.22 billion in December 2022 to P34.17 billion by June 2025, representing growth of more than 50% over the period, according to data provided by Ms. Felix.
\n\u201cThe data show that while we consistently exceed the medium enterprise requirement, other segments require more flexible and risk-sensitive approaches.\u201d
\nFor women entrepreneurs, barriers multiply. While women own or lead over 60% of MSMEs, they remain largely excluded from formal credit, Ms. Geotina-Garcia said.
\n\u201cThey instead turn to alternative sources of capital \u2014 usually friends and family \u2014 or informal lenders, or register businesses and loans under their husband\u2019s name,\u201d she said.
\nThe gap between policy and market reality has spurred growth in alternative financing. Digital banks like Maya Bank now serve segments traditional banks have avoided.
\nShailesh Baidwan, Maya Group president and Maya Bank cofounder, said in an e-mail interview that Maya\u2019s reach has grown from 1.5 million bank customers in 2022 to nine million by September 2025, with more than 50% accessing formal credit for the first time.
\n\u201cOur customer base is predominantly Millennials and Gen Z, who account for 84% of our bank users, and 76% are based outside Metro Manila,\u201d Mr. Baidwan said. \u201cThis reflects how digital banking is closing access gaps in rural and emerging urban areas.\u201d
\nMaya uses alternative data, such as transaction patterns, digital payment activity, and business cash flows, to assess creditworthiness, enabling first-time borrowers to access loans.
\nMs. Geotina-Garcia said that fintech companies now offer loans with minimal requirements and shorter processing times. \u201cMSMEs lean towards alternative sources of funding as they provide a more streamlined process, cutting out the numerous requirements of banks,\u201d she said.
\nIndustry experts increasingly advocate moving away from rigid quotas toward incentive-based systems. Mr. Lagua said that differentiating targets by bank category could be set, scaling penalties proportionately with bank size, and shifting from volume targets to access-oriented metrics such as the number of new-to-bank borrowers reached.
\n\u201cRather than penalizing all banks equally, government should reward institutions that demonstrate real capability-building,\u201d he said. He also said that the need for transparent, bank-by-bank public reporting to enable accountability.
\nMs. Felix echoed this view. \u201cWe believe inclusion is achieved better through incentives, not penalties,\u201d she said. \u201cLet\u2019s reward banks that successfully expand MSME and Agri lending through lower capital charges, tax incentives, or supervisory recognition.\u201d
\nThe CTB also advocates for strengthening credit guarantee programs and promoting co-lending arrangements with government institutions. \u201cStrengthen credit guarantees, improve data access through the Credit Information Corporation, and promote co-lending with government institutions \u2014 these are sustainable ways to grow lending without jeopardizing depositor protection,\u201d Ms. Felix said.
\nOUTLOOK
\nAs momentum builds for comprehensive banking reform, players in the banking industry paint differing pictures of urgency and caution. Yet, most agree the status quo is unsustainable.
On bank secrecy reform, consensus appears strongest. The convergence of BSP, SEC, and major business and policy groups behind careful reforms suggests legislative action may finally overcome decades of loopholes and oversight.
\n\u201cThe main deterrence to illicit activities that involve financial transactions is the near certainty of prosecution and conviction,\u201d Mr. Sta. Ana said. \u201cLifting bank secrecy is a necessary condition to obtain information and evidence in order to prosecute and convict.\u201d
\nMs. Felix said that harmonizing local confidentiality rules with international anti-money laundering and counter-terrorism financing frameworks, particularly those under the Financial Action Task Force, could modernize the secrecy regime without compromising privacy.
\nThe path forward for mandated credit leaves more to be agreed upon. Ms. Felix suggested a phased approach, with reforms rolling out over 18 to 24 months. \u201cWe support a phased approach \u2014 first pilot programs, then fine-tuning before full implementation,\u201d she said.
\nThe emergence of digital banks and fintech lenders adds innovation to the mandatory credit debate. Digital bank Maya Bank demonstrates that technology can reach underserved populations at scale.
\n\u201cThis includes support for the development of modern credit modeling practices; and a regulatory environment that allows for market-responsive, risk-based pricing,\u201d Mr. Baidwan said.
\nMeanwhile, Ms. Geotina-Garcia said that reform must be evidence-based but rooted in grassroots insights. \u201cThere should be a process of consultation with intended beneficiaries, industry groups, and MSME associations as they know their situations best.\u201d
\n\u201cUnfortunately, the guarantee system or credit access in general is not a panacea to the problem,\u201d Mr. Dumlao said.
\n\u201cFinancial assistance is just the n-th major concern of prospective borrowers. There are others like corruption that concern borrowers before they become competitive.\u201d
\n", "content_text": "By Pierce Oel A. Montalvo, Researcher\nON THE SIDELINES of The Asian Banker\u2019s Finance Philippines 2025 forum in August, Bankers Association of the Philippines (BAP) President Jose Teodoro K. Limcaoco told reporters that mandatory credit lending rules and strict bank secrecy laws \u201chave become constraints in today\u2019s labor-driven financial marketplace.\u201d\n\u201cBy modernizing these laws, we create a fertile ground for tech-driven analytics, smart risk management, better credit assessment, and a more competitive and transparent banking sector,\u201d added Mr. Limcaoco, who also serves as the president and chief executive officer of the Bank of Philippine Islands.\nThese calls for reform continue to echo throughout the banking industry. Last October, six major business groups in the Philippines, including the Makati Business Club (MBC) and the Management Association of the Philippines (MAP), signed a joint statement calling to amend the country\u2019s bank secrecy laws.\nLikewise, mandatory credit lending policies continue to be dragged into practice. The Asian Development Bank said that credit for micro, small, and medium enterprises (MSMEs) remained limited in the Philippines during 2024.\n\u201cThe continued enforcement of the Magna Carta\u2019s remaining provisions, alongside central bank oversight, underscores the government\u2019s ongoing commitment to MSME development,\u201d it said regarding the Philippines in its Asia Small and Medium-Sized Enterprise Monitor 2025 report. \u201cHowever, the stalled legislative amendments highlight the need for renewed policy attention to ensure the law remains responsive and effective in addressing current MSME challenges.\u201d\nWith players, policy groups, and regulators of the banking industry all pointing in the same direction, the question is no longer whether reform should happen \u2014 but when, and how.\nBANK SECRECY\n\u201cThe language of existing laws on bank secrecy makes the Philippines the only country to still have restrictive bank secrecy policy,\u201d the Bangko Sentral ng Pilipinas (BSP) said in its 2024 legal primer on the laws on secrecy of bank deposits.\nThe primer cites three republic acts (RAs) that define the country\u2019s bank secrecy laws: RA 1405 or the Law on Secrecy of Bank Deposits, RA 6426 or the Foreign Currency Deposit Act, and RA 8367 or the Revised Nonstock Savings and Loan Association Act of 1997.\nRA 1405, enacted in 1955, was intended to encourage public investment in government securities and discourage private hoarding after World War II.\nPassed later in 1972, RA 6426 aimed to attract foreign currency deposits from overseas Filipinos to address the country\u2019s dollar deficit and boost international reserves.\nHowever, the primer notes that more than half a century after their enactment, the conditions that once prevailed no longer exist, rendering the laws outdated for their original purpose.\nThe primer also cites the 2011 declaration by the Group of Twenty (G20) that the \u201cera of bank secrecy is over\u201d after endorsing standards on transparency and exchange of information. In 2014, the Organisation for Economic Co-operation and Development released the standard for automatic exchange of information as the new global standard for combating tax evasion and money laundering.\nNow, the central bank is rocking the boat. The BSP resumed its push to reform these laws, BSP General Counsel Roberto L. Figueroa said at a House briefing last September.\nThe primer also mentioned that as of the document\u2019s creation, the central bank is collaborating with BAP, MAP, MBC, and the Chamber of Thrift Banks (CTB) to propose the repeal of bank secrecy laws.\nThe Securities and Exchange Commission (SEC) also backed amendments to RA 1405 to fight corruption.\n\u201cThe bank secrecy law has often been used as a shield for owners of bank accounts in cases of violations of RA 8799, or the Securities Regulation Code and RA 11232, or the Revised Corporation Code of the Philippines,\u201d the SEC said in a press release last September.\n\u201cLifting the bank secrecy provision will remove the greatest obstacle for authorities and regulators, to go after tax evasion and money laundering associated with corruption and other criminal activities,\u201d said Filomeno S. Sta. Ana III, executive director of economic research and policy group Action for Economic Reforms (AER), in an e-mail message.\n\u201cCorrupt politicians, tax evaders, and other criminal elements have exploited the bank secrecy provision to keep law enforcers at bay.\u201d\nThrift banks are also burdened by the bank secrecy laws. Suzanne I. Felix, executive director of the CTB, said that the \u201cstrict\u201d secrecy laws can slow fraud investigations in smaller banks that lack big in-house investigative teams.\n\u201cThe CTB strongly supports calibrated reforms to the Bank Secrecy Law that uphold depositor confidentiality while enabling effective enforcement of anti-money laundering, fraud prevention, and prudential supervision measures.\u201d\nMANDATED CREDIT\nDespite being enacted 17 years ago, RA 9501 (the Magna Carta for MSMEs) remains largely unimplemented.\nBSP data show that while bank loans for MSMEs grew by 7.1% to P536.51 billion as of end-June 2025, this was only 4.5% of their total loan portfolio of P12.05 trillion \u2014 still below the 10% overall requirement for banks under the Magna Carta for such enterprises.\nUnder the Magna Carta, banks were required to direct 8% of their lending to micro and small enterprises and another 2% to medium-sized businesses. The mandatory allocation ended in June 2018 after its 10-year term expired, though the BSP still monitors MSME lending as part of its oversight responsibilities.\nBenel D. Lagua, a member of the Financial Executives of the Philippines and an independent director in progressive banks, said that the one-size-fits-all mandate \u201cignored radically different business models, risk appetites, and geographic footprints.\u201d\n\u201cRural and cooperative banks serve naturally micro clients, while large banks found it cheaper to pay penalties than build costly retail underwriting systems.\u201d\nThe gap between mandate and reality is even starker when broken down by enterprise size. According to data cited by Ma. Aurora D. Geotina-Garcia, president of Mageo Consulting, Inc., 2024 figures show that only 1.8% of the mandated total loan portfolio went to micro and small enterprises \u2014 far below the 8% requirement. Medium businesses fared better at 2.83%, exceeding the 2% target.\n\u201cOver time, most banks have opted to incur penalties for noncompliance instead of fulfilling the 10% lending mandate,\u201d Ms. Geotina-Garcia said in an e-mail interview. \u201cThis is due to the perceived risks of lending to micro and small businesses.\u201d\nFurthermore, research by Luis F. Dumlao, an associate professor of economics at the Ateneo de Manila University, shows agricultural lending declined to 9.5% by 2022 from 21.7% of bank portfolios in 2012, a drop that occurred even as mandates remained in place.\nIn an e-mail interview, Mr. Dumlao said that \u201cthe cost of doing business of paying the penalty has been less than the actuarial cost of default of lending to target lenders.\u201d\nHis research calculates that for mandatory credit allocation to work effectively with government guarantees covering 100% of plus risk-free interest, it would cost taxpayers approximately P300 billion for the agricultural sector alone \u2014 vastly exceeding the P2.75-billion budget allocation prescribed by the Department of Budget and Management.\n\u201cThe politically and fiscally feasible approach to finding how much government should guarantee is how much political capital politicians are willing to give up either by raising taxes or by reallocating budget,\u201d Mr. Dumlao said, comparing it to the concept of \u201cstatistical value of life\u201d in policy decisions.\nThe thrift banking industry presents a more nuanced picture. Total compliance for micro and small enterprises among thrift banks grew from P22.22 billion in December 2022 to P34.17 billion by June 2025, representing growth of more than 50% over the period, according to data provided by Ms. Felix.\n\u201cThe data show that while we consistently exceed the medium enterprise requirement, other segments require more flexible and risk-sensitive approaches.\u201d\nFor women entrepreneurs, barriers multiply. While women own or lead over 60% of MSMEs, they remain largely excluded from formal credit, Ms. Geotina-Garcia said.\n\u201cThey instead turn to alternative sources of capital \u2014 usually friends and family \u2014 or informal lenders, or register businesses and loans under their husband\u2019s name,\u201d she said.\nThe gap between policy and market reality has spurred growth in alternative financing. Digital banks like Maya Bank now serve segments traditional banks have avoided.\nShailesh Baidwan, Maya Group president and Maya Bank cofounder, said in an e-mail interview that Maya\u2019s reach has grown from 1.5 million bank customers in 2022 to nine million by September 2025, with more than 50% accessing formal credit for the first time.\n\u201cOur customer base is predominantly Millennials and Gen Z, who account for 84% of our bank users, and 76% are based outside Metro Manila,\u201d Mr. Baidwan said. \u201cThis reflects how digital banking is closing access gaps in rural and emerging urban areas.\u201d\nMaya uses alternative data, such as transaction patterns, digital payment activity, and business cash flows, to assess creditworthiness, enabling first-time borrowers to access loans.\nMs. Geotina-Garcia said that fintech companies now offer loans with minimal requirements and shorter processing times. \u201cMSMEs lean towards alternative sources of funding as they provide a more streamlined process, cutting out the numerous requirements of banks,\u201d she said.\nIndustry experts increasingly advocate moving away from rigid quotas toward incentive-based systems. Mr. Lagua said that differentiating targets by bank category could be set, scaling penalties proportionately with bank size, and shifting from volume targets to access-oriented metrics such as the number of new-to-bank borrowers reached.\n\u201cRather than penalizing all banks equally, government should reward institutions that demonstrate real capability-building,\u201d he said. He also said that the need for transparent, bank-by-bank public reporting to enable accountability.\nMs. Felix echoed this view. \u201cWe believe inclusion is achieved better through incentives, not penalties,\u201d she said. \u201cLet\u2019s reward banks that successfully expand MSME and Agri lending through lower capital charges, tax incentives, or supervisory recognition.\u201d\nThe CTB also advocates for strengthening credit guarantee programs and promoting co-lending arrangements with government institutions. \u201cStrengthen credit guarantees, improve data access through the Credit Information Corporation, and promote co-lending with government institutions \u2014 these are sustainable ways to grow lending without jeopardizing depositor protection,\u201d Ms. Felix said.\nOUTLOOK\nAs momentum builds for comprehensive banking reform, players in the banking industry paint differing pictures of urgency and caution. Yet, most agree the status quo is unsustainable.\nOn bank secrecy reform, consensus appears strongest. The convergence of BSP, SEC, and major business and policy groups behind careful reforms suggests legislative action may finally overcome decades of loopholes and oversight.\n\u201cThe main deterrence to illicit activities that involve financial transactions is the near certainty of prosecution and conviction,\u201d Mr. Sta. Ana said. \u201cLifting bank secrecy is a necessary condition to obtain information and evidence in order to prosecute and convict.\u201d\nMs. Felix said that harmonizing local confidentiality rules with international anti-money laundering and counter-terrorism financing frameworks, particularly those under the Financial Action Task Force, could modernize the secrecy regime without compromising privacy.\nThe path forward for mandated credit leaves more to be agreed upon. Ms. Felix suggested a phased approach, with reforms rolling out over 18 to 24 months. \u201cWe support a phased approach \u2014 first pilot programs, then fine-tuning before full implementation,\u201d she said.\nThe emergence of digital banks and fintech lenders adds innovation to the mandatory credit debate. Digital bank Maya Bank demonstrates that technology can reach underserved populations at scale.\n\u201cThis includes support for the development of modern credit modeling practices; and a regulatory environment that allows for market-responsive, risk-based pricing,\u201d Mr. Baidwan said.\nMeanwhile, Ms. Geotina-Garcia said that reform must be evidence-based but rooted in grassroots insights. \u201cThere should be a process of consultation with intended beneficiaries, industry groups, and MSME associations as they know their situations best.\u201d\n\u201cUnfortunately, the guarantee system or credit access in general is not a panacea to the problem,\u201d Mr. Dumlao said.\n\u201cFinancial assistance is just the n-th major concern of prospective borrowers. There are others like corruption that concern borrowers before they become competitive.\u201d", "date_published": "2025-12-15T00:05:56+08:00", "date_modified": "2025-12-14T17:27:27+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/12/PESO-high-angle-banknotes-with-house-lock.jpg", "tags": [ "Banking Report Q3 2025", "Pierce Oel A. Montalvo", "Banking Report", "Research" ], "summary": "ON THE SIDELINES of The Asian Banker\u2019s Finance Philippines 2025 forum in August, Bankers Association of the Philippines (BAP) President Jose Teodoro K. Limcaoco told reporters that mandatory credit lending rules and strict bank secrecy laws \u201chave become constraints in today\u2019s labor-driven financial marketplace.\u201d" }, { "id": "/?p=718489", "url": "/research/2025/12/15/718489/arms-race-against-the-no-face-how-the-protect-your-money-campaign-could-equip-the-masses-against-financial-trickery/", "title": "Arms race against the no-face: How the Protect Your Money campaign could equip the masses against financial trickery", "content_html": "By Matthew Miguel L. Castillo, Researcher
\nOPEN your mobile phone to check your SMS inbox, scroll to some messages sent through your trusted e-wallet or digital bank\u2019s line.
\nAmong these, find any message telling you of claimable winnings, redeemable points, and retractable transactions.
\nLook for a link included in the message, do not open it \u2014 inspect its content for any sly mistypes to resemble the website it is trying to emulate.
\nIf no suspicion initially arose, you would probably open the link under normal circumstances, clueless that a scam attempt has already targeted you.
\nFor a lot of Filipinos, this theoretical scenario had already been a grim and costly real-life experience, which sees more victims by the day.
\nConsidering the widespread susceptibility to these emerging financial threats, the Financial Sector Forum (FSF) and the Consumer Protection and Education Committee (CPEC) decided it was high time to relaunch the Protect Your Money (PYM) campaign.
\nThe PYM campaign is an awareness drive first launched in 2013 calling for Filipinos to be vigilant and proactive against financial schemes through offers in fraudulent investment activities and documents.
\nIn an e-mailed response to 大象传媒, the Bangko Sentral ng Pilipinas (BSP) said that the 2013 drive reminded the Filipino to protect his/her money by \u201cknowing the bank, verifying it\u2019s BSP license, and dealing with authorized employees or licensed agents only.\u201d
\nThe Financial Sector Forum renewed the campaign in June 2025 and adapted its information drives to more current financial threats.
\n\u201cToday, deception wears a friendlier face, speaks your language online, and can reach your phone 24/7; this is why the PYM campaign needed to evolve,\u201d the central bank said.
\nBEHIND ENEMY LINES
\nPolice Colonel Jay D. Guillermo, chief of the Philippine National Police anti-cybercrime group of the cyber response unit, said that a person\u2019s information is the primarily coveted among cyber criminals.
\u201cIt is a person\u2019s information that [the scammers] attain first to eventually run trickery on them and get their money,\u201d he told 大象传媒 in a Zoom interview.
\nMr. Guillermo said that the public\u2019s personal information is widely available and easily accessible online, making it seamless for cyber fraud assailants to collect.
\nAccording to data from the Philippines Digital 2025 report by social media consumer intelligence company Meltwater, 90.8 million Filipinos, or 78% of the country\u2019s overall population, have been using social media in 2025.
\nThe report also showed that Facebook and Messenger were the most popular social media applications among Filipinos, in line with the most popular usage purpose of keeping in touch with friends and family.
\nMr. Guillermo said that scammers exploit Filipino\u2019s personal connections to run emergency scams on friends and family members of personal accounts they take over.
\n\u201cThrough Facebook, given that the user unknowingly provides the scammer with the one-time-passcode to his/her account, the latter may send messages to the former\u2019s friends, asking for immediate financial aid after an alleged emergency,\u201d he said.
\nHe added that the scammer would then manipulate the victim into sending money to a dummy account of the supposed \u201chelper\u201d of their friend in the made up emergency scenario.
\nMr. Guillermo said that scammers also purchase verified and/or authentic accounts or identities of actual persons to generate fake identities that the public would be unlikely to hesitate in trusting.
\nAn example he mentioned was of registered SIMs, whose contact activities would not be flagged by monitoring agencies resulting in minimal barriers to reaching the common mobile user.
\nSITTING DUCKS
\n\u201cThe profile of a typical fraud victim is [anyone] that lacks basic digital education and digital literacy,\u201d Julian Louie Singson, executive director and co-founder at the Cybersecurity Council of the Philippines (CSCP), told 大象传媒 in a Zoom call.
In multiple global reports and assessments, the Philippines has emerged as one of the most targeted and victimized countries in the cyberspace.
\nFor instance, the 2025 Microsoft Digital Defense Report revealed that the Philippines placed 20th among countries targeted by cyberthreats globally in the first half of the year.
\nChief Executive Officer of Microsoft Philippines Peter Maquera said in an article that such attacks are \u201cno longer isolated information technology (IT) issues \u2014 they disrupt operations, delay customer service and cause financial and reputational damage that can take years to recover from.\u201d
\nThe 2025 second-half update to the top fraud trends report by US-based consumer credit reporting agency TransUnion showed that the country was the most widely targeted by fraud among Asian countries assessed.
\nAlmost two-thirds of all Filipino consumers surveyed were targeted by fraud, of which 9% eventually fell victim, from February to May 2025.
\n\u201cNowadays, people would receive text messages directly from reputable digital banks and e-wallets, containing links to fraudulent websites,\u201d Mr. Singson said, adding that these could be identified with thorough and informed inspection.
\nPhishing was the most prevalent form of fraud in the Philippines in the span, according to TransUnion report.
\nIt involves an online scammer\u2019s impersonation of reputable institutions through varying contact points to lure targets into providing sensitive information allowing them access to their financial accounts.
\nAmong Filipino business leaders alone, 6% of total revenues were lost to fraud in the past year, amounting to an estimate of P4 trillion.
\nMr. Singson added that awareness would be vital for Filipinos to identify and easily steer clear of scams in their current forms.
\nIn its move to refresh the campaign, the FSF recognized that active fraud syndicates are global scaling, tech-enabled, and more evasive, rendering the initial PYM safeguards \u201cno longer enough.\u201d
\nTHE ARMAMENT AND ITS LOGISTICS
\nThe PYM campaign has been rolled out through the multi-pronged efforts of the FSF by each member institution according to its given role.
The BSP leads in spreading the campaign\u2019s visibility with strategically placed posters, art-cards, and infographics in high traffic places both online and offline, primarily targeting underserved communities.
\nThe Securities and Exchanges Commission mainly boosts the campaign\u2019s digital engagement with postings of educational short videos or reels that make financial concepts digestible and emphasize protecting money against scams.
\nThe Insurance Commission directly reaches out to Filipinos with SMS tips to remind them of consumer safety and to verify who or what they are dealing with financially.
\nAnd lastly, the Philippine Deposit Insurance Corp. amplifies the campaign through radio interviews, reminding offline Filipinos to proactively safeguard their deposits.
\n\u201cFSF CPEC believes that when financial regulators speak with one voice, the message cuts through the noise,\u201d said the central bank.
\nAccording to data provided by the BSP, 50,000 campaign posters have been printed and distributed nationwide from August.
\nThe first batch of educational reels had already been posted, accumulating 178,000 views as of early December, with more content being prepared for release in later dates.
\nRadio segments and text message advisories have also been prepared for rollout to reach Filipinos without access to social media platforms.
\nThe renewed campaign is set to strategically roll out in phases up to 2028, with the goal of behavioral changes in Filipinos and improved sensitivity to encroaching threats.
\n\u201cScams evolve, so must our shields. Protect Your Money started as a warning. Today, it is a call to empowerment,\u201d the BSP said.
\nTACTICAL ADVICE
\nMr. Guillermo said that the most effective way the campaign could spread awareness on cyber threats and cybersecurity would be in a more direct and personal approach.
\u201cIn posting awareness campaign advertisements online or in banks, what are the chances passersby and customers will read these? The best step to expand awareness is to talk to the people,\u201d he said.
\nMoreover, Mr. Guillermo said that the most vulnerable to scams are those in far-flung areas and are newly connected to online financial platforms, saying that they may not be reached through the campaign\u2019s current methodology.
\nMr. Singson added that coordinating with and mobilizing various communities that make up the masses would be a strategic move in the campaign\u2019s execution.
\nHe added that partnerships with various clubs and local governments would greatly help in connecting with the people and improving their overall digital literacy.
\n\u201cA successful [educational effort] I have seen is that of a small bank which went to Zumba classes of senior citizens \u2014 providing their drinks and snacks \u2014 and eventually teaching them financial literacy,\u201d he said.
\nThe experts said that artificial intelligence (AI) and deep fake technology loom as formidable tools that fraudsters use to empower their trickery.
\n\u201cI have personally seen investment traps on Facebook using AI generated videos of [Filipino billionaires], claiming quick returns on supposed investments,\u201d he said.
\n\u201cDeepfake [technology] is what\u2019s new on the horizon, to run cryptocurrecy, investment, and recovery scams,\u201d Mr. Guillermo added.
\nA deepfake, as defined by Merriam-Webster, is an image, recording, or video altered and edited to have an entirely different person deliver the message or action being shown.
\n\u201cFor example, [the scammers] can capture my [persona] and post it, using my identity to run a recovery scam,\u201d said Mr. Guillermo.
\nA recovery scam is aimed at those previously victimized by financial loss or other forms of fraud, using the disguise of an assistant in recovering the money to bait for even more information.
\nREINFORCEMENTS EN ROUTE
\nFSF CPEC said that the campaign is open to cooperating with schools, local governments, media organizations, and digital platform advocates in empowering its information drive.
Mr. Singson said that the CSCP is open to supporting this push for grassroots learning which \u201cthey have already been doing.\u201d
\n\u201cThe way we do it is we deliver short cyber hygiene lessons [in] schools… we can partner up with both the national and local government to push for more digital literacy for everyone,\u201d he said.
\nMoreover, Mr. Singson said that the CSCP could provide the FSF CPEC with developing cyber threats in the Philippines and ASEAN countries to spread awareness in advance.
\nMeanwhile, Mr. Guillermo said that the PNP anti-cybercrime group could aid in highlighting dangers in cyberspace by giving threatened institutions a heads-up based on recurring complaints.
\n\u201cWe [can track], based on the complaints, the lapses in financial institutions procedures and collection of information, and talk to them about it,\u201d said Mr. Guillermo.
\nThe BSP said that rolling out the \u201ccollaborative model\u201d of the PYM campaign will continue to expand moving forward, ensuring that protection and empowerment are promoted together.
\n", "content_text": "By Matthew Miguel L. Castillo, Researcher\nOPEN your mobile phone to check your SMS inbox, scroll to some messages sent through your trusted e-wallet or digital bank\u2019s line.\nAmong these, find any message telling you of claimable winnings, redeemable points, and retractable transactions.\nLook for a link included in the message, do not open it \u2014 inspect its content for any sly mistypes to resemble the website it is trying to emulate.\nIf no suspicion initially arose, you would probably open the link under normal circumstances, clueless that a scam attempt has already targeted you.\nFor a lot of Filipinos, this theoretical scenario had already been a grim and costly real-life experience, which sees more victims by the day.\nConsidering the widespread susceptibility to these emerging financial threats, the Financial Sector Forum (FSF) and the Consumer Protection and Education Committee (CPEC) decided it was high time to relaunch the Protect Your Money (PYM) campaign.\nThe PYM campaign is an awareness drive first launched in 2013 calling for Filipinos to be vigilant and proactive against financial schemes through offers in fraudulent investment activities and documents.\nIn an e-mailed response to 大象传媒, the Bangko Sentral ng Pilipinas (BSP) said that the 2013 drive reminded the Filipino to protect his/her money by \u201cknowing the bank, verifying it\u2019s BSP license, and dealing with authorized employees or licensed agents only.\u201d\nThe Financial Sector Forum renewed the campaign in June 2025 and adapted its information drives to more current financial threats.\n\u201cToday, deception wears a friendlier face, speaks your language online, and can reach your phone 24/7; this is why the PYM campaign needed to evolve,\u201d the central bank said.\nBEHIND ENEMY LINES\nPolice Colonel Jay D. Guillermo, chief of the Philippine National Police anti-cybercrime group of the cyber response unit, said that a person\u2019s information is the primarily coveted among cyber criminals.\n\u201cIt is a person\u2019s information that [the scammers] attain first to eventually run trickery on them and get their money,\u201d he told 大象传媒 in a Zoom interview.\nMr. Guillermo said that the public\u2019s personal information is widely available and easily accessible online, making it seamless for cyber fraud assailants to collect.\nAccording to data from the Philippines Digital 2025 report by social media consumer intelligence company Meltwater, 90.8 million Filipinos, or 78% of the country\u2019s overall population, have been using social media in 2025.\nThe report also showed that Facebook and Messenger were the most popular social media applications among Filipinos, in line with the most popular usage purpose of keeping in touch with friends and family.\nMr. Guillermo said that scammers exploit Filipino\u2019s personal connections to run emergency scams on friends and family members of personal accounts they take over.\n\u201cThrough Facebook, given that the user unknowingly provides the scammer with the one-time-passcode to his/her account, the latter may send messages to the former\u2019s friends, asking for immediate financial aid after an alleged emergency,\u201d he said.\nHe added that the scammer would then manipulate the victim into sending money to a dummy account of the supposed \u201chelper\u201d of their friend in the made up emergency scenario.\nMr. Guillermo said that scammers also purchase verified and/or authentic accounts or identities of actual persons to generate fake identities that the public would be unlikely to hesitate in trusting.\nAn example he mentioned was of registered SIMs, whose contact activities would not be flagged by monitoring agencies resulting in minimal barriers to reaching the common mobile user.\nSITTING DUCKS\n\u201cThe profile of a typical fraud victim is [anyone] that lacks basic digital education and digital literacy,\u201d Julian Louie Singson, executive director and co-founder at the Cybersecurity Council of the Philippines (CSCP), told 大象传媒 in a Zoom call.\nIn multiple global reports and assessments, the Philippines has emerged as one of the most targeted and victimized countries in the cyberspace.\nFor instance, the 2025 Microsoft Digital Defense Report revealed that the Philippines placed 20th among countries targeted by cyberthreats globally in the first half of the year.\nChief Executive Officer of Microsoft Philippines Peter Maquera said in an article that such attacks are \u201cno longer isolated information technology (IT) issues \u2014 they disrupt operations, delay customer service and cause financial and reputational damage that can take years to recover from.\u201d\nThe 2025 second-half update to the top fraud trends report by US-based consumer credit reporting agency TransUnion showed that the country was the most widely targeted by fraud among Asian countries assessed.\nAlmost two-thirds of all Filipino consumers surveyed were targeted by fraud, of which 9% eventually fell victim, from February to May 2025.\n\u201cNowadays, people would receive text messages directly from reputable digital banks and e-wallets, containing links to fraudulent websites,\u201d Mr. Singson said, adding that these could be identified with thorough and informed inspection.\nPhishing was the most prevalent form of fraud in the Philippines in the span, according to TransUnion report.\nIt involves an online scammer\u2019s impersonation of reputable institutions through varying contact points to lure targets into providing sensitive information allowing them access to their financial accounts.\nAmong Filipino business leaders alone, 6% of total revenues were lost to fraud in the past year, amounting to an estimate of P4 trillion.\nMr. Singson added that awareness would be vital for Filipinos to identify and easily steer clear of scams in their current forms.\nIn its move to refresh the campaign, the FSF recognized that active fraud syndicates are global scaling, tech-enabled, and more evasive, rendering the initial PYM safeguards \u201cno longer enough.\u201d\nTHE ARMAMENT AND ITS LOGISTICS\nThe PYM campaign has been rolled out through the multi-pronged efforts of the FSF by each member institution according to its given role.\nThe BSP leads in spreading the campaign\u2019s visibility with strategically placed posters, art-cards, and infographics in high traffic places both online and offline, primarily targeting underserved communities.\nThe Securities and Exchanges Commission mainly boosts the campaign\u2019s digital engagement with postings of educational short videos or reels that make financial concepts digestible and emphasize protecting money against scams.\nThe Insurance Commission directly reaches out to Filipinos with SMS tips to remind them of consumer safety and to verify who or what they are dealing with financially.\nAnd lastly, the Philippine Deposit Insurance Corp. amplifies the campaign through radio interviews, reminding offline Filipinos to proactively safeguard their deposits.\n\u201cFSF CPEC believes that when financial regulators speak with one voice, the message cuts through the noise,\u201d said the central bank.\nAccording to data provided by the BSP, 50,000 campaign posters have been printed and distributed nationwide from August.\nThe first batch of educational reels had already been posted, accumulating 178,000 views as of early December, with more content being prepared for release in later dates.\nRadio segments and text message advisories have also been prepared for rollout to reach Filipinos without access to social media platforms.\nThe renewed campaign is set to strategically roll out in phases up to 2028, with the goal of behavioral changes in Filipinos and improved sensitivity to encroaching threats.\n\u201cScams evolve, so must our shields. Protect Your Money started as a warning. Today, it is a call to empowerment,\u201d the BSP said.\nTACTICAL ADVICE\nMr. Guillermo said that the most effective way the campaign could spread awareness on cyber threats and cybersecurity would be in a more direct and personal approach.\n\u201cIn posting awareness campaign advertisements online or in banks, what are the chances passersby and customers will read these? The best step to expand awareness is to talk to the people,\u201d he said.\nMoreover, Mr. Guillermo said that the most vulnerable to scams are those in far-flung areas and are newly connected to online financial platforms, saying that they may not be reached through the campaign\u2019s current methodology.\nMr. Singson added that coordinating with and mobilizing various communities that make up the masses would be a strategic move in the campaign\u2019s execution.\nHe added that partnerships with various clubs and local governments would greatly help in connecting with the people and improving their overall digital literacy.\n\u201cA successful [educational effort] I have seen is that of a small bank which went to Zumba classes of senior citizens \u2014 providing their drinks and snacks \u2014 and eventually teaching them financial literacy,\u201d he said.\nThe experts said that artificial intelligence (AI) and deep fake technology loom as formidable tools that fraudsters use to empower their trickery.\n\u201cI have personally seen investment traps on Facebook using AI generated videos of [Filipino billionaires], claiming quick returns on supposed investments,\u201d he said.\n\u201cDeepfake [technology] is what\u2019s new on the horizon, to run cryptocurrecy, investment, and recovery scams,\u201d Mr. Guillermo added.\nA deepfake, as defined by Merriam-Webster, is an image, recording, or video altered and edited to have an entirely different person deliver the message or action being shown.\n\u201cFor example, [the scammers] can capture my [persona] and post it, using my identity to run a recovery scam,\u201d said Mr. Guillermo.\nA recovery scam is aimed at those previously victimized by financial loss or other forms of fraud, using the disguise of an assistant in recovering the money to bait for even more information.\nREINFORCEMENTS EN ROUTE\nFSF CPEC said that the campaign is open to cooperating with schools, local governments, media organizations, and digital platform advocates in empowering its information drive.\nMr. Singson said that the CSCP is open to supporting this push for grassroots learning which \u201cthey have already been doing.\u201d\n\u201cThe way we do it is we deliver short cyber hygiene lessons [in] schools… we can partner up with both the national and local government to push for more digital literacy for everyone,\u201d he said.\nMoreover, Mr. Singson said that the CSCP could provide the FSF CPEC with developing cyber threats in the Philippines and ASEAN countries to spread awareness in advance.\nMeanwhile, Mr. Guillermo said that the PNP anti-cybercrime group could aid in highlighting dangers in cyberspace by giving threatened institutions a heads-up based on recurring complaints.\n\u201cWe [can track], based on the complaints, the lapses in financial institutions procedures and collection of information, and talk to them about it,\u201d said Mr. Guillermo.\nThe BSP said that rolling out the \u201ccollaborative model\u201d of the PYM campaign will continue to expand moving forward, ensuring that protection and empowerment are promoted together.", "date_published": "2025-12-15T00:04:56+08:00", "date_modified": "2025-12-14T17:26:40+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/12/3QBR25-Protect.jpg", "tags": [ "Banking Report Q3 2025", "Matthew Miguel L. Castillo", "Banking Report", "Research" ], "summary": "OPEN your mobile phone to check your SMS inbox, scroll to some messages sent through your trusted e-wallet or digital bank\u2019s line." }, { "id": "/?p=718488", "url": "/research/2025/12/15/718488/from-cash-counters-to-clicks-the-digital-shift-in-philippine-remittances/", "title": "From cash counters to clicks: The digital shift in Philippine remittances", "content_html": "By Heather Caitlin P. Ma\u00f1ago
\nFOR MILLIONS of Filipinos, sending money home no longer means standing in long queues. Digital remittance platforms have transformed the process into a few taps on a smartphone \u2014 making financial services accessible to families across the archipelago and the world.
\nWith the Philippines embracing digital change, the way families send and receive remittances are being transformed.
\nVisa\u2019s Money Travels: 2025 Digital Remittances Adoption Report highlights global trends in how people send and receive money, pinpointing key areas for growth. The report also explores the reasons behind remittance use and examines consumer perceptions of digital transaction security.
\nAccording to the report, digital remittance adoption in the Philippines continues to grow, with most people preferring digital apps for transactions. About 74% of senders and 66% of receivers use digital apps, making them the dominant method. The second most common approach is sending money digitally from a physical location.
\nBanks and regulators, including the Bangko Sentral ng Pilipinas (BSP), are collaborating to ensure the digital shift promotes financial inclusion. Both emphasize that education and infrastructure are critical to success.
\n\u201cThis can start with the promotion of financial literacy through continuous programs to educate all Filipinos on digital services, including PDOS (Pre-Departure\u00a0 Orientation Seminars), and Filipino Community Events abroad,\u201d said Rizal Commercial Banking Corp.\u2019s (RCBC) Transaction Banking Group.
\nIt also stressed the need for \u201cdeveloping tailored products \u2014 specifically user-friendly, affordable digital offerings for Overseas Filipino Workers (OFWs) and those with limited digital literacy.\u201d
\nThe BSP had a similar sentiment, noting that it continues to promote financial inclusion and broaden access to digital financial services nationwide, with particular emphasis on underserved rural and regional communities.
\nThese initiatives include interoperable electronic payment streams like PESONet and InstaPay, QR-based systems, and low-cost Basic Deposit Accounts (BDAs) designed for unbanked Filipinos.
\nIn terms of integrating digital remittance services into their platforms, banks are embedding digital remittance options into mobile apps and web platforms.
\n\u201cPhilippine banks are integrating digital remittance services primarily by offering multiple online channels that are accessible via web and mobile platforms,\u201d RCBC explained.
\nRuben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said that banks are partnering with global payment networks to enable instant transfers and introducing hybrid solutions that start digitally but allow cash-out options \u2014 meeting the needs of both tech-savvy users and those who prefer traditional methods.
\nThe BSP complements these efforts by supporting digital banks and e-wallets.
\n\u201cDigital banks and e-wallets have broadened financial access by offering streamlined paperless account opening, instant credit options, and mobile-based financial services,\u201d the BSP noted, citing the surge in e-wallet accounts to 393.6 million in 2023 from 257.5 million in 2022.
\nUSER EXPERIENCE
\nIn Visa\u2019s report, users cited ease of use and strong security as the main benefits of digital remittances, with nearly half of senders and over half of receivers emphasizing convenience.
\u201cUser experience can drive adoption by positioning the bank as the one-stop shop for all OFW transactions,\u201d RCBC said.
\nThey emphasized the need for apps that allow clients to manage accounts and send remittances in one place.
\nThey added that this also involved creating dependable, user-friendly financial tools tailored for OFWs, migrants, and their beneficiaries.
\nMr. Asuncion suggested simplifying interfaces, integrating multilingual support and adding features like \u201cbiometric authentication and automated currency conversion\u201d to make transactions faster and more intuitive.
\nSafety, privacy, and speed were also consistently cited as an advantage.
\nSecurity perceptions strongly favor digital apps, which are widely considered safe for both sending and receiving funds. In contrast, physical remittance methods are viewed as less secure, with only 3% to 6% perceiving them as safe across the Asia Pacific.
\n\u201cEnsure that effective security measures are in place,\u201d RCBC advised.
\nIt emphasized that banks must prioritize strong security measures such as encryption, multifactor authentication, and fraud detection to safeguard user data and transactions.
\nEqually important is maintaining transparency in operations to foster customer trust.
\n\u201cThis means clear communications on fees and exchange rates and Terms & Conditions, adherence to [government] compliance and regulatory requirements related to remittance, and reliable customer service support.\u201d
\nMeanwhile, \u201cthe BSP is strengthening its regulatory environment to ensure those expectations will consistently be met,\u201d the central bank said, referencing Circular No. 1195 on timely redress mechanisms and Circular No. 1198 on safeguarding customer funds.
\nIt added that \u201cguided by the National Payment Systems Act (NPSA) and the National Retail Payment System (NRPS) Framework, the BSP requires all operators of payment systems (OPS) and payment service providers (PSPs) to register and operate under sound governance, effective risk management, and strong consumer protection standards.\u201d
\nDespite these advantages, high fees remain the biggest pain point. For digital transactions, 43% of senders and 30% of receivers report concerns about costs. Physical remittances face similar issues, with 45% of senders and 29% of receivers citing high fees as a problem.
\nMr. Asuncion suggested \u201cinnovations like blockchain-based transfers, partnerships with local e-wallets, and tiered pricing models\u201d to lower costs.
\nMeanwhile, RCBC emphasized transparency. Stating that banks should \u201cprovide a definitive breakdown of the remittance charges\u201d to reduce dissatisfaction and encourage loyalty.
\nAt the same time, \u201cthe BSP issued Memorandum No. M-2024-015 to provide guidance to BSP supervised institutions (BSIs) on setting fees for electronic payment services.\u201d
\nThis aimed to ensure pricing remains fair, accountable, and transparent, aligned with the principles of the NRPS Framework and the Financial Consumer Protection Act.
\n\u201cThese measures will help ensure that pricing remains responsive to market dynamics, technological advancements, and evolving consumer needs,\u201d said the BSP.
\nUNDERSTANDING REMITTANCE BEHAVIOR
\nVisa\u2019s research showed 76% and 82% of Filipinos send and receive remittances once per year.
The primary reason for sending money were unexpected needs, accounting for 41% of Filipino respondents, while 39% of Filipino\u2019s cited receiving regular remittances.
\nContrary to the report, RCBC said most OFWs send remittances monthly.
\n\u201cOnce a month for their family\u2019s monthly allowances/expenses, extra sending twice a year for tuition and Christmas allowance of the family,\u201d RCBC clarified.
\nIt added that digital financial services should ensure 24/7 access for emergency remittances and enable real-time transfers for regular ones, while technical and support teams work to prevent downtime and transmission issues.
\nThis pattern highlights the need for flexible, event-driven financial products and reliable platforms for both emergency and regular transfers.
\n\u201cThis can be seen as a strong indicator that while digital channels are trusted, there remains room to make them part of everyday financial behavior,\u201d the BSP added.
\nThe BSP is expanding digital payment use cases, such as merchant transactions, transport fares, bills, and government disbursements so Filipinos can rely on them for everyday financial needs, not just occasional ones.
\nTHE ROAD AHEAD
\nLooking ahead, sending and receiving of remittances are projected to decline over the next twelve months with 7% and 44%, respectively, staying relatively flat to 2024.
\u201cWhile this is a global standpoint, the remittance business in the Philippines is increasing,\u201d said RCBC.
\nTo sustain engagement, they recommend \u201clowering or waiving front-end and back-end remittance fees, offering better exchange rates, and potentially waiving any associated taxes.\u201d
\nIt stated this would keep Filipinos, especially those working abroad, using trusted remittance channels.
\n\u201cIn parallel, the BSP is advancing initiatives that make cross-border payment systems faster, cheaper, and more transparent.\u201d
\nAn example of this is participating in Project Nexus, a Bank for International Settlements-led initiative to link domestic instant payment systems, aiming to make cross-system transactions faster and more efficient.
\n\u201cIn April 2025, the five founding central banks \u2014 India, Malaysia, the Philippines, Singapore, and Thailand \u2014 incorporated Nexus Global Payments (NGP) in Singapore to operationalize the scheme while the BSP remains to be involved the ongoing Project Nexus Phase 4,\u201d said the central bank.
\n", "content_text": "By Heather Caitlin P. Ma\u00f1ago\nFOR MILLIONS of Filipinos, sending money home no longer means standing in long queues. Digital remittance platforms have transformed the process into a few taps on a smartphone \u2014 making financial services accessible to families across the archipelago and the world.\nWith the Philippines embracing digital change, the way families send and receive remittances are being transformed.\nVisa\u2019s Money Travels: 2025 Digital Remittances Adoption Report highlights global trends in how people send and receive money, pinpointing key areas for growth. The report also explores the reasons behind remittance use and examines consumer perceptions of digital transaction security.\nAccording to the report, digital remittance adoption in the Philippines continues to grow, with most people preferring digital apps for transactions. About 74% of senders and 66% of receivers use digital apps, making them the dominant method. The second most common approach is sending money digitally from a physical location.\nBanks and regulators, including the Bangko Sentral ng Pilipinas (BSP), are collaborating to ensure the digital shift promotes financial inclusion. Both emphasize that education and infrastructure are critical to success.\n\u201cThis can start with the promotion of financial literacy through continuous programs to educate all Filipinos on digital services, including PDOS (Pre-Departure\u00a0 Orientation Seminars), and Filipino Community Events abroad,\u201d said Rizal Commercial Banking Corp.\u2019s (RCBC) Transaction Banking Group.\nIt also stressed the need for \u201cdeveloping tailored products \u2014 specifically user-friendly, affordable digital offerings for Overseas Filipino Workers (OFWs) and those with limited digital literacy.\u201d\nThe BSP had a similar sentiment, noting that it continues to promote financial inclusion and broaden access to digital financial services nationwide, with particular emphasis on underserved rural and regional communities.\nThese initiatives include interoperable electronic payment streams like PESONet and InstaPay, QR-based systems, and low-cost Basic Deposit Accounts (BDAs) designed for unbanked Filipinos.\nIn terms of integrating digital remittance services into their platforms, banks are embedding digital remittance options into mobile apps and web platforms.\n\u201cPhilippine banks are integrating digital remittance services primarily by offering multiple online channels that are accessible via web and mobile platforms,\u201d RCBC explained.\nRuben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said that banks are partnering with global payment networks to enable instant transfers and introducing hybrid solutions that start digitally but allow cash-out options \u2014 meeting the needs of both tech-savvy users and those who prefer traditional methods.\nThe BSP complements these efforts by supporting digital banks and e-wallets.\n\u201cDigital banks and e-wallets have broadened financial access by offering streamlined paperless account opening, instant credit options, and mobile-based financial services,\u201d the BSP noted, citing the surge in e-wallet accounts to 393.6 million in 2023 from 257.5 million in 2022.\nUSER EXPERIENCE\nIn Visa\u2019s report, users cited ease of use and strong security as the main benefits of digital remittances, with nearly half of senders and over half of receivers emphasizing convenience.\n\u201cUser experience can drive adoption by positioning the bank as the one-stop shop for all OFW transactions,\u201d RCBC said.\nThey emphasized the need for apps that allow clients to manage accounts and send remittances in one place.\nThey added that this also involved creating dependable, user-friendly financial tools tailored for OFWs, migrants, and their beneficiaries.\nMr. Asuncion suggested simplifying interfaces, integrating multilingual support and adding features like \u201cbiometric authentication and automated currency conversion\u201d to make transactions faster and more intuitive.\nSafety, privacy, and speed were also consistently cited as an advantage.\nSecurity perceptions strongly favor digital apps, which are widely considered safe for both sending and receiving funds. In contrast, physical remittance methods are viewed as less secure, with only 3% to 6% perceiving them as safe across the Asia Pacific.\n\u201cEnsure that effective security measures are in place,\u201d RCBC advised.\nIt emphasized that banks must prioritize strong security measures such as encryption, multifactor authentication, and fraud detection to safeguard user data and transactions.\nEqually important is maintaining transparency in operations to foster customer trust.\n\u201cThis means clear communications on fees and exchange rates and Terms & Conditions, adherence to [government] compliance and regulatory requirements related to remittance, and reliable customer service support.\u201d\nMeanwhile, \u201cthe BSP is strengthening its regulatory environment to ensure those expectations will consistently be met,\u201d the central bank said, referencing Circular No. 1195 on timely redress mechanisms and Circular No. 1198 on safeguarding customer funds.\nIt added that \u201cguided by the National Payment Systems Act (NPSA) and the National Retail Payment System (NRPS) Framework, the BSP requires all operators of payment systems (OPS) and payment service providers (PSPs) to register and operate under sound governance, effective risk management, and strong consumer protection standards.\u201d\nDespite these advantages, high fees remain the biggest pain point. For digital transactions, 43% of senders and 30% of receivers report concerns about costs. Physical remittances face similar issues, with 45% of senders and 29% of receivers citing high fees as a problem.\nMr. Asuncion suggested \u201cinnovations like blockchain-based transfers, partnerships with local e-wallets, and tiered pricing models\u201d to lower costs.\nMeanwhile, RCBC emphasized transparency. Stating that banks should \u201cprovide a definitive breakdown of the remittance charges\u201d to reduce dissatisfaction and encourage loyalty.\nAt the same time, \u201cthe BSP issued Memorandum No. M-2024-015 to provide guidance to BSP supervised institutions (BSIs) on setting fees for electronic payment services.\u201d\nThis aimed to ensure pricing remains fair, accountable, and transparent, aligned with the principles of the NRPS Framework and the Financial Consumer Protection Act.\n\u201cThese measures will help ensure that pricing remains responsive to market dynamics, technological advancements, and evolving consumer needs,\u201d said the BSP.\nUNDERSTANDING REMITTANCE BEHAVIOR\nVisa\u2019s research showed 76% and 82% of Filipinos send and receive remittances once per year.\nThe primary reason for sending money were unexpected needs, accounting for 41% of Filipino respondents, while 39% of Filipino\u2019s cited receiving regular remittances.\nContrary to the report, RCBC said most OFWs send remittances monthly.\n\u201cOnce a month for their family\u2019s monthly allowances/expenses, extra sending twice a year for tuition and Christmas allowance of the family,\u201d RCBC clarified.\nIt added that digital financial services should ensure 24/7 access for emergency remittances and enable real-time transfers for regular ones, while technical and support teams work to prevent downtime and transmission issues.\nThis pattern highlights the need for flexible, event-driven financial products and reliable platforms for both emergency and regular transfers.\n\u201cThis can be seen as a strong indicator that while digital channels are trusted, there remains room to make them part of everyday financial behavior,\u201d the BSP added.\nThe BSP is expanding digital payment use cases, such as merchant transactions, transport fares, bills, and government disbursements so Filipinos can rely on them for everyday financial needs, not just occasional ones.\nTHE ROAD AHEAD\nLooking ahead, sending and receiving of remittances are projected to decline over the next twelve months with 7% and 44%, respectively, staying relatively flat to 2024.\n\u201cWhile this is a global standpoint, the remittance business in the Philippines is increasing,\u201d said RCBC.\nTo sustain engagement, they recommend \u201clowering or waiving front-end and back-end remittance fees, offering better exchange rates, and potentially waiving any associated taxes.\u201d\nIt stated this would keep Filipinos, especially those working abroad, using trusted remittance channels.\n\u201cIn parallel, the BSP is advancing initiatives that make cross-border payment systems faster, cheaper, and more transparent.\u201d\nAn example of this is participating in Project Nexus, a Bank for International Settlements-led initiative to link domestic instant payment systems, aiming to make cross-system transactions faster and more efficient.\n\u201cIn April 2025, the five founding central banks \u2014 India, Malaysia, the Philippines, Singapore, and Thailand \u2014 incorporated Nexus Global Payments (NGP) in Singapore to operationalize the scheme while the BSP remains to be involved the ongoing Project Nexus Phase 4,\u201d said the central bank.", "date_published": "2025-12-15T00:03:56+08:00", "date_modified": "2025-12-14T17:26:00+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/12/3QBR25-6301554.jpg", "tags": [ "Banking Report Q3 2025", "Heather Caitlin P. Ma\u00f1ago", "Banking Report", "Research" ], "summary": "FOR MILLIONS of Filipinos, sending money home no longer means standing in long queues. Digital remittance platforms have transformed the process into a few taps on a smartphone \u2014 making financial services accessible to families across the archipelago and the world." }, { "id": "/?p=718486", "url": "/research/2025/12/15/718486/rate-cuts-us-tariffs-corruption-mess-steer-markets-in-q3/", "title": "Rate cuts, US tariffs, corruption mess steer markets in Q3", "content_html": "By Isa Jane D. Acabal
\nPOLICY EASING by the Bangko Sentral ng Pilipinas (BSP), tariffs imposed by the United States, and the ongoing flood control corruption scandal shaped the country\u2019s financial markets in the third quarter, analysts said.
\nThe Philippine Stock Exchange index (PSEi), the country\u2019s barometer for the stock market, closed at 5,953.46 in the third quarter, down by 18.1% from 7,272.65 in the same quarter last year.
\nOn the other hand, the peso appreciated by 3.9% to P58.20 against the dollar as of end-September from P56.03 a year ago, according to data from the Bankers Association of the Philippines.
\n\r\n \r\n\r\nYields on government securities rose by an average of 2.59 basis points (bps) year on year, based on the PHP Bloomberg Valuation (BVAL) Service Reference Rates published on the Philippine Dealing System\u2019s website as of Sept. 30.
\nThe BSP\u2019s shift to a more dovish stance reflected in its consecutive rate cuts influenced the performance of domestic markets during the period, according to analysts.
\nJust last week, the central bank slashed again its policy rate by another 25 bps, bringing the key rate to over three-year low of 4.5%. It also signaled that the easing cycle nears its end.
\nIt has so far trimmed borrowing costs by two full percentage points since it began its easing cycle in August last year.
\n\u201cReduced borrowing costs incentivized capital formation and supported investment momentum and economic activity, despite external headwinds and domestic governance concerns,\u201d the central bank said in an e-mailed reply to questions.
\nAccording to the BSP, the present interest rate environment helped in credit expansion and in maintaining stability in the domestic financial markets.
\n\u201cWhat we saw from this easing cycle was a \u2018A Tale of Two Cities\u2019 in Q3 \u2014 the local stock market was tepid while the bond market received much interest,\u201d Marco Antonio C. Agonia, an economist from the University of Asia and the Pacific, said in an e-mail.
\nMr. Agonia said the response in local equities was muted because market players anticipated the rate cuts, contrary to the local secondary market where \u201cparticipants scrambled to lock in yields within the easing cycle.\u201d
\nFor economist Reinielle Matt M. Erece of Oikonomia Advisory and Research, Inc., the markets\u2019 reaction to the key rate reduction was anticipated, with bond yields already factoring in the move, leading to their decline.
\nHowever, he said equity markets continued to move sideways due to investors\u2019 concern about corruption, global trade tensions, and weaker currency.
\nSharing the same sentiment, Nicholas Antonio T. Mapa, chief economist of Metropolitan Bank & Trust Co., said in an e-mail that the BSP\u2019s policy easing would help support moderating growth momentum amid uncertainty.
\n\u201cAlmost everyone was expecting BSP to retain their dovish stance given target consistent inflation and expectations for growth momentum to stay challenged,\u201d he said.
\nDespite the rate cuts, Mr. Mapa said investors remain cautious given persistent concerns about the economic and geopolitical outlook for the Philippines.
\nIn the third quarter, the Philippine economy grew 4%, a sharp slowdown from the 5.5% growth in the second quarter and the 5.2% logged in the same period in 2024.
\nGovernment spending increased by 5.8% in the third quarter, slowing down from 8.7% in the previous quarter, but faster than the 5% growth recorded in the same period last year.
\nThis followed after the delays and controversies surrounding flood-control infrastructure projects.
\n\u201cThe ongoing infrastructure spending controversy exerted downward pressure on investor sentiment and domestic market performance,\u201d according to the BSP.
\nOn the same note, Mr. Agonia said the ongoing flood control scandal soured investors\u2019 mood in the stock market.
\n\u201cWhile trade uncertainties weighed on investors\u2019 minds in the first half of the year, governance issues became the defining brush stroke for the Q3 picture,\u201d he said, adding that a definite action is needed to regain investors\u2019 optimism.
\nHe noted that the US Fed\u2019s September rate cut boosted the PSEi, but gains were short-lived as new revelations about the flood-control scandal emerged.
\nUS TARIFFS
\nThe 19% US tariff imposed on most Philippine goods, effective Aug. 7, also affected markets during the period.
\u201cThe heightened uncertainty over the implementation of US tariffs weighed on domestic investor sentiment during the quarter,\u201d the BSP said.
\nBased on the central bank\u2019s Business Expectations Survey, business sentiment became less optimistic in the third quarter amid global headwinds from higher US tariffs, geopolitical tensions, and weaker external demand.
\nFor Mr. Agonia, the tariff announcement alleviated some of the uncertainty that had weighed market players in the previous quarters concerning the implementation of US tariffs.
\n\u201cMarkets seemed to react positively to the definite and comparatively lenient tariff stance given to the Philippines,\u201d Mr. Agonia said.
\nMeanwhile, for Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco, the confirmation of the US tariff midway through the quarter \u201cwas neither here nor there in terms of market impact\u201d primarily because exports are a minor factor for the country\u2019s economic growth.
\n\u201cFor the most part, the Philippines is one of the \u2018winners\u2019 in the global tariff setup so far, even though its rate ended up being slightly higher than the one first proposed in Liberation Day,\u201d he said.
\nFor Mr. Mapa, the ongoing US tariffs weighed on the country\u2019s overall growth, a key concern for investors.
\nHowever, \u201calthough traders and exporters remain wary over developments on the global trade front, concern appears to be shifting to domestic growth concerns more than to US tariff policy,\u201d Mr. Mapa added.
\nMr. Agonia said other challenges for financial markets in the third quarter included the \u201cghost month,\u201d bad weather, and slight peso depreciation.
\nMeanwhile, supportive factors included \u201cbenign domestic inflation, within-expectations Q2 gross domestic product (GDP) growth, and good Q2 corporate earnings,\u201d he added.
\nKEY FACTORS TO MONITOR
\nHeading into the fourth quarter, Mr. Chanco sees further rate cut expectations as markets continue to face pressure based on domestic factors.
\u201cAs things stand, our base case is that the Board will cut again in December and in early-2026 by a total of 50 bps (two more 25-bps cuts),\u201d he said.
\nMr. Agonia said the country\u2019s financial markets could see cautious gains, supported by the seasonal holiday boost and catch-up government spending.
\nOn the same note, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said markets expect a seasonal rise in remittances and peso conversions to fund the Christmas spending in the latter part of the fourth quarter, a pattern observed for decades.
\nHe also anticipates further rate cuts by the US Fed and the BSP in the coming months, amid benign inflation, to remain an offsetting positive factor for the economy.
\nFIXED-INCOME MARKET
\nBSP: The bond market is expected to be supported by the low-interest rate environment, easing global monetary conditions, and robust demand from domestic investors.
Agonia: Relatively low inflation and a more dovish BSP should see the bond market flourishing into Q4 and onwards. Volatility in the US markets may encourage investors to flock to the Philippine bond market.
\nErece: Expectations of continuous rate cuts can drive market rates downwards. Furthermore, concerns about economic slowdowns may also drive demand for debt securities over equities to lock in consistent profit through interest rates.
\nEQUITIES
\nBSP: Ongoing concerns over public spending on flood control projects weigh down market sentiment. However, slower global trade and the sustained strength of the US dollar are likely to influence foreign investment into equities.
Ricafort: Further improvement in ESG (environmental, social, and governance) compliance by the government and some listed companies may be needed for the PSEi to break out higher from the familiar range of 6,000-7,000 seen for more than 13 years already, particularly the government\u2019s anti-corruption measures and further elevating governance standards.
\nAgonia: Local equities may continue to be lukewarm, especially as analysts scale down their Q3 GDP growth forecasts. Despite this, some factors guarding the downside may include benign inflation, healthy employment figures, potentially strong Q3 corporate earnings, and some holiday remittance relief for the peso-dollar rate.
\nErece: A potential year of loss can be anticipated given disappointing economic growth, persistent external headwinds, and weak public sector credibility.
\nFOREIGN EXCHANGE MARKET
\nBSP: Concerns over US fiscal sustainability, US trade policy measures and risks to the US Fed\u2019s stability and independence could weaken the US dollar and support the peso. However, ongoing geopolitical tensions, notably in the Middle East, may prompt safe-haven demand for the dollar and put depreciation pressure on the peso. Domestically, the peso could find support from steady macroeconomic fundamentals and resilient FX inflows from BPO revenues, tourism, and Overseas Filipino Workers\u2019 remittances.
Ricafort: Still relatively benign local inflation data tends to fundamentally support the peso exchange rate with more purchasing power for the local currency.
\nAgonia: The holiday remittance wave may also provide relief for the peso-dollar rate towards the P57-P57.5 range. However, a potential BSP rate cut in December and a larger Q4 trade deficit could add to some depreciation pressure moving forward.
\nErece: The recent corruption scandals can drive confidence on the country down. Thus, inducing capital outflows and less demand for the peso. These events can cause the peso to depreciate. Despite a dovish Fed, if investor sentiment overwhelms the foreign exchange effects of monetary policy, the Peso may continue to depreciate. However, I think the BSP will prevent the currency from reaching P60 levels through their own interventions.
\n", "content_text": "By Isa Jane D. Acabal\nPOLICY EASING by the Bangko Sentral ng Pilipinas (BSP), tariffs imposed by the United States, and the ongoing flood control corruption scandal shaped the country\u2019s financial markets in the third quarter, analysts said.\nThe Philippine Stock Exchange index (PSEi), the country\u2019s barometer for the stock market, closed at 5,953.46 in the third quarter, down by 18.1% from 7,272.65 in the same quarter last year. \nOn the other hand, the peso appreciated by 3.9% to P58.20 against the dollar as of end-September from P56.03 a year ago, according to data from the Bankers Association of the Philippines.\n\r\n \r\n\r\n \r\n \r\n \r\n \r\n\r\n \r\n 1 of 4\r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n\r\n \r\n \nYields on government securities rose by an average of 2.59 basis points (bps) year on year, based on the PHP Bloomberg Valuation (BVAL) Service Reference Rates published on the Philippine Dealing System\u2019s website as of Sept. 30.\nThe BSP\u2019s shift to a more dovish stance reflected in its consecutive rate cuts influenced the performance of domestic markets during the period, according to analysts.\nJust last week, the central bank slashed again its policy rate by another 25 bps, bringing the key rate to over three-year low of 4.5%. It also signaled that the easing cycle nears its end.\nIt has so far trimmed borrowing costs by two full percentage points since it began its easing cycle in August last year.\n\u201cReduced borrowing costs incentivized capital formation and supported investment momentum and economic activity, despite external headwinds and domestic governance concerns,\u201d the central bank said in an e-mailed reply to questions.\nAccording to the BSP, the present interest rate environment helped in credit expansion and in maintaining stability in the domestic financial markets.\n\u201cWhat we saw from this easing cycle was a \u2018A Tale of Two Cities\u2019 in Q3 \u2014 the local stock market was tepid while the bond market received much interest,\u201d Marco Antonio C. Agonia, an economist from the University of Asia and the Pacific, said in an e-mail.\nMr. Agonia said the response in local equities was muted because market players anticipated the rate cuts, contrary to the local secondary market where \u201cparticipants scrambled to lock in yields within the easing cycle.\u201d\nFor economist Reinielle Matt M. Erece of Oikonomia Advisory and Research, Inc., the markets\u2019 reaction to the key rate reduction was anticipated, with bond yields already factoring in the move, leading to their decline. \nHowever, he said equity markets continued to move sideways due to investors\u2019 concern about corruption, global trade tensions, and weaker currency.\nSharing the same sentiment, Nicholas Antonio T. Mapa, chief economist of Metropolitan Bank & Trust Co., said in an e-mail that the BSP\u2019s policy easing would help support moderating growth momentum amid uncertainty.\n\u201cAlmost everyone was expecting BSP to retain their dovish stance given target consistent inflation and expectations for growth momentum to stay challenged,\u201d he said.\nDespite the rate cuts, Mr. Mapa said investors remain cautious given persistent concerns about the economic and geopolitical outlook for the Philippines.\nIn the third quarter, the Philippine economy grew 4%, a sharp slowdown from the 5.5% growth in the second quarter and the 5.2% logged in the same period in 2024.\nGovernment spending increased by 5.8% in the third quarter, slowing down from 8.7% in the previous quarter, but faster than the 5% growth recorded in the same period last year.\nThis followed after the delays and controversies surrounding flood-control infrastructure projects.\n\u201cThe ongoing infrastructure spending controversy exerted downward pressure on investor sentiment and domestic market performance,\u201d according to the BSP.\nOn the same note, Mr. Agonia said the ongoing flood control scandal soured investors\u2019 mood in the stock market.\n\u201cWhile trade uncertainties weighed on investors\u2019 minds in the first half of the year, governance issues became the defining brush stroke for the Q3 picture,\u201d he said, adding that a definite action is needed to regain investors\u2019 optimism.\nHe noted that the US Fed\u2019s September rate cut boosted the PSEi, but gains were short-lived as new revelations about the flood-control scandal emerged.\nUS TARIFFS\nThe 19% US tariff imposed on most Philippine goods, effective Aug. 7, also affected markets during the period.\n\u201cThe heightened uncertainty over the implementation of US tariffs weighed on domestic investor sentiment during the quarter,\u201d the BSP said.\nBased on the central bank\u2019s Business Expectations Survey, business sentiment became less optimistic in the third quarter amid global headwinds from higher US tariffs, geopolitical tensions, and weaker external demand.\nFor Mr. Agonia, the tariff announcement alleviated some of the uncertainty that had weighed market players in the previous quarters concerning the implementation of US tariffs.\n\u201cMarkets seemed to react positively to the definite and comparatively lenient tariff stance given to the Philippines,\u201d Mr. Agonia said. \nMeanwhile, for Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco, the confirmation of the US tariff midway through the quarter \u201cwas neither here nor there in terms of market impact\u201d primarily because exports are a minor factor for the country\u2019s economic growth. \n\u201cFor the most part, the Philippines is one of the \u2018winners\u2019 in the global tariff setup so far, even though its rate ended up being slightly higher than the one first proposed in Liberation Day,\u201d he said. \nFor Mr. Mapa, the ongoing US tariffs weighed on the country\u2019s overall growth, a key concern for investors.\nHowever, \u201calthough traders and exporters remain wary over developments on the global trade front, concern appears to be shifting to domestic growth concerns more than to US tariff policy,\u201d Mr. Mapa added.\nMr. Agonia said other challenges for financial markets in the third quarter included the \u201cghost month,\u201d bad weather, and slight peso depreciation.\nMeanwhile, supportive factors included \u201cbenign domestic inflation, within-expectations Q2 gross domestic product (GDP) growth, and good Q2 corporate earnings,\u201d he added.\nKEY FACTORS TO MONITOR\nHeading into the fourth quarter, Mr. Chanco sees further rate cut expectations as markets continue to face pressure based on domestic factors.\n\u201cAs things stand, our base case is that the Board will cut again in December and in early-2026 by a total of 50 bps (two more 25-bps cuts),\u201d he said.\nMr. Agonia said the country\u2019s financial markets could see cautious gains, supported by the seasonal holiday boost and catch-up government spending.\nOn the same note, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said markets expect a seasonal rise in remittances and peso conversions to fund the Christmas spending in the latter part of the fourth quarter, a pattern observed for decades.\nHe also anticipates further rate cuts by the US Fed and the BSP in the coming months, amid benign inflation, to remain an offsetting positive factor for the economy.\nFIXED-INCOME MARKET\nBSP: The bond market is expected to be supported by the low-interest rate environment, easing global monetary conditions, and robust demand from domestic investors.\nAgonia: Relatively low inflation and a more dovish BSP should see the bond market flourishing into Q4 and onwards. Volatility in the US markets may encourage investors to flock to the Philippine bond market.\nErece: Expectations of continuous rate cuts can drive market rates downwards. Furthermore, concerns about economic slowdowns may also drive demand for debt securities over equities to lock in consistent profit through interest rates.\nEQUITIES\nBSP: Ongoing concerns over public spending on flood control projects weigh down market sentiment. However, slower global trade and the sustained strength of the US dollar are likely to influence foreign investment into equities.\nRicafort: Further improvement in ESG (environmental, social, and governance) compliance by the government and some listed companies may be needed for the PSEi to break out higher from the familiar range of 6,000-7,000 seen for more than 13 years already, particularly the government\u2019s anti-corruption measures and further elevating governance standards.\nAgonia: Local equities may continue to be lukewarm, especially as analysts scale down their Q3 GDP growth forecasts. Despite this, some factors guarding the downside may include benign inflation, healthy employment figures, potentially strong Q3 corporate earnings, and some holiday remittance relief for the peso-dollar rate.\nErece: A potential year of loss can be anticipated given disappointing economic growth, persistent external headwinds, and weak public sector credibility.\nFOREIGN EXCHANGE MARKET\nBSP: Concerns over US fiscal sustainability, US trade policy measures and risks to the US Fed\u2019s stability and independence could weaken the US dollar and support the peso. However, ongoing geopolitical tensions, notably in the Middle East, may prompt safe-haven demand for the dollar and put depreciation pressure on the peso. Domestically, the peso could find support from steady macroeconomic fundamentals and resilient FX inflows from BPO revenues, tourism, and Overseas Filipino Workers\u2019 remittances.\nRicafort: Still relatively benign local inflation data tends to fundamentally support the peso exchange rate with more purchasing power for the local currency.\nAgonia: The holiday remittance wave may also provide relief for the peso-dollar rate towards the P57-P57.5 range. However, a potential BSP rate cut in December and a larger Q4 trade deficit could add to some depreciation pressure moving forward.\nErece: The recent corruption scandals can drive confidence on the country down. Thus, inducing capital outflows and less demand for the peso. These events can cause the peso to depreciate. Despite a dovish Fed, if investor sentiment overwhelms the foreign exchange effects of monetary policy, the Peso may continue to depreciate. However, I think the BSP will prevent the currency from reaching P60 levels through their own interventions.", "date_published": "2025-12-15T00:02:55+08:00", "date_modified": "2025-12-14T17:29:24+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/10/US-Dollar-Peso-currency-1.jpg", "tags": [ "Banking Report Q3 2025", "Isa Jane D. Acabal", "Banking Report", "Research" ], "summary": "POLICY EASING by the Bangko Sentral ng Pilipinas (BSP), tariffs imposed by the United States, and the ongoing flood control corruption scandal shaped the country\u2019s financial markets in the third quarter, analysts said." }, { "id": "/?p=718485", "url": "/research/2025/12/15/718485/moderating-loan-growth-rate-cuts-drag-listed-big-banks-in-q3/", "title": "Moderating loan growth, rate cuts drag listed big banks in Q3", "content_html": "![\"\"](\"/wp-content/uploads/2025/12/3QBR25-Incomev2.jpg\")
By Lourdes O. Pilar, Researcher
\nSHARE PRICES of listed universal and commercial banks slipped at the close of the third quarter as loan growth moderated and policy rate cuts continued to squeeze lending margins.
\nHowever, analysts still expect a rebound in the last quarter of this year.
\nThe Philippine Stock Exchange index (PSEi) fell by 18.1% year on year to 5,953.46 at the end of the third quarter, worse than the 6.5% decline in the second quarter.
\nThe decline was reflected in the financials subindex which also declined by 10.6% during the period.
\nThe third quarter saw 10 out of 13 largest banks\u2019 stock prices contract annually as of end-September. Philippine Trust Co. led the decliners with 25.7% drop during the period, followed by Security Bank Corp. (-25.6%) and Union Bank of the Philippines (-22%).
\nOn the other hand, three U/KBs saw their share prices grow in the third quarter. Philippine National Bank (PNB) grew the most with 89.3% surge. Other lenders which recorded growth were China Banking Corp. (21.6%), and East West Banking Corp. (17.8%).
\n\u201cThe decline in most listed banks was largely due to investor concerns over the impact of recent policy rate cuts on lending margin amid backdrop of moderating loan growth,\u201d Ralph Jonathan B. Fausto, research associate in Chinabank Securities Corp., said in an e-mail.
\nBusiness loan appetite notably softened amid prevailing uncertainties while asset quality likewise came under scrutiny, with the continued expansion in high-yielding segments resulting in higher provisioning requirements which weighed on banks\u2019 bottom-line performance, Mr. Fausto said.
\nThe Monetary Board trimmed the key policy rate by 25 basis points (bps) to a three-year low of 4.75% in October, while inflation in the first nine months averaged at 1.7%, matching the central bank\u2019s full-year forecast.
\nThe Monetary Board slashed its key rate for a fifth straight meeting in December by another 25 bps, bringing the target reverse repurchase rate to an over three-year low of 4.5%.
\nThe Bangko Sentral ng Pilipinas (BSP) also signaled that the current easing cycle, which started in August last year, approaches its end.
\nAggregate net income of universal and commercial banks grew by 4.2% to P283.16 billion as of end-September from P271.73 billion the previous year, data from the BSP showed.
\nGross total loan portfolio of these big lenders rose by 8.8% to P15.03 trillion as of end-September from P13.81 trillion last year.
\nLikewise, the big banks\u2019 gross nonperforming loans (NPLs) ratio narrowed down to 3.02% in September from 3.18% a year ago.
\nThe big bank\u2019s net interest margin (NIM) \u2014 a ratio that measure banks\u2019 efficiency in investing their fund by dividing annualized net interest income to average earning asset \u2014 improved to 4.2% in the third quarter from 4.06% recorded in the same period last year.
\nProvision for credit losses by these big banks reached P116.63 billion, up by 60.9% from P72.48 billion in September 2024.
\nKervin Laurence Sisayan, head of research of Maybank Securities Philippines, said that most of the banks were more conservative in third quarter due to the ongoing slowdown in the economy.
\n\u201cNote that we\u2019ve seen gross domestic product (GDP) growth slower than expected mostly due to weaker gross capital formation. As a result, majority has increased credit costs to account for any potential weakness for example in the construction sector,\u201d said Mr. Sisayan.
\nFor the third quarter, the Philippine economy expanded by 4%, easing from the 5.5% of the previous quarter growth and 5.2% expansion in the last three months of 2024.
\nHowever, this was still below the 5.5%-6.5% growth target of the government.
\n\u201cA decelerating economy as evidenced by the dismal 4% 3Q25 GDP outturn amid weather-related disruptions that weighed on consumption, and the corruption scandal that curtailed government spending and reduced investment activity,\u201d Abigail Kathryn L. Chiw, first vice-president and head of research at BDO Securities Corp., said in an e-mail.
\nThe Marcos administration faces increasing scrutiny over flood control projects, where billions of pesos in public funds were diverted through padded contracts and shell companies. The Department of Finance said that economic losses from corruption in flood control projects may have averaged P118.5 billion annually from 2023 to 2025.
\nAt present, the Independent Commission for Infrastructure and Congress are conducting separate investigations to individuals involved in public works projects, including claims of budget manipulation and contractor collusion.
\n![\"\"](\"/wp-content/uploads/2025/12/Bank_Share.jpg\")
STANDOUTS
\nInvestors should closely monitor the trajectory of interest rates, as the BSP easing cycle will impact NIM, Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said. Traders should consider near-term volatility due to potential adjustments in monetary policy expectations and global risk sentiment.
\u201cDespite the broader sectoral weakness, BDO and BPI stood out due to their resilient loan growth and strong noninterest income performance. BDO\u2019s diversified business lines and solid capital position helped it weather market volatility,\u201d he said.
\n\u201cThese banks demonstrated operational agility and managed to sustain profitability despite external challenges,\u201d Mr. Arce added.
\nMr. Fausto said that BPI continue to deliver mid-teens return on equity (RoE) underpinned by its deliberate strategy to continue scaling its consumer loan portfolio alongside the revenue uplift and efficiency gains from tech investments. Meanwhile BDO also stood out during the quarter due to sustained double-digit growth in corporate lending.
\n\u201cBDO is the bank that stood out the most given the stable and high-quality growth. What we like about BDO is the improvement in quarterly RoE, bringing it closer to mid-teens level. In addition, they continue to see above industry loan growth despite the economic slowdown,\u201d said Mr. Sisayan.
\nMr. Sisayan also said that in the near term, they might see overall weakness in profitability for banks as they increase provisions for bad loans.
\n\u201cFor short term we are currently looking for the local currency movement as the weaker peso could bring lower inflows and liquidity for the banks. The declining foreign direct investment (FDI) should also be watch as lower FDI \u00a0 could translate to slower economic growth and loan growth impacting the banks performance,\u201d Jash Matthew M. Baylon, equity analyst at The First Resources Management and Securities Corp., said in a Viber message.
\nBSP reported that net inflows of FDI into the Philippines slumped by 25.8% in September to $432 million from $830 million in the same month in 2024, amid a drop in net investments in debt instruments.
\nRATE CUTS
\nMr. Sisayan said that lower policy rates would put downward pressure on asset yields or loans.
\u201cHowever, we have yet to see the policy rate cuts have a significant impact to asset yields of banks in the past 12 months. In fact, the decline in NIMs has been quite minimal especially if we take into account the banks\u2019 pivot towards lending more to the consumer segment,\u201d said Mr. Sisayan.
\nHe also added that the trend remains that policy cuts will negatively affect NIMs and profitability.
\n\u201cIn theory, lower rates should make funding cost cheaper and spur loan growth. But if most corporates are cautious to expand given the economic slowdown, this might not translate to higher demand for loans in the near term,\u201d he added.
\nLuis A. Limlingan, head of sales at Regina Capital Development Corp., said that in the medium term, these developments are \u201cbeneficial\u201d for banks as lower policy rates can encourage more borrowing.
\n\u201cCheaper loans make credit more accessible to clients, which helps support stronger loan demand. As loan growth picks up, banks are likely to see a corresponding boost in revenues. But in the near term, pressured margins are one of the key factors the market is already pricing in,\u201d Mr. Limlingan said.
\nMs. Chiw said that subdued inflation and easing interest rates are positive for consumption and supportive of growth.
\n\u201cWe believe these conditions are constructive for banks, as it encourages lending activity and fee income growth as transaction volumes increase. We also think NIM pressures from rate cuts could be mitigated by the rising mix of higher-margin consumer loans and cultivating lower-cost CASA deposits to support loan expansion,\u201d she said.
\nMr. Baylon thinks that the BSP\u2019s monetary policy reduction has a balanced effect on the country\u2019s financial sector, as rate cutting cycle at its December meeting could improve the spending in the country which may show a recovery on economic activity.
\nMr. Arce said that while lower rates could compress NIMs and reduce interest income, they may also stimulate credit demand from consumers and businesses, supporting loan growth.
\n\u201cThe benign inflation outlook enhances purchasing power and reduces credit risk, improving banks\u2019 asset quality. Overall, in the medium term, the sector is poised for steady but moderate growth, as profitability will hinge more on volume expansion and cost efficiency than margin gains,\u201d Mr. Arce said.
\nOUTLOOK
\nAnalysts expect a rebound for listed banks in the last quarter of this year.
Mr. Arce said that the fourth quarter of 2025 is expected to bring a modest rebound for the sector as lending activity gradually picks up and the holiday season boosts consumer spending.
\n\u201cHowever, the sector\u2019s overall growth may remain tempered by cautious corporate lending and lingering global uncertainties. BDO, BPI, and MBT are projected to lead the sector in terms of earnings momentum, while mid-tier banks like RCB and EW may post selective growth due to niche lending and digital strategies,\u201d Mr. Arce said.
\n\u201cWe expect banks to perform in line with their current trajectory, as we do not see any significant developments that could affect profitability drastically through yearend. Loan growth is also likely to remain steady, with the current trend showing a slowdown despite the recent rate cut from the BSP,\u201d Mr. Limlingan said.
\nMr. Fausto expects listed banks to end fourth quarter of 2025 on a solid footing supported by healthy loan demand from corporates earmarking for expansion plans and working capital requirements for 2026.
\n\u201cConsumer lending is also poised to remain strong, driven by increased credit card and personal loan utilization amid holiday-driven spending. Given that most bank stocks have declined year-to-date, current valuations appear more attractive which could potentially prompt investors to reconsider names with still durable growth prospects and support potential share price recovery over the medium term,\u201d said Mr. Fausto.
\nMr. Baylon also shared that the banking sector will show improve provisions as higher consumer spending and consumer capacity to pay off their loans which may benefit banking provision.\u00a0
\n\u201cMoreover, the expectation of lower interest rates for the year end could boost loan demand for both retail and corporate which may offset the declining net interest margin. However, we still consider the revised GDP outlook for the full year 2025 which may bring a more cautious approach on its corporate loans segment,\u201d Mr. Baylon added.
\nHowever, Ms. Chiw expects their covered banks of lower earnings growth.
\n\u201cOverall, we expect our covered banks to deliver slower earnings growth of 5.4%-8.3% for this year from 6%-9.7% previously, on account of preemptive provisioning costs and moderating loan growth trends in recent months, which is reflective also of slackening GDP performance,\u201d said Ms. Chiw.
\n\u201cHowever, lower borrowing costs may result to a pickup in lending activity and a reduction of NPL stress, which in turn would allow banks to cut back on provisioning costs that could also lift earnings in the ensuing quarter,\u201d she added.
\n", "content_text": "By Lourdes O. Pilar, Researcher\nSHARE PRICES of listed universal and commercial banks slipped at the close of the third quarter as loan growth moderated and policy rate cuts continued to squeeze lending margins.\nHowever, analysts still expect a rebound in the last quarter of this year.\nThe Philippine Stock Exchange index (PSEi) fell by 18.1% year on year to 5,953.46 at the end of the third quarter, worse than the 6.5% decline in the second quarter.\nThe decline was reflected in the financials subindex which also declined by 10.6% during the period.\nThe third quarter saw 10 out of 13 largest banks\u2019 stock prices contract annually as of end-September. Philippine Trust Co. led the decliners with 25.7% drop during the period, followed by Security Bank Corp. (-25.6%) and Union Bank of the Philippines (-22%).\nOn the other hand, three U/KBs saw their share prices grow in the third quarter. Philippine National Bank (PNB) grew the most with 89.3% surge. Other lenders which recorded growth were China Banking Corp. (21.6%), and East West Banking Corp. (17.8%).\n\u201cThe decline in most listed banks was largely due to investor concerns over the impact of recent policy rate cuts on lending margin amid backdrop of moderating loan growth,\u201d Ralph Jonathan B. Fausto, research associate in Chinabank Securities Corp., said in an e-mail.\nBusiness loan appetite notably softened amid prevailing uncertainties while asset quality likewise came under scrutiny, with the continued expansion in high-yielding segments resulting in higher provisioning requirements which weighed on banks\u2019 bottom-line performance, Mr. Fausto said.\nThe Monetary Board trimmed the key policy rate by 25 basis points (bps) to a three-year low of 4.75% in October, while inflation in the first nine months averaged at 1.7%, matching the central bank\u2019s full-year forecast.\nThe Monetary Board slashed its key rate for a fifth straight meeting in December by another 25 bps, bringing the target reverse repurchase rate to an over three-year low of 4.5%.\nThe Bangko Sentral ng Pilipinas (BSP) also signaled that the current easing cycle, which started in August last year, approaches its end.\nAggregate net income of universal and commercial banks grew by 4.2% to P283.16 billion as of end-September from P271.73 billion the previous year, data from the BSP showed.\nGross total loan portfolio of these big lenders rose by 8.8% to P15.03 trillion as of end-September from P13.81 trillion last year.\nLikewise, the big banks\u2019 gross nonperforming loans (NPLs) ratio narrowed down to 3.02% in September from 3.18% a year ago.\nThe big bank\u2019s net interest margin (NIM) \u2014 a ratio that measure banks\u2019 efficiency in investing their fund by dividing annualized net interest income to average earning asset \u2014 improved to 4.2% in the third quarter from 4.06% recorded in the same period last year.\nProvision for credit losses by these big banks reached P116.63 billion, up by 60.9% from P72.48 billion in September 2024.\nKervin Laurence Sisayan, head of research of Maybank Securities Philippines, said that most of the banks were more conservative in third quarter due to the ongoing slowdown in the economy. \n\u201cNote that we\u2019ve seen gross domestic product (GDP) growth slower than expected mostly due to weaker gross capital formation. As a result, majority has increased credit costs to account for any potential weakness for example in the construction sector,\u201d said Mr. Sisayan.\nFor the third quarter, the Philippine economy expanded by 4%, easing from the 5.5% of the previous quarter growth and 5.2% expansion in the last three months of 2024.\nHowever, this was still below the 5.5%-6.5% growth target of the government.\n\u201cA decelerating economy as evidenced by the dismal 4% 3Q25 GDP outturn amid weather-related disruptions that weighed on consumption, and the corruption scandal that curtailed government spending and reduced investment activity,\u201d Abigail Kathryn L. Chiw, first vice-president and head of research at BDO Securities Corp., said in an e-mail.\nThe Marcos administration faces increasing scrutiny over flood control projects, where billions of pesos in public funds were diverted through padded contracts and shell companies. The Department of Finance said that economic losses from corruption in flood control projects may have averaged P118.5 billion annually from 2023 to 2025.\nAt present, the Independent Commission for Infrastructure and Congress are conducting separate investigations to individuals involved in public works projects, including claims of budget manipulation and contractor collusion.\n\nSTANDOUTS\nInvestors should closely monitor the trajectory of interest rates, as the BSP easing cycle will impact NIM, Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said. Traders should consider near-term volatility due to potential adjustments in monetary policy expectations and global risk sentiment.\n\u201cDespite the broader sectoral weakness, BDO and BPI stood out due to their resilient loan growth and strong noninterest income performance. BDO\u2019s diversified business lines and solid capital position helped it weather market volatility,\u201d he said.\n\u201cThese banks demonstrated operational agility and managed to sustain profitability despite external challenges,\u201d Mr. Arce added.\nMr. Fausto said that BPI continue to deliver mid-teens return on equity (RoE) underpinned by its deliberate strategy to continue scaling its consumer loan portfolio alongside the revenue uplift and efficiency gains from tech investments. Meanwhile BDO also stood out during the quarter due to sustained double-digit growth in corporate lending.\n\u201cBDO is the bank that stood out the most given the stable and high-quality growth. What we like about BDO is the improvement in quarterly RoE, bringing it closer to mid-teens level. In addition, they continue to see above industry loan growth despite the economic slowdown,\u201d said Mr. Sisayan.\nMr. Sisayan also said that in the near term, they might see overall weakness in profitability for banks as they increase provisions for bad loans.\n\u201cFor short term we are currently looking for the local currency movement as the weaker peso could bring lower inflows and liquidity for the banks. The declining foreign direct investment (FDI) should also be watch as lower FDI \u00a0 could translate to slower economic growth and loan growth impacting the banks performance,\u201d Jash Matthew M. Baylon, equity analyst at The First Resources Management and Securities Corp., said in a Viber message.\nBSP reported that net inflows of FDI into the Philippines slumped by 25.8% in September to $432 million from $830 million in the same month in 2024, amid a drop in net investments in debt instruments.\nRATE CUTS\nMr. Sisayan said that lower policy rates would put downward pressure on asset yields or loans.\n\u201cHowever, we have yet to see the policy rate cuts have a significant impact to asset yields of banks in the past 12 months. In fact, the decline in NIMs has been quite minimal especially if we take into account the banks\u2019 pivot towards lending more to the consumer segment,\u201d said Mr. Sisayan.\nHe also added that the trend remains that policy cuts will negatively affect NIMs and profitability.\n\u201cIn theory, lower rates should make funding cost cheaper and spur loan growth. But if most corporates are cautious to expand given the economic slowdown, this might not translate to higher demand for loans in the near term,\u201d he added.\nLuis A. Limlingan, head of sales at Regina Capital Development Corp., said that in the medium term, these developments are \u201cbeneficial\u201d for banks as lower policy rates can encourage more borrowing.\n\u201cCheaper loans make credit more accessible to clients, which helps support stronger loan demand. As loan growth picks up, banks are likely to see a corresponding boost in revenues. But in the near term, pressured margins are one of the key factors the market is already pricing in,\u201d Mr. Limlingan said.\nMs. Chiw said that subdued inflation and easing interest rates are positive for consumption and supportive of growth.\n\u201cWe believe these conditions are constructive for banks, as it encourages lending activity and fee income growth as transaction volumes increase. We also think NIM pressures from rate cuts could be mitigated by the rising mix of higher-margin consumer loans and cultivating lower-cost CASA deposits to support loan expansion,\u201d she said.\nMr. Baylon thinks that the BSP\u2019s monetary policy reduction has a balanced effect on the country\u2019s financial sector, as rate cutting cycle at its December meeting could improve the spending in the country which may show a recovery on economic activity.\nMr. Arce said that while lower rates could compress NIMs and reduce interest income, they may also stimulate credit demand from consumers and businesses, supporting loan growth.\n\u201cThe benign inflation outlook enhances purchasing power and reduces credit risk, improving banks\u2019 asset quality. Overall, in the medium term, the sector is poised for steady but moderate growth, as profitability will hinge more on volume expansion and cost efficiency than margin gains,\u201d Mr. Arce said.\nOUTLOOK\nAnalysts expect a rebound for listed banks in the last quarter of this year.\nMr. Arce said that the fourth quarter of 2025 is expected to bring a modest rebound for the sector as lending activity gradually picks up and the holiday season boosts consumer spending.\n\u201cHowever, the sector\u2019s overall growth may remain tempered by cautious corporate lending and lingering global uncertainties. BDO, BPI, and MBT are projected to lead the sector in terms of earnings momentum, while mid-tier banks like RCB and EW may post selective growth due to niche lending and digital strategies,\u201d Mr. Arce said.\n\u201cWe expect banks to perform in line with their current trajectory, as we do not see any significant developments that could affect profitability drastically through yearend. Loan growth is also likely to remain steady, with the current trend showing a slowdown despite the recent rate cut from the BSP,\u201d Mr. Limlingan said.\nMr. Fausto expects listed banks to end fourth quarter of 2025 on a solid footing supported by healthy loan demand from corporates earmarking for expansion plans and working capital requirements for 2026.\n\u201cConsumer lending is also poised to remain strong, driven by increased credit card and personal loan utilization amid holiday-driven spending. Given that most bank stocks have declined year-to-date, current valuations appear more attractive which could potentially prompt investors to reconsider names with still durable growth prospects and support potential share price recovery over the medium term,\u201d said Mr. Fausto.\nMr. Baylon also shared that the banking sector will show improve provisions as higher consumer spending and consumer capacity to pay off their loans which may benefit banking provision.\u00a0\n\u201cMoreover, the expectation of lower interest rates for the year end could boost loan demand for both retail and corporate which may offset the declining net interest margin. However, we still consider the revised GDP outlook for the full year 2025 which may bring a more cautious approach on its corporate loans segment,\u201d Mr. Baylon added.\nHowever, Ms. Chiw expects their covered banks of lower earnings growth.\n\u201cOverall, we expect our covered banks to deliver slower earnings growth of 5.4%-8.3% for this year from 6%-9.7% previously, on account of preemptive provisioning costs and moderating loan growth trends in recent months, which is reflective also of slackening GDP performance,\u201d said Ms. Chiw.\n\u201cHowever, lower borrowing costs may result to a pickup in lending activity and a reduction of NPL stress, which in turn would allow banks to cut back on provisioning costs that could also lift earnings in the ensuing quarter,\u201d she added.", "date_published": "2025-12-15T00:01:55+08:00", "date_modified": "2025-12-16T14:07:40+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/12/3QBR25-Incomev2.jpg", "tags": [ "Banking Report Q3 2025", "Lourdes O. Pilar", "Banking Report", "Research" ], "summary": "SHARE PRICES of listed universal and commercial banks slipped at the close of the third quarter as loan growth moderated and policy rate cuts continued to squeeze lending margins." }, { "id": "/?p=718497", "url": "/infographics/2025/12/15/718497/listed-u-kbs-shares-yearly-gains-and-losses-as-of-end-september-2025/", "title": "Listed U/KBs\u2019 Shares: Yearly Gains and Losses as of end-September 2025", "content_html": "SHARE PRICES of listed universal and commercial banks slipped at the close of the third quarter as loan growth moderated and policy rate cuts continued to squeeze lending margins. Read the full story.
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BANKING STOCKS rose in the second quarter as rate cuts coupled with steady inflation impacted profit margins, analysts said. Read the full story.
\n![\"Listed](\"https://live.staticflickr.com/65535/54789023915_54447a2179_b.jpg\")
![\"\"](\"/wp-content/uploads/2025/09/Income-2QBR2025-scaled.jpg\")
The article \u201cListed banks\u2019 share prices rise in Q2\u201d by Heather Caitlin P. Ma\u00f1ago in 大象传媒\u2019s quarterly banking report published on Sept. 15 misstated that Philippine Savings Bank (PSBank) posted a 50.8% share price decline in the first half, but it actually rose by 6.4%. The article also misstated that Bank of Commerce stock contracted by 94%, but it went up by 7%.
\nWe deeply regret the errors and extend our apologies to PSBank, Bank of Commerce and our readers.
\nBANKING STOCKS rose in the second quarter as rate cuts coupled with steady inflation impacted profit margins, analysts said.
\nThey also cautioned investors to further monitor rate cuts from the Bangko Sentral ng Pilipinas (BSP) and further actions by the US Federal Reserve.
\nThe Philippine Stock Exchange index (PSEi) inched down by 0.7% year on year to 6,364.94 at the end of the second quarter.
\n
However, the financials subindex, which includes banks, climbed by 18.4% annually to 2,278.62 during the period.
\nDuring the period, 11 out of the country\u2019s 13 listed universal and commercial banks (U/KBs) posted growth in their share prices year on year.
\nPhilippine National Bank (ticker symbol: PNB) led with 142.3% year-on-year surge. It was followed by Asia United Bank Corp. (AUB, 75.6%), China Banking Corp. (CBC, 69.9%), Philippine Bank of Communications (PBC, 37.6%) and BDO Unibank, Inc. (BDO, 19.2%).
\nListed thrift bank Philippine Savings Bank also grew by 6.4% year on year.
\nMeanwhile, Philippine Trust Co. (PTC) stock contracted by 26.8%, year on year as of end-June while Union Bank of the Philippines\u2019 (UBP) dropped by 4.5%.
\nAggregate net income of universal and commercial banks grew by 3.1% to P184.46 billion as of end-June from P178.91 billion in the same period a year ago, data from the BSP showed.
\nGross total loan portfolio of these big lenders rose by 11% to P14.7 trillion as of end-June from P13.25 trillion a year ago.
\nThe big banks\u2019 gross nonperforming loans (NPLs) ratio improved to 3.05% as of end-June from 3.21% the previous year.
\nMeanwhile, the big banks\u2019 net interest margin (NIM) \u2014 a ratio that measures banks\u2019 efficiency in investing their funds by dividing annualized net interest income to average earning asset \u2014 rose to 4.13% as of end-June from 4.04% recorded a year earlier.
\nProvision for credit losses by these big banks reached P71.81 billion, up by 67.6% from P42.84 billion in June 2024.
\nRATE CUTS AND TARIFFS
\nLuis A. Limlingan, head of sales at Regina Capital Development Corp., said that BSP rate cuts are one of the primary drivers of the performance of listed banks for the second quarter.
He pointed out that reduced interest rates not only encourage borrowers to tap into cheaper loans \u2014 driving loan growth and broadening the banks\u2019 customer base \u2014 but also led to increased profits from trading activities.
\n\u201cOverall, the rate cuts created a dual benefit: stronger loan growth and enhanced investment returns, both of which supported the banking sector\u2019s bottom line,\u201d Mr. Limlingan said in a Viber message.
\nKervin Laurence S. Sisayan, vice-president and head of research at Maybank Securities Philippines, Inc., said that another BSP movement, which influenced banks\u2019 performance during the period, were the reserve requirement ratios (RRRs) jumbo cut made as of end-March.
\n\u201cA cut in RRR would reduce the pressure on funding costs for banks in general and would typically be margin accretive,\u201d he said in an e-mail.
\nAs of end-March, the central bank reduced RRRs by 200 basis points (bps) to 5% for U/KBs from 7%. Additionally, RRR for digital banks were also slashed by 150 bps to 2.5%, while the ratio for thrift lenders was lowered by 100 bps to 0%.
\nHe added that subsequent cuts in policy rates have pushed industry asset yields lower, offsetting the potential improvement from the RRR cut.
\nFor Abigail Kathryn L. Chiw, first vice-president and head of research at BDO Securities Corp., the steady improvement in the macroeconomic conditions of the Philippines helped sustain strong loan demand on the back of corporate and consumer segments.
\n\u201cEasing funding costs and rising mix of higher-margin consumer loans also resulted to sequential upturns in lending margins,\u201d said Ms. Chiw in an e-mail.
\nHowever, she also said that the aggressive expansion in unsecured consumer loans, such as credit cards, prompted banks to increase their provisions to guard against NPL risks which has dragged earnings.
\nRalph Jonathan B. Fausto, research associate in Chinabank Securities Corp., said that outlook for monetary policy from the BSP and the US Federal Reserve, coupled with uncertainties in external trade policy, remain key drivers during the period.
\nThese factors, he said, have direct implications for loan demand and net interest margins.
\n\u201cThe sustained expansion of listed banks into the consumer lending segment has been underpinned by stable and low domestic inflation, and robust employment conditions \u2014 which continue to support a constructive outlook for household consumption,\u201d he said in an e-mail.
\nIn June, headline inflation picked up to 1.4%, inching up from 1.3% in May. However, this was still slower than the year-earlier 3.7%.
\nIn the six months to June, inflation averaged 1.8%, slower than the 3.6% average in the same period last year.
\nThis prompted the central bank to implement a second straight rate cut, lowering the policy rate from 5.5% to 5.25%, marking its lowest level in two and a half years.
\nDuring its August policy meeting, the BSP reduced the target reverse repurchase rate by 25 bps bringing it down to 5% from 5.25%, the lowest rate in nearly three years, since November 2022.
\nSince its easing cycle in August 2024, the BSP lowered borrowing costs by a total of 150 basis points.
\nJash Matthew M. Baylon, equity analyst at The First Resources Management and Securities said that aside from the BSP rate cuts, global uncertainty due to tariff wars added a cautious stance across business confidence which impacts banks\u2019 operations.
\nIn April, US President Donald J. Trump announced a reciprocal tariff rate of 17% on goods from the Philippines, but the implementation was postponed until July.
\nThen, in early July, he raised the tariff rate to 20% and after a meeting with Philippine President Ferdinand R. Marcos, Jr., Mr. Trump implemented a new tariff of 19% on Philippine goods, which took effect on Aug. 7.
\nSTANDOUTS
\nBDO, PNB, Bank of Commerce (BNCOM), and CBC stood out in the second quarter amid loan expansions and strong earnings, analysts said.
For Mr. Limlingan, PNB and BNCOM stood out in terms of bottom line, \u201cposting some of the highest returns among banks during the period.\u201d
\n\u201c[They] benefited from strong loan portfolio expansion and robust trading gains, reflecting sustained growth momentum,\u201d he said.
\nHe added that banks remain aggressive in expanding their lending activities, buoyed by expectations of possible rate cuts in the next few months.
\nFor Ms. Chiw, CBC stood out with robust earnings growth and return on equity for the quarter. The solid 18% earnings growth and 15% return on equity of CBC during the period was driven by strong loan expansion, improved NIMs, solid asset quality with a nonperforming loan ratio, and one-off foreclosure gains covering increased provisions.
\nFor Mr. Fausto, BDO\u2019s corporate loan growth accelerated in the second quarter, indicating a recovery in business borrowing after being dampened by US tariff uncertainties in the prior quarter.
\nMeanwhile, Security Bank Corp. (SECB) \u201creported higher-than-anticipated provisions in [the first half of the year], largely attributable to its aggressive expansion in the credit card segment,\u201d he added.
\nFor Mr. Baylon, smaller banks could maximize the current economic situation, which could potentially enhance their net interest margins in a lower rate environment. On the other hand, larger universal banks experience a negative impact on their earnings.
\nOUTLOOK
\nMs. Chiw said that the central bank can deliver one more rate cut this year as inflation remains below the BSP target.
\u201cAccommodative interest rates are supportive of growth, which should be a net positive for banks,\u201d she said.
\nShe expects banks to deliver healthy earnings growth and sees lower borrowing costs could lead to an increase in lending activity and a reduction in NPL stress. This, in turn, would enable banks to reduce their provisioning costs.
\n\u201cVolatile financial markets may also provide trading gains or losses,\u201d she said.
\nSimilarly, for Mr. Limlingan, he is supportive of further rate cuts from the BSP as it can allow banks to broaden their markets.
\n\u201cIn the short term, profitability may improve as trading gains strengthen. However, we also anticipate increased pricing competition among banks, as adjustments in product pricing could pose risks to their margins,\u201d he said.
\nHe added that further rate cuts could boost banks\u2019 revenues and bottom lines through several channels that benefit from a more dovish policy stance.
\nMr. Sisayan expects recent policy rate cuts to put further pressure on NIMs.
\n\u201cWith lower rates, and more clarity on global trade, the weakness in NIMs could be offset by stronger loan growth as corporates become more confident to pursue expansion plans,\u201d he said.
\nChinabank Securities\u2019 Mr. Fausto and BDO Securities\u2019 Ms. Chiw advised investors to closely monitor loan growth, NIMs, and asset quality of banks.
\nMr. Fausto said the BSP\u2019s 25-bp rate cuts in April and June are expected to help loans grow faster, especially within the corporate lending space.
\n\u201cNet interest margins, however, are expected to be broadly stable \u2014 with some seeing marginal uplift from lower funding costs,\u201d Mr. Fausto said.
\nHe added that with major listed banks growing their high-yield loan segments, it\u2019s important to keep an eye on credit costs and NPL ratios.
\nAdditionally, Ms. Chiw said that key concerns right now are Mr. Trump\u2019s erratic trade policies and attempts to undermine US Fed independence.
\n\u201cThese may result to renewed interest rate and exchange rate volatility potentially hurting consumption and investment appetite,\u201d she said.
\nMoreover, for Mr. Baylon, investors should keep an eye on global events, especially decisions by the US Fed, since these can affect the local currency and foreign investments, which in turn influence bank operations.
\nHe also anticipates that consumer and retail banking will be a major earnings contributor for large banks this year, driven by improved purchasing power and stronger domestic spending as inflation eases.
\nHe added that even with the potential for a policy rate cut from the BSP, robust consumer activity may sustain credit demand, particularly for personal loans, auto financing, and credit cards.
\n\u201cThis volume-driven growth could help offset margin compression, positioning big banks to benefit from a more consumption-led recovery,\u201d he said. \u2014 HCPM
\n", "content_text": "The article \u201cListed banks\u2019 share prices rise in Q2\u201d by Heather Caitlin P. Ma\u00f1ago in 大象传媒\u2019s quarterly banking report published on Sept. 15 misstated that Philippine Savings Bank (PSBank) posted a 50.8% share price decline in the first half, but it actually rose by 6.4%. The article also misstated that Bank of Commerce stock contracted by 94%, but it went up by 7%. \nWe deeply regret the errors and extend our apologies to PSBank, Bank of Commerce and our readers.\nBANKING STOCKS rose in the second quarter as rate cuts coupled with steady inflation impacted profit margins, analysts said.\nThey also cautioned investors to further monitor rate cuts from the Bangko Sentral ng Pilipinas (BSP) and further actions by the US Federal Reserve.\nThe Philippine Stock Exchange index (PSEi) inched down by 0.7% year on year to 6,364.94 at the end of the second quarter.\n\nHowever, the financials subindex, which includes banks, climbed by 18.4% annually to 2,278.62 during the period.\nDuring the period, 11 out of the country\u2019s 13 listed universal and commercial banks (U/KBs) posted growth in their share prices year on year.\nPhilippine National Bank (ticker symbol: PNB) led with 142.3% year-on-year surge. It was followed by Asia United Bank Corp. (AUB, 75.6%), China Banking Corp. (CBC, 69.9%), Philippine Bank of Communications (PBC, 37.6%) and BDO Unibank, Inc. (BDO, 19.2%).\nListed thrift bank Philippine Savings Bank also grew by 6.4% year on year.\nMeanwhile, Philippine Trust Co. (PTC) stock contracted by 26.8%, year on year as of end-June while Union Bank of the Philippines\u2019 (UBP) dropped by 4.5%.\nAggregate net income of universal and commercial banks grew by 3.1% to P184.46 billion as of end-June from P178.91 billion in the same period a year ago, data from the BSP showed.\nGross total loan portfolio of these big lenders rose by 11% to P14.7 trillion as of end-June from P13.25 trillion a year ago.\nThe big banks\u2019 gross nonperforming loans (NPLs) ratio improved to 3.05% as of end-June from 3.21% the previous year.\nMeanwhile, the big banks\u2019 net interest margin (NIM) \u2014 a ratio that measures banks\u2019 efficiency in investing their funds by dividing annualized net interest income to average earning asset \u2014 rose to 4.13% as of end-June from 4.04% recorded a year earlier.\nProvision for credit losses by these big banks reached P71.81 billion, up by 67.6% from P42.84 billion in June 2024.\nRATE CUTS AND TARIFFS\nLuis A. Limlingan, head of sales at Regina Capital Development Corp., said that BSP rate cuts are one of the primary drivers of the performance of listed banks for the second quarter.\nHe pointed out that reduced interest rates not only encourage borrowers to tap into cheaper loans \u2014 driving loan growth and broadening the banks\u2019 customer base \u2014 but also led to increased profits from trading activities.\n\u201cOverall, the rate cuts created a dual benefit: stronger loan growth and enhanced investment returns, both of which supported the banking sector\u2019s bottom line,\u201d Mr. Limlingan said in a Viber message.\nKervin Laurence S. Sisayan, vice-president and head of research at Maybank Securities Philippines, Inc., said that another BSP movement, which influenced banks\u2019 performance during the period, were the reserve requirement ratios (RRRs) jumbo cut made as of end-March.\n\u201cA cut in RRR would reduce the pressure on funding costs for banks in general and would typically be margin accretive,\u201d he said in an e-mail.\nAs of end-March, the central bank reduced RRRs by 200 basis points (bps) to 5% for U/KBs from 7%. Additionally, RRR for digital banks were also slashed by 150 bps to 2.5%, while the ratio for thrift lenders was lowered by 100 bps to 0%.\nHe added that subsequent cuts in policy rates have pushed industry asset yields lower, offsetting the potential improvement from the RRR cut.\nFor Abigail Kathryn L. Chiw, first vice-president and head of research at BDO Securities Corp., the steady improvement in the macroeconomic conditions of the Philippines helped sustain strong loan demand on the back of corporate and consumer segments.\n\u201cEasing funding costs and rising mix of higher-margin consumer loans also resulted to sequential upturns in lending margins,\u201d said Ms. Chiw in an e-mail.\nHowever, she also said that the aggressive expansion in unsecured consumer loans, such as credit cards, prompted banks to increase their provisions to guard against NPL risks which has dragged earnings.\nRalph Jonathan B. Fausto, research associate in Chinabank Securities Corp., said that outlook for monetary policy from the BSP and the US Federal Reserve, coupled with uncertainties in external trade policy, remain key drivers during the period.\nThese factors, he said, have direct implications for loan demand and net interest margins.\n\u201cThe sustained expansion of listed banks into the consumer lending segment has been underpinned by stable and low domestic inflation, and robust employment conditions \u2014 which continue to support a constructive outlook for household consumption,\u201d he said in an e-mail.\nIn June, headline inflation picked up to 1.4%, inching up from 1.3% in May. However, this was still slower than the year-earlier 3.7%.\nIn the six months to June, inflation averaged 1.8%, slower than the 3.6% average in the same period last year.\nThis prompted the central bank to implement a second straight rate cut, lowering the policy rate from 5.5% to 5.25%, marking its lowest level in two and a half years.\nDuring its August policy meeting, the BSP reduced the target reverse repurchase rate by 25 bps bringing it down to 5% from 5.25%, the lowest rate in nearly three years, since November 2022.\nSince its easing cycle in August 2024, the BSP lowered borrowing costs by a total of 150 basis points.\nJash Matthew M. Baylon, equity analyst at The First Resources Management and Securities said that aside from the BSP rate cuts, global uncertainty due to tariff wars added a cautious stance across business confidence which impacts banks\u2019 operations.\nIn April, US President Donald J. Trump announced a reciprocal tariff rate of 17% on goods from the Philippines, but the implementation was postponed until July.\nThen, in early July, he raised the tariff rate to 20% and after a meeting with Philippine President Ferdinand R. Marcos, Jr., Mr. Trump implemented a new tariff of 19% on Philippine goods, which took effect on Aug. 7.\nSTANDOUTS\nBDO, PNB, Bank of Commerce (BNCOM), and CBC stood out in the second quarter amid loan expansions and strong earnings, analysts said.\nFor Mr. Limlingan, PNB and BNCOM stood out in terms of bottom line, \u201cposting some of the highest returns among banks during the period.\u201d\n\u201c[They] benefited from strong loan portfolio expansion and robust trading gains, reflecting sustained growth momentum,\u201d he said.\nHe added that banks remain aggressive in expanding their lending activities, buoyed by expectations of possible rate cuts in the next few months.\nFor Ms. Chiw, CBC stood out with robust earnings growth and return on equity for the quarter. The solid 18% earnings growth and 15% return on equity of CBC during the period was driven by strong loan expansion, improved NIMs, solid asset quality with a nonperforming loan ratio, and one-off foreclosure gains covering increased provisions.\nFor Mr. Fausto, BDO\u2019s corporate loan growth accelerated in the second quarter, indicating a recovery in business borrowing after being dampened by US tariff uncertainties in the prior quarter.\nMeanwhile, Security Bank Corp. (SECB) \u201creported higher-than-anticipated provisions in [the first half of the year], largely attributable to its aggressive expansion in the credit card segment,\u201d he added.\nFor Mr. Baylon, smaller banks could maximize the current economic situation, which could potentially enhance their net interest margins in a lower rate environment. On the other hand, larger universal banks experience a negative impact on their earnings.\nOUTLOOK\nMs. Chiw said that the central bank can deliver one more rate cut this year as inflation remains below the BSP target.\n\u201cAccommodative interest rates are supportive of growth, which should be a net positive for banks,\u201d she said.\nShe expects banks to deliver healthy earnings growth and sees lower borrowing costs could lead to an increase in lending activity and a reduction in NPL stress. This, in turn, would enable banks to reduce their provisioning costs.\n\u201cVolatile financial markets may also provide trading gains or losses,\u201d she said.\nSimilarly, for Mr. Limlingan, he is supportive of further rate cuts from the BSP as it can allow banks to broaden their markets.\n\u201cIn the short term, profitability may improve as trading gains strengthen. However, we also anticipate increased pricing competition among banks, as adjustments in product pricing could pose risks to their margins,\u201d he said.\nHe added that further rate cuts could boost banks\u2019 revenues and bottom lines through several channels that benefit from a more dovish policy stance.\nMr. Sisayan expects recent policy rate cuts to put further pressure on NIMs.\n\u201cWith lower rates, and more clarity on global trade, the weakness in NIMs could be offset by stronger loan growth as corporates become more confident to pursue expansion plans,\u201d he said.\nChinabank Securities\u2019 Mr. Fausto and BDO Securities\u2019 Ms. Chiw advised investors to closely monitor loan growth, NIMs, and asset quality of banks.\nMr. Fausto said the BSP\u2019s 25-bp rate cuts in April and June are expected to help loans grow faster, especially within the corporate lending space.\n\u201cNet interest margins, however, are expected to be broadly stable \u2014 with some seeing marginal uplift from lower funding costs,\u201d Mr. Fausto said.\nHe added that with major listed banks growing their high-yield loan segments, it\u2019s important to keep an eye on credit costs and NPL ratios.\nAdditionally, Ms. Chiw said that key concerns right now are Mr. Trump\u2019s erratic trade policies and attempts to undermine US Fed independence.\n\u201cThese may result to renewed interest rate and exchange rate volatility potentially hurting consumption and investment appetite,\u201d she said.\nMoreover, for Mr. Baylon, investors should keep an eye on global events, especially decisions by the US Fed, since these can affect the local currency and foreign investments, which in turn influence bank operations.\nHe also anticipates that consumer and retail banking will be a major earnings contributor for large banks this year, driven by improved purchasing power and stronger domestic spending as inflation eases.\nHe added that even with the potential for a policy rate cut from the BSP, robust consumer activity may sustain credit demand, particularly for personal loans, auto financing, and credit cards.\n\u201cThis volume-driven growth could help offset margin compression, positioning big banks to benefit from a more consumption-led recovery,\u201d he said. \u2014 HCPM", "date_published": "2025-09-15T21:00:11+08:00", "date_modified": "2025-09-15T21:37:23+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/09/Income-2QBR2025-thumb.jpg", "tags": [ "Banking Report Q2 2025", "Heather Caitlin P. Ma\u00f1ago", "Banking Report", "Research" ], "summary": "BANKING STOCKS rose in the second quarter as rate cuts coupled with steady inflation impacted profit margins, analysts said." }, { "id": "/?p=698183", "url": "/research/2025/09/15/698183/a-portrait-of-a-filipino-as-a-consumer-spending-wiser-saving-smarter/", "title": "A portrait of a Filipino as a consumer: Spending wiser, saving smarter", "content_html": "By Abigail Marie P. Yraola, Deputy Research Head
\nFILIPINO CONSUMERS are walking a financial tightrope \u2014 tightening belts, gripping wallets, and bracing for every shift in the economic winds.
\nIn the second quarter, Filipino consumers are seen to be optimistic about their earnings but remain cautious. Consumers are adjusting their attitudes towards budgets and savings, despite the increase in their pay checks to brace for economic shocks.
\nThis consumer behavior is reflected in a quarterly survey from TransUnion. In its Q2 2025 Consumer Pulse Study, it assessed the everchanging consumer attitudes based on the dynamics of income, debt, and identity theft.
\n\r\n \r\n\r\n\u201cThe report underscores a dual reality: optimism about future income coexists with persistent financial stress and caution,\u201d Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said in a Viber message.
\nHe added that the report implies that consumer confidence is fragile and highly sensitive to economic headwinds such as inflation and job security.
\nFor the banking industry, the future isn\u2019t just about expanding credit access \u2014 it\u2019s about earning trust through transparency, personalization, and education.
\nMr. Asuncion said that banks that integrate financial wellness tools, alternative credit scoring, and proactive fraud protection will not only meet immediate needs but also position themselves as long-term partners in resilience.
\n\u201cThe winners will be those who shift from being lenders to becoming financial enablers,\u201d he said.
\nDevelopment Bank of the Philippines (DBP) President and Chief Executive Officer (CEO) Michael O. De Jesus said that banks have the responsibility to improve financial literacy among the population.
\nBut to do this, a better understanding of individual attitudes toward savings is needed.
\nSAVING SMARTER
\nMr. De Jesus pointed out that saving is essentially setting aside the money we earn due to different reasons, and mostly these reasons for savings are valid enough but the challenge is not in \u201cpiling up cash\u201d but how we manage it.
\u201cSaving may be a \u2018good idea,\u2019 but it is never going to make one seriously wealthy unless you can save a massive proportion of your income and your income is massive as well,\u201d he said in an e-mail.
\nWhile saving is a commendable act, investing, on the other hand, can generate wealth, provided there is money to begin with.
\n\u201cSaving can be a virtue, but you have to move beyond keeping your money in savings and start investing to reap the full benefit,\u201d he advised.
\nHe added that as financial institutions, providing consumers the knowledge (financial literacy), planning tools (wealth and asset management) and savings and investment products to achiever their life goals are necessary.
\nINCOME AND SPENDING
\nAccording to the TransUnion report, consumer financial health stayed mostly stable as 41% of consumers suggested a rise in their income for the past three months, while 73% of Filipino consumers expect a rise in come next year, an optimistic outlook on their financial futures.
Still, financial stress is evident with 44% of consumers expecting difficulties in paying bills.
\nThis financial worry mirrors that consumers are cautious in spending and adjusting their savings, driven by concerns in inflation and job securities.
\nStill, the report highlighted that there was a 45% increase in emergency savings and a 47% cutback in discretionary spending in the past three months.
\nMoreover, some were upbeat in managing their finances by increasing savings and paying off debt faster.
\n\u201cSpending patterns reflected a balancing act between optimism and constraint,\u201d the report noted.
\n\u201cThis often leads to a \u2018bunker\u2019 mentality as consumers scrimp on spending and buttress their savings for the expected \u2018rainy days\u2019 ahead,\u201d he noted.
\nHe cautioned that if this \u201cbehavior\u201d cascades among consumers, it could lead to a recession. In turn, businesses may respond to reduce demand by cutting back on productions on their services and goods.
\n\u201cThe shift in savings behavior means many households adopt a more conservative mindset, prioritizing liquidity and financial safety versus \u2018wants\u2019 spending \u2014 which benefits the consumer, the financial institutions, and the economy in the long run,\u201d Maybank Philippines said in an e-mail.
\nThis provides peace of mind for consumers amid uncertainty and prevents them from falling into debt in emergencies. While they continue to spend, consumers will seek value to justify what they spend.
\n\u201cConsumers may become more receptive to financial literacy campaigns and products framed around security, preparedness and long-term goals,\u201d Maybank said.
\nThis indicates an increased demand for savings accounts, time deposits and low-risk investment products as the appetite for personal loans and credit card spending tempers.
\n\u201cHigher savings means better ability to lend out these funds to businesses,\u201d it said, which in turn will boost long-term growth and help strengthen the economy.
\nFor Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co., this behavioral shift aligns with conventional economic thought as households shift their budgets to prioritize essential while cutting back on discretionary spending during challenging periods.
\n\u201cThe growth in personal loans have helped support domestic consumption throughout the period of elevated inflation, delivering robust household expenditure,\u201d Mr. Mapa said in an e-mail.
\nHe added that as inflation slows, this should at least help restore some purchasing power to help households restore savings or pay down loan balances.
\nSAVINGS AND CREDIT BEHAVIOR
\nAs highlighted by the report, rising prices, job security and interest rates were the sources of caution of consumers and financial institutions are taking countermeasure in addressing these financial woes.
For Rizal Commercial Banking Corp. Credit Cards President and CEO Arniel Vincent B. Ong, financial institutions can ensure their borrowers added value for using their credit cards on everyday essentials to help address rising prices and cost of living pressures
\n\u201cLenders can help address the concern on job security (and its resulting income uncertainty) by offering flexible payment programs for customers,\u201d Mr. Ong said in an e-mail.
\nFor Mr. Mapa, the central bank\u2019s lowering borrowing costs provide relief to households and firms.
\n\u201cLower interest rates will help firms hire more workers or invest to bolster operations, resulting in increased efficiencies and or job creation,\u201d Mr. Mapa explained.
\nLatest government data showed inflation picked up 1.5% in August from 0.9% in July. This was the fastest reading since the 1.8% recorded in March.
\nA year earlier inflation rate was higher at 3.3%.
\nMeanwhile, in late August, the Monetary Board slashed the target reverse repurchase rate by 25 basis points (bps) to 5% from 5.25%, for a third straight meeting.
\nSince it began its easing cycle in August last year, the BSP has reduced borrowing costs by a total of 150 bps. In its last two meeting this year, it delivered two 25-bp cuts each in April then in June.
\nOn the other hand, government data also showed that the Philippine economy expanded by an annual 5.5% in the April-to-June period, slower than the 6.5% growth in the same period last year.
\nHowever, this was a tad faster than the 5.4% in the first three months.
\nIn the first semester, GDP growth averaged 5.4%, significantly slower than the 6.2% a year earlier.
\nThe latest gross domestic product print (GDP) missed\u00a0 the lower end of the government\u2019s 5.5% to 6.5% growth target this year.
\nResults of the study also showed that 58% of Filipinos see access to credit as a \u201cmajor enabler\u201d of their financial goals. But even so, 57% had dropped their application or refinancing proposal due to fears of rejection resulting from income or work status and the high cost of new credit.
\n\u201cTo meet strong demand for credit while addressing fears of rejection and high costs, banks need to adopt a more inclusive and transparent lending approach,\u201d UnionBank\u2019s Mr. Asuncion said.
\nThis, he added, includes leveraging alternative data such as utility or rental payment history, for credit scoring to assist those with limited credit files.
\nHe noted that ultimately, banks must position credit as an enabler of financial stability, not just consumption.
\nFor RCBC\u2019s Mr. Ong, an effective way for banks to adapt their lending approach is by utilizing nontraditional sources of data.
\n\u201cBanks have relied on a combination of traditional employment documents proof and data from credit bureaus \u2014 which means that first-time borrowers or those working in the gig economy have no access to credit,\u201d he said.
\nIn this day and age where data is king, there are numerous other data points available that can help predict a borrower\u2019s creditworthiness, Mr. Ong said.
\n\u201cFinancial institutions must make a strategic decision to leverage this alternative data in order to expand the population of credit-worthy individuals.\u201d
\nMANAGING FINANCIAL STRESS
\nIt is worth noting enough that banks should invest in financial literacy or education to aid consumers in making informed decisions to adjust their spending and saving patterns amid inflationary pressures, and economic uncertainty.
For the Bangko Sentral ng Pilipinas (BSP), it said that it has been a pioneer in promoting financial literacy in the country when it established the BSP Consumer Education Committee.
\nThis established a structured financial education program to empower Filipinos in making informed financial decisions.
\nEfforts include BSP e-Learning Academy, collaborative programs, innovative programs for marginalized sectors, training and capacity building, financial learning sessions, digital platforms, and educated materials.
\nFor RCBC\u2019s Mr. Ong, banks can play a crucial role in enhancing consumers\u2019 financial literacy and health through various strategies such as educational resources, user-friendly tools and apps, transparent information and promoting savings.
\n\u201cPrivate financial institutions as well as BSP roll out programs to help grow financial learning and literacy to equip households and firms with the understanding and knowhow to navigate the challenging economic landscape with the help of financial market tools,\u201d Mr. Mapa said.
\nFor Mr. Asuncion, banks in the country and the BSP are investing heavily in financial literacy to help consumers make informed decisions amid inflation and uncertainty.
\nInitiatives [may] aim to build resilience, promote responsible borrowing, and empower Filipinos to navigate inflationary pressures and economic uncertainty, said Mr. Asuncion.
\nThe central bank strongly urges banks to go beyond providing basic access to financial services and improve in strengthening their clients\u2019 financial health.
\n\u201cBanks are well-positioned to champion financial literacy because of their direct interaction with consumers and their central role in financial transactions,\u201d the BSP said in an e-mail.
\nIt added that by embedding financial literacy into their products, promoting responsible lending, scaling education through partnerships, and tracking client outcomes, banks can help convert financial inclusion into financial resilience and well-being.
\nBanks, businesses, and the government should work to shore up confidence in the overall economy, Mr. De Jesus said.
\n\u201c[This can be done] by loosening credit, such as through interest rate reductions initiated by the BSP, making it easier for borrowing and lending, encouraging business investments that boost the business climate, and ensuring that the ventures we fund will have maximum impact on employment and incomes.\u201d
\n", "content_text": "By Abigail Marie P. Yraola, Deputy Research Head\nFILIPINO CONSUMERS are walking a financial tightrope \u2014 tightening belts, gripping wallets, and bracing for every shift in the economic winds.\nIn the second quarter, Filipino consumers are seen to be optimistic about their earnings but remain cautious. Consumers are adjusting their attitudes towards budgets and savings, despite the increase in their pay checks to brace for economic shocks.\nThis consumer behavior is reflected in a quarterly survey from TransUnion. In its Q2 2025 Consumer Pulse Study, it assessed the everchanging consumer attitudes based on the dynamics of income, debt, and identity theft.\n\r\n \r\n\r\n \r\n \r\n \r\n \r\n\r\n \r\n 1 of 3\r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n\r\n \r\n \n\u201cThe report underscores a dual reality: optimism about future income coexists with persistent financial stress and caution,\u201d Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said in a Viber message. \nHe added that the report implies that consumer confidence is fragile and highly sensitive to economic headwinds such as inflation and job security. \nFor the banking industry, the future isn\u2019t just about expanding credit access \u2014 it\u2019s about earning trust through transparency, personalization, and education.\nMr. Asuncion said that banks that integrate financial wellness tools, alternative credit scoring, and proactive fraud protection will not only meet immediate needs but also position themselves as long-term partners in resilience.\n\u201cThe winners will be those who shift from being lenders to becoming financial enablers,\u201d he said. \nDevelopment Bank of the Philippines (DBP) President and Chief Executive Officer (CEO) Michael O. De Jesus said that banks have the responsibility to improve financial literacy among the population. \nBut to do this, a better understanding of individual attitudes toward savings is needed.\nSAVING SMARTER\nMr. De Jesus pointed out that saving is essentially setting aside the money we earn due to different reasons, and mostly these reasons for savings are valid enough but the challenge is not in \u201cpiling up cash\u201d but how we manage it.\n\u201cSaving may be a \u2018good idea,\u2019 but it is never going to make one seriously wealthy unless you can save a massive proportion of your income and your income is massive as well,\u201d he said in an e-mail.\nWhile saving is a commendable act, investing, on the other hand, can generate wealth, provided there is money to begin with.\n\u201cSaving can be a virtue, but you have to move beyond keeping your money in savings and start investing to reap the full benefit,\u201d he advised.\nHe added that as financial institutions, providing consumers the knowledge (financial literacy), planning tools (wealth and asset management) and savings and investment products to achiever their life goals are necessary.\nINCOME AND SPENDING\nAccording to the TransUnion report, consumer financial health stayed mostly stable as 41% of consumers suggested a rise in their income for the past three months, while 73% of Filipino consumers expect a rise in come next year, an optimistic outlook on their financial futures.\nStill, financial stress is evident with 44% of consumers expecting difficulties in paying bills. \nThis financial worry mirrors that consumers are cautious in spending and adjusting their savings, driven by concerns in inflation and job securities.\nStill, the report highlighted that there was a 45% increase in emergency savings and a 47% cutback in discretionary spending in the past three months. \nMoreover, some were upbeat in managing their finances by increasing savings and paying off debt faster.\n\u201cSpending patterns reflected a balancing act between optimism and constraint,\u201d the report noted.\n\u201cThis often leads to a \u2018bunker\u2019 mentality as consumers scrimp on spending and buttress their savings for the expected \u2018rainy days\u2019 ahead,\u201d he noted.\nHe cautioned that if this \u201cbehavior\u201d cascades among consumers, it could lead to a recession. In turn, businesses may respond to reduce demand by cutting back on productions on their services and goods. \n\u201cThe shift in savings behavior means many households adopt a more conservative mindset, prioritizing liquidity and financial safety versus \u2018wants\u2019 spending \u2014 which benefits the consumer, the financial institutions, and the economy in the long run,\u201d Maybank Philippines said in an e-mail.\nThis provides peace of mind for consumers amid uncertainty and prevents them from falling into debt in emergencies. While they continue to spend, consumers will seek value to justify what they spend. \n\u201cConsumers may become more receptive to financial literacy campaigns and products framed around security, preparedness and long-term goals,\u201d Maybank said.\nThis indicates an increased demand for savings accounts, time deposits and low-risk investment products as the appetite for personal loans and credit card spending tempers.\n\u201cHigher savings means better ability to lend out these funds to businesses,\u201d it said, which in turn will boost long-term growth and help strengthen the economy.\nFor Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co., this behavioral shift aligns with conventional economic thought as households shift their budgets to prioritize essential while cutting back on discretionary spending during challenging periods. \n\u201cThe growth in personal loans have helped support domestic consumption throughout the period of elevated inflation, delivering robust household expenditure,\u201d Mr. Mapa said in an e-mail.\nHe added that as inflation slows, this should at least help restore some purchasing power to help households restore savings or pay down loan balances.\nSAVINGS AND CREDIT BEHAVIOR\nAs highlighted by the report, rising prices, job security and interest rates were the sources of caution of consumers and financial institutions are taking countermeasure in addressing these financial woes.\nFor Rizal Commercial Banking Corp. Credit Cards President and CEO Arniel Vincent B. Ong, financial institutions can ensure their borrowers added value for using their credit cards on everyday essentials to help address rising prices and cost of living pressures\n\u201cLenders can help address the concern on job security (and its resulting income uncertainty) by offering flexible payment programs for customers,\u201d Mr. Ong said in an e-mail.\nFor Mr. Mapa, the central bank\u2019s lowering borrowing costs provide relief to households and firms.\n\u201cLower interest rates will help firms hire more workers or invest to bolster operations, resulting in increased efficiencies and or job creation,\u201d Mr. Mapa explained. \nLatest government data showed inflation picked up 1.5% in August from 0.9% in July. This was the fastest reading since the 1.8% recorded in March.\nA year earlier inflation rate was higher at 3.3%.\nMeanwhile, in late August, the Monetary Board slashed the target reverse repurchase rate by 25 basis points (bps) to 5% from 5.25%, for a third straight meeting.\nSince it began its easing cycle in August last year, the BSP has reduced borrowing costs by a total of 150 bps. In its last two meeting this year, it delivered two 25-bp cuts each in April then in June.\nOn the other hand, government data also showed that the Philippine economy expanded by an annual 5.5% in the April-to-June period, slower than the 6.5% growth in the same period last year. \nHowever, this was a tad faster than the 5.4% in the first three months. \nIn the first semester, GDP growth averaged 5.4%, significantly slower than the 6.2% a year earlier.\nThe latest gross domestic product print (GDP) missed\u00a0 the lower end of the government\u2019s 5.5% to 6.5% growth target this year.\nResults of the study also showed that 58% of Filipinos see access to credit as a \u201cmajor enabler\u201d of their financial goals. But even so, 57% had dropped their application or refinancing proposal due to fears of rejection resulting from income or work status and the high cost of new credit.\n\u201cTo meet strong demand for credit while addressing fears of rejection and high costs, banks need to adopt a more inclusive and transparent lending approach,\u201d UnionBank\u2019s Mr. Asuncion said.\nThis, he added, includes leveraging alternative data such as utility or rental payment history, for credit scoring to assist those with limited credit files.\nHe noted that ultimately, banks must position credit as an enabler of financial stability, not just consumption.\nFor RCBC\u2019s Mr. Ong, an effective way for banks to adapt their lending approach is by utilizing nontraditional sources of data.\n\u201cBanks have relied on a combination of traditional employment documents proof and data from credit bureaus \u2014 which means that first-time borrowers or those working in the gig economy have no access to credit,\u201d he said. \nIn this day and age where data is king, there are numerous other data points available that can help predict a borrower\u2019s creditworthiness, Mr. Ong said.\n\u201cFinancial institutions must make a strategic decision to leverage this alternative data in order to expand the population of credit-worthy individuals.\u201d\nMANAGING FINANCIAL STRESS\nIt is worth noting enough that banks should invest in financial literacy or education to aid consumers in making informed decisions to adjust their spending and saving patterns amid inflationary pressures, and economic uncertainty.\nFor the Bangko Sentral ng Pilipinas (BSP), it said that it has been a pioneer in promoting financial literacy in the country when it established the BSP Consumer Education Committee.\nThis established a structured financial education program to empower Filipinos in making informed financial decisions.\nEfforts include BSP e-Learning Academy, collaborative programs, innovative programs for marginalized sectors, training and capacity building, financial learning sessions, digital platforms, and educated materials.\nFor RCBC\u2019s Mr. Ong, banks can play a crucial role in enhancing consumers\u2019 financial literacy and health through various strategies such as educational resources, user-friendly tools and apps, transparent information and promoting savings.\n\u201cPrivate financial institutions as well as BSP roll out programs to help grow financial learning and literacy to equip households and firms with the understanding and knowhow to navigate the challenging economic landscape with the help of financial market tools,\u201d Mr. Mapa said. \nFor Mr. Asuncion, banks in the country and the BSP are investing heavily in financial literacy to help consumers make informed decisions amid inflation and uncertainty.\nInitiatives [may] aim to build resilience, promote responsible borrowing, and empower Filipinos to navigate inflationary pressures and economic uncertainty, said Mr. Asuncion.\nThe central bank strongly urges banks to go beyond providing basic access to financial services and improve in strengthening their clients\u2019 financial health.\n\u201cBanks are well-positioned to champion financial literacy because of their direct interaction with consumers and their central role in financial transactions,\u201d the BSP said in an e-mail.\nIt added that by embedding financial literacy into their products, promoting responsible lending, scaling education through partnerships, and tracking client outcomes, banks can help convert financial inclusion into financial resilience and well-being.\nBanks, businesses, and the government should work to shore up confidence in the overall economy, Mr. De Jesus said.\n\u201c[This can be done] by loosening credit, such as through interest rate reductions initiated by the BSP, making it easier for borrowing and lending, encouraging business investments that boost the business climate, and ensuring that the ventures we fund will have maximum impact on employment and incomes.\u201d", "date_published": "2025-09-15T00:05:21+08:00", "date_modified": "2025-09-14T16:32:31+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/09/earnings.jpg", "tags": [ "Abigail Marie P. Yraola", "Banking Report Q2 2025", "Banking Report", "Research" ], "summary": "FILIPINO CONSUMERS are walking a financial tightrope \u2014 tightening belts, gripping wallets, and bracing for every shift in the economic winds." }, { "id": "/?p=698181", "url": "/research/2025/09/15/698181/how-the-bsps-upcoming-rules-could-make-or-break-online-gambling/", "title": "How the BSP\u2019s upcoming rules could make or break online gambling", "content_html": "By Pierce Oel A. Montalvo, Researcher
\nWHAT STARTED as a free-for-all for online gambling is about to get some serious house rules from the central bank.
\nLast July, the Bangko Sentral ng Pilipinas (BSP) released a draft circular introducing comprehensive regulations for online gambling payment services.
\nThe draft circular represents the regulator\u2019s assertive stance on online gambling. Should it become regulation, providers, operators, and consumers alike will be met with drastic changes in the gambling industry.
\nThen, in August, the central bank ordered to remove in-app gambling links from e-wallets.
\n\u201cThe BSP directive is issued in light of the surge in online gambling transactions and its impact on the financial health of consumers and their families,\u201d the central bank said in a statement.
\nAN URGENT RESPONSE
\nThe central bank\u2019s intervention followed growing alarm from lawmakers and health experts over online betting\u2019s devastating impact. The Aug. 14 order gave financial firms 48 hours to remove links redirecting users to gambling websites.
\u201cThe Monetary Board has approved our policy ordering BSP-supervised institutions to take down all icons and links redirecting to online gambling sites,\u201d BSP Deputy Governor Mamerto E. Tangonan said during a Senate committee hearing on online gambling in August.
\nThe new draft circular goes further, aiming to build comprehensive regulatory walls rather than simply patching leaks. BSP said the suspension would remain in place until guidelines for online gambling payment services are finalized.
\n\u201cIt is finalizing new rules, developed following public consultation, that will require banks, e-wallets, and other financial service providers to adopt stronger safeguards against gambling-related harm,\u201d the central bank said in a statement dated Aug. 7.
\nThe scale of the challenge is substantial. According to Philippine Amusement and Gaming Corp. (PAGCOR), gaming industry gross gaming revenues jumped 26% to P214.75 billion in the first half of 2025. Electronic games drove this growth with a 53.47% increase in gross revenues to P114.83 billion.
\nPAGCOR currently collects a 30% rate from e-gaming platforms, down from 35%, which could encourage illegal operators to register. However, concerns remain about the proliferation of unlicensed and unregulated sites that could undermine anti-money laundering efforts.
\nBSP Governor Eli M. Remolona, Jr. said that more measures to regulate e-gaming are being considered.
\n\u201cWe\u2019re still studying it. Basically, as before, we just want to put sand in the wheels,\u201d he said during the Manila Tech Summit on Aug. 26.
\nThe regulatory pressures are heard not just in the government but also in the streets, among online gambling users who have already felt the first blows.
\n\u201cIf you\u2019re a gambler, you\u2019re really a gambler. You\u2019ll find and find other sites,\u201d said a bike taxi driver, who plays scatter slots on his mobile phone. He requested to be anonymous.
\n\u201cAll the riders we\u2019ve been with, they all want to gamble,\u201d he said in an interview in mixed English and Filipino.
\n\u201cYou say all sites disappear, everything, whether illegal, legal, whatever, nothing left, totally banned. Damn, then gambling in street corners will be rampant again.\u201d
\nDEFINING THE BATTLEGROUND
\nAt its core, the proposed regulations seek to erect an accountability system for all participants in the industry.
The circular places further enforcement on Payment Service Providers (PSPs) \u2014 e-wallets, banks, and other financial institutions facilitating these transactions. Under the proposal, these entities must secure prior BSP authority to offer online gambling payment services.
\nThis privilege depends on meeting strict criteria, including minimum capitalization of P300 million.
\nPSPs must also maintain \u201cstrong anti-money laundering and counter-terrorism financing risk management\u201d systems. This function ensures only financially sound and compliant institutions operate in high-risk platforms.
\nCentral to the BSP\u2019s strategy is creating the Online Gambling Transaction Account (OGTA). This account must be created specifically for online gambling, funded exclusively through on-us transfers from the eligible account owner.
\nBy mandating separate OGTAs, the BSP aims to force deliberate decision-making while creating auditable fund trails.
\nTo enforce this, PSPs will implement enhanced know-your-customer measures, including mandatory facial biometric verification for account opening.
\nThe circular will amend specific sections of the Manual of Regulations for Payment Systems to establish these new compliance requirements. PSPs must also conduct periodic reverifications to maintain account integrity and prevent unauthorized access by restricted individuals.
\nOPERATIONAL LIMITS
\nThe circular imposes strict OGTA operational limitations, establishing daily funding limits not exceeding 20% of primary account average daily balance.
It mandates \u201ctransaction windows\u201d not exceeding six hours per day and 24-hour \u201ccooling-off periods\u201d following \u201cheavy usage.\u201d
\nHeavy usage, among other considerations, is to be defined by PSPs through their company-specific Responsible Online Gambling Policy. These policies should be intended to promote responsible gambling and enable account owners to exercise self-control and prevent gambling addiction.
\nOnce OGTAs are created, all lending options within the same digital platform must be disabled. This measure could sever dangerous links between gambling and reckless spending.
\nIn the draft circular, Online Gambling Operators (OGOs) face strict onboarding requirements through PSPs, which must treat them as \u201chigh-risk merchants.\u201d This entails enhanced due diligence, including beneficial ownership verification to identify ultimate natural persons behind corporate structures.
\nPSPs must verify if OGOs are properly licensed by appropriate government agencies like PAGCOR and maintain good standing.
\nINDUSTRY PREPARATIONS
\nThe financial technology (fintech) sector is implementing comprehensive systems while bracing for challenges.
Fintech Alliance.PH Chairman Angelito \u201cLito\u201d M. Villanueva said that members have declared \u201czero tolerance policy on misuse of digital payment platforms by illegal businesses, especially online gambling.\u201d
\n\u201cOur members are already putting in place robust due diligence measures and real-time monitoring systems,\u201d Mr. Villanueva, who also sits as Rizal Commercial Banking Corp. executive vice-president and chief innovation and inclusion officer, said in an e-mail.
\n\u201cThis means stricter onboarding for licensed gaming merchants, blacklisting of unregulated sites, and detection tools to flag suspicious activity.\u201d
\nThe Alliance supports proactive, risk-based approaches beyond simply blocking transactions. \u201cWe are recommending tools such as transaction caps, time-based restrictions, and self-exclusion features built directly into user interfaces,\u201d Mr. Villanueva said.
\nFinancial institutions are developing internal safeguards to prevent staff from participating in online gambling.
\n\u201cMany of our members have introduced internal awareness campaigns, stricter HR compliance protocols, and even employee self-exclusion policies,\u201d Mr. Villanueva added.
\n\u201cIf we, the fintech industry players, are safeguarded against gambling risks, then so are the consumers we serve.\u201d
\nMr. Villanueva further said that a delicate balance between compliance and user experience has to be made.
\n\u201cWe need proper safeguards without creating unnecessary friction for legitimate digital transactions.\u201d
\nThere are legitimate concerns about implementation costs, though Mr. Villanueva said the Alliance\u2019s position is clear.
\n\u201cConsumer protection and financial integrity are investments, not expenses,\u201d he said.
\nMajor players have signaled alignment with regulators. In separate statements, GCash and Maya said they will comply with the BSP\u2019s directive immediately. Both e-wallets subsequently dropped links to gambling sites on their platforms.
\nAccording to the results of a survey conducted by research firm The Fourth Wall, GCash emerged as the most-used e-wallet app, cited by 92% of respondents, followed by Maya (6%).
\n\u201cWhen BSP ordered removal of in-app gambling links, Maya acted swiftly and complied within the mandated period,\u201d Maya said in an e-mail statement to 大象传媒.
\n\u201cMaya fully supports the BSP\u2019s efforts to ensure the responsible use of digital financial services, safeguard system security, strengthen consumer protection, and promote financial inclusion.\u201d
\nDespite industry cooperation, debates emerge about whether regulation is enough.
\n\u201cWe need to go beyond taking down icons and links,\u201d said Mr. Villanueva.
\nThe Alliance plans comprehensive guidance for dispute resolution.
\n\u201cI would like to create and execute an encompassing \u2018bible book\u2019 that will compile these concerns, protocols, and best practices,\u201d Mr. Villanueva said.
\nTHE HUMAN COST
\nThe BSP\u2019s urgency for regulation is underscored by alarming rates of addiction.
Jayvee Vargas, representative for rehabilitation center Bridges of Hope, revealed during a video interview that \u201cseven out of 10 people admitted to our facilities have gambling disorders.\u201d
\nBridges of Hope Drugs and Alcohol Rehabilitation Foundation, Inc. is a PAGCOR-accredited help center with 15 branches nationwide.
\n\u201cI\u2019ve seen in the last five years, I\u2019ve seen it almost double,\u201d Mr. Vargas said, describing the trend as \u201cscary.\u201d
\nCOVID-19 served as a key point when the lockdown drove people to online gambling. However, Mr. Vargas said accessibility is the fundamental issue. \u201cFor me, that\u2019s the first problem. It\u2019s very accessible to the public,\u201d he said.
\nThe barriers to entry are minimal. \u201cAll you need is capital of P100, and then you can have access to it already,\u201d he said. \u201cYou can bet in cents.\u201d
\nGambling addiction affects all social strata without discrimination. \u201cSome come from wealthy families. Some come from the lower bracket. It affects everybody.\u201d
\nCurrent age verification systems remain fundamentally flawed. \u201cThere\u2019s no way to validate the age. You just have to tick, like, a box [saying] \u2018Okay, I\u2019m 21 years old,\u2019\u201d Mr. Vargas said. \u201cBut there\u2019s no measure that says, \u2018Now, show me proof that you\u2019re 21.\u2019\u201d
\nThe addiction cycle follows predictable patterns. \u201cWhen you have that habit of gambling, you\u2019re always thinking about the wins and not anymore the losses.\u201d
\nSimilarly, the bike taxi driver said that gambling is \u201clike drugs.\u201d
\n\u201cIf you don\u2019t know how to control yourself, you\u2019ll really be addicted to it. That\u2019s why you see, they removed it from GCash… But, we can still gamble.\u201d
\nThe driver added that illegal gambling sites do not impose cash-in limits.
\n\u201cBecause with sites, you really can\u2019t stop the sites. They get a lot from that.\u201d
\nPROHIBITION VS REGULATION
\nMr. Vargas views daily caps and time limits as improvements. \u201cI think that\u2019s better than none,\u201d he said regarding proposed time limits.
However, he said that determined addicts may explore jailbreaks. \u201cThe only cap is the limit of how deep their wallet goes,\u201d Mr. Vargas said, regarding self-imposed caps. \u201cIf there are limits, daily limits, I\u2019ll just max out the daily limits if I\u2019m really addicted.\u201d
\nCooling-off provisions and pop-up risk messaging may provide some benefit. \u201cI think it will have some effect,\u201d Mr. Vargas said, drawing parallels to anti-drunk driving campaigns that have reduced road accidents.
\nThe exclusion of vulnerable groups receives strong support. \u201cI think it\u2019s good to protect that, especially minors and senior citizens,\u201d Mr. Vargas said. For elderly gamblers, \u201cthey\u2019re supposed to be relaxing, enjoying life, right?\u201d
\nThe debate ultimately centers on whether regulation suffices or outright prohibition becomes necessary. Mr. Vargas maintains conditional support for regulated access.
\n\u201cIf gambling operators and regulators have robust safety measures for the gaming public, then I don\u2019t believe we need to remove access,\u201d he said.
\n\u201cBut if there\u2019s no robust measure. We\u2019re kind of playing with fire,\u201d he added.
\nMr. Villanueva advocates stronger measures given escalating social costs. \u201cThe social costs outweigh the financial benefits,\u201d he said.
\n\u201cA clear and decisive stance will help protect Filipinos from gambling addiction dangers becoming too easy through digital channels.\u201d
\nA critical risk involves potential migration to illegal platforms. \u201cThere could be spillover to the illegal gambling sites,\u201d Mr. Vargas said. \u201cThat\u2019s what we have to watch out for \u2014 how to stop those sites from existing.\u201d
\nThe driver said that industry giants like GCash should be allowed to provide services on online gambling sites.
\n\u201cWhat they should do better there: just bring it back to GCash. Because that\u2019s where they\u2019ll earn.\u201d
\nThe driver added that gambling is a universal reality that should be regulated instead. \u201cAlmost all people in the world gamble. There\u2019s no person who doesn\u2019t gamble. Even those who go to church, they gamble.\u201d
\n\u201cSo, even if you\u2019re good, if you hold cards, you\u2019re still a gambler.\u201d
\nHowever, Mr. Villanueva said that regardless of their legality, online gambling sites \u201cstill allow users to connect their e-wallets and even bank accounts directly.\u201d
\n\u201cThese wallets should be delinked completely from gambling transactions, period.\u201d
\n", "content_text": "By Pierce Oel A. Montalvo, Researcher\nWHAT STARTED as a free-for-all for online gambling is about to get some serious house rules from the central bank.\nLast July, the Bangko Sentral ng Pilipinas (BSP) released a draft circular introducing comprehensive regulations for online gambling payment services.\nThe draft circular represents the regulator\u2019s assertive stance on online gambling. Should it become regulation, providers, operators, and consumers alike will be met with drastic changes in the gambling industry.\nThen, in August, the central bank ordered to remove in-app gambling links from e-wallets.\n\u201cThe BSP directive is issued in light of the surge in online gambling transactions and its impact on the financial health of consumers and their families,\u201d the central bank said in a statement.\nAN URGENT RESPONSE\nThe central bank\u2019s intervention followed growing alarm from lawmakers and health experts over online betting\u2019s devastating impact. The Aug. 14 order gave financial firms 48 hours to remove links redirecting users to gambling websites.\n\u201cThe Monetary Board has approved our policy ordering BSP-supervised institutions to take down all icons and links redirecting to online gambling sites,\u201d BSP Deputy Governor Mamerto E. Tangonan said during a Senate committee hearing on online gambling in August.\nThe new draft circular goes further, aiming to build comprehensive regulatory walls rather than simply patching leaks. BSP said the suspension would remain in place until guidelines for online gambling payment services are finalized.\n\u201cIt is finalizing new rules, developed following public consultation, that will require banks, e-wallets, and other financial service providers to adopt stronger safeguards against gambling-related harm,\u201d the central bank said in a statement dated Aug. 7.\nThe scale of the challenge is substantial. According to Philippine Amusement and Gaming Corp. (PAGCOR), gaming industry gross gaming revenues jumped 26% to P214.75 billion in the first half of 2025. Electronic games drove this growth with a 53.47% increase in gross revenues to P114.83 billion.\nPAGCOR currently collects a 30% rate from e-gaming platforms, down from 35%, which could encourage illegal operators to register. However, concerns remain about the proliferation of unlicensed and unregulated sites that could undermine anti-money laundering efforts. \nBSP Governor Eli M. Remolona, Jr. said that more measures to regulate e-gaming are being considered.\n\u201cWe\u2019re still studying it. Basically, as before, we just want to put sand in the wheels,\u201d he said during the Manila Tech Summit on Aug. 26.\nThe regulatory pressures are heard not just in the government but also in the streets, among online gambling users who have already felt the first blows.\n\u201cIf you\u2019re a gambler, you\u2019re really a gambler. You\u2019ll find and find other sites,\u201d said a bike taxi driver, who plays scatter slots on his mobile phone. He requested to be anonymous.\n\u201cAll the riders we\u2019ve been with, they all want to gamble,\u201d he said in an interview in mixed English and Filipino.\n\u201cYou say all sites disappear, everything, whether illegal, legal, whatever, nothing left, totally banned. Damn, then gambling in street corners will be rampant again.\u201d\nDEFINING THE BATTLEGROUND\nAt its core, the proposed regulations seek to erect an accountability system for all participants in the industry.\nThe circular places further enforcement on Payment Service Providers (PSPs) \u2014 e-wallets, banks, and other financial institutions facilitating these transactions. Under the proposal, these entities must secure prior BSP authority to offer online gambling payment services.\nThis privilege depends on meeting strict criteria, including minimum capitalization of P300 million.\nPSPs must also maintain \u201cstrong anti-money laundering and counter-terrorism financing risk management\u201d systems. This function ensures only financially sound and compliant institutions operate in high-risk platforms.\nCentral to the BSP\u2019s strategy is creating the Online Gambling Transaction Account (OGTA). This account must be created specifically for online gambling, funded exclusively through on-us transfers from the eligible account owner.\nBy mandating separate OGTAs, the BSP aims to force deliberate decision-making while creating auditable fund trails.\nTo enforce this, PSPs will implement enhanced know-your-customer measures, including mandatory facial biometric verification for account opening.\nThe circular will amend specific sections of the Manual of Regulations for Payment Systems to establish these new compliance requirements. PSPs must also conduct periodic reverifications to maintain account integrity and prevent unauthorized access by restricted individuals.\nOPERATIONAL LIMITS\nThe circular imposes strict OGTA operational limitations, establishing daily funding limits not exceeding 20% of primary account average daily balance.\nIt mandates \u201ctransaction windows\u201d not exceeding six hours per day and 24-hour \u201ccooling-off periods\u201d following \u201cheavy usage.\u201d\nHeavy usage, among other considerations, is to be defined by PSPs through their company-specific Responsible Online Gambling Policy. These policies should be intended to promote responsible gambling and enable account owners to exercise self-control and prevent gambling addiction.\nOnce OGTAs are created, all lending options within the same digital platform must be disabled. This measure could sever dangerous links between gambling and reckless spending.\nIn the draft circular, Online Gambling Operators (OGOs) face strict onboarding requirements through PSPs, which must treat them as \u201chigh-risk merchants.\u201d This entails enhanced due diligence, including beneficial ownership verification to identify ultimate natural persons behind corporate structures.\nPSPs must verify if OGOs are properly licensed by appropriate government agencies like PAGCOR and maintain good standing.\nINDUSTRY PREPARATIONS\nThe financial technology (fintech) sector is implementing comprehensive systems while bracing for challenges.\nFintech Alliance.PH Chairman Angelito \u201cLito\u201d M. Villanueva said that members have declared \u201czero tolerance policy on misuse of digital payment platforms by illegal businesses, especially online gambling.\u201d\n\u201cOur members are already putting in place robust due diligence measures and real-time monitoring systems,\u201d Mr. Villanueva, who also sits as Rizal Commercial Banking Corp. executive vice-president and chief innovation and inclusion officer, said in an e-mail.\n\u201cThis means stricter onboarding for licensed gaming merchants, blacklisting of unregulated sites, and detection tools to flag suspicious activity.\u201d\nThe Alliance supports proactive, risk-based approaches beyond simply blocking transactions. \u201cWe are recommending tools such as transaction caps, time-based restrictions, and self-exclusion features built directly into user interfaces,\u201d Mr. Villanueva said.\nFinancial institutions are developing internal safeguards to prevent staff from participating in online gambling.\n\u201cMany of our members have introduced internal awareness campaigns, stricter HR compliance protocols, and even employee self-exclusion policies,\u201d Mr. Villanueva added.\n\u201cIf we, the fintech industry players, are safeguarded against gambling risks, then so are the consumers we serve.\u201d\nMr. Villanueva further said that a delicate balance between compliance and user experience has to be made.\n\u201cWe need proper safeguards without creating unnecessary friction for legitimate digital transactions.\u201d\nThere are legitimate concerns about implementation costs, though Mr. Villanueva said the Alliance\u2019s position is clear.\n\u201cConsumer protection and financial integrity are investments, not expenses,\u201d he said.\nMajor players have signaled alignment with regulators. In separate statements, GCash and Maya said they will comply with the BSP\u2019s directive immediately. Both e-wallets subsequently dropped links to gambling sites on their platforms.\nAccording to the results of a survey conducted by research firm The Fourth Wall, GCash emerged as the most-used e-wallet app, cited by 92% of respondents, followed by Maya (6%).\n\u201cWhen BSP ordered removal of in-app gambling links, Maya acted swiftly and complied within the mandated period,\u201d Maya said in an e-mail statement to 大象传媒.\n\u201cMaya fully supports the BSP\u2019s efforts to ensure the responsible use of digital financial services, safeguard system security, strengthen consumer protection, and promote financial inclusion.\u201d\nDespite industry cooperation, debates emerge about whether regulation is enough.\n\u201cWe need to go beyond taking down icons and links,\u201d said Mr. Villanueva.\nThe Alliance plans comprehensive guidance for dispute resolution.\n\u201cI would like to create and execute an encompassing \u2018bible book\u2019 that will compile these concerns, protocols, and best practices,\u201d Mr. Villanueva said.\nTHE HUMAN COST\nThe BSP\u2019s urgency for regulation is underscored by alarming rates of addiction.\nJayvee Vargas, representative for rehabilitation center Bridges of Hope, revealed during a video interview that \u201cseven out of 10 people admitted to our facilities have gambling disorders.\u201d\nBridges of Hope Drugs and Alcohol Rehabilitation Foundation, Inc. is a PAGCOR-accredited help center with 15 branches nationwide.\n\u201cI\u2019ve seen in the last five years, I\u2019ve seen it almost double,\u201d Mr. Vargas said, describing the trend as \u201cscary.\u201d\nCOVID-19 served as a key point when the lockdown drove people to online gambling. However, Mr. Vargas said accessibility is the fundamental issue. \u201cFor me, that\u2019s the first problem. It\u2019s very accessible to the public,\u201d he said.\nThe barriers to entry are minimal. \u201cAll you need is capital of P100, and then you can have access to it already,\u201d he said. \u201cYou can bet in cents.\u201d\nGambling addiction affects all social strata without discrimination. \u201cSome come from wealthy families. Some come from the lower bracket. It affects everybody.\u201d\nCurrent age verification systems remain fundamentally flawed. \u201cThere\u2019s no way to validate the age. You just have to tick, like, a box [saying] \u2018Okay, I\u2019m 21 years old,\u2019\u201d Mr. Vargas said. \u201cBut there\u2019s no measure that says, \u2018Now, show me proof that you\u2019re 21.\u2019\u201d\nThe addiction cycle follows predictable patterns. \u201cWhen you have that habit of gambling, you\u2019re always thinking about the wins and not anymore the losses.\u201d\nSimilarly, the bike taxi driver said that gambling is \u201clike drugs.\u201d\n\u201cIf you don\u2019t know how to control yourself, you\u2019ll really be addicted to it. That\u2019s why you see, they removed it from GCash… But, we can still gamble.\u201d\nThe driver added that illegal gambling sites do not impose cash-in limits.\n\u201cBecause with sites, you really can\u2019t stop the sites. They get a lot from that.\u201d\nPROHIBITION VS REGULATION\nMr. Vargas views daily caps and time limits as improvements. \u201cI think that\u2019s better than none,\u201d he said regarding proposed time limits.\nHowever, he said that determined addicts may explore jailbreaks. \u201cThe only cap is the limit of how deep their wallet goes,\u201d Mr. Vargas said, regarding self-imposed caps. \u201cIf there are limits, daily limits, I\u2019ll just max out the daily limits if I\u2019m really addicted.\u201d\nCooling-off provisions and pop-up risk messaging may provide some benefit. \u201cI think it will have some effect,\u201d Mr. Vargas said, drawing parallels to anti-drunk driving campaigns that have reduced road accidents.\nThe exclusion of vulnerable groups receives strong support. \u201cI think it\u2019s good to protect that, especially minors and senior citizens,\u201d Mr. Vargas said. For elderly gamblers, \u201cthey\u2019re supposed to be relaxing, enjoying life, right?\u201d\nThe debate ultimately centers on whether regulation suffices or outright prohibition becomes necessary. Mr. Vargas maintains conditional support for regulated access.\n\u201cIf gambling operators and regulators have robust safety measures for the gaming public, then I don\u2019t believe we need to remove access,\u201d he said.\n\u201cBut if there\u2019s no robust measure. We\u2019re kind of playing with fire,\u201d he added.\nMr. Villanueva advocates stronger measures given escalating social costs. \u201cThe social costs outweigh the financial benefits,\u201d he said.\n\u201cA clear and decisive stance will help protect Filipinos from gambling addiction dangers becoming too easy through digital channels.\u201d\nA critical risk involves potential migration to illegal platforms. \u201cThere could be spillover to the illegal gambling sites,\u201d Mr. Vargas said. \u201cThat\u2019s what we have to watch out for \u2014 how to stop those sites from existing.\u201d\nThe driver said that industry giants like GCash should be allowed to provide services on online gambling sites.\n\u201cWhat they should do better there: just bring it back to GCash. Because that\u2019s where they\u2019ll earn.\u201d\nThe driver added that gambling is a universal reality that should be regulated instead. \u201cAlmost all people in the world gamble. There\u2019s no person who doesn\u2019t gamble. Even those who go to church, they gamble.\u201d\n\u201cSo, even if you\u2019re good, if you hold cards, you\u2019re still a gambler.\u201d\nHowever, Mr. Villanueva said that regardless of their legality, online gambling sites \u201cstill allow users to connect their e-wallets and even bank accounts directly.\u201d\n\u201cThese wallets should be delinked completely from gambling transactions, period.\u201d", "date_published": "2025-09-15T00:04:21+08:00", "date_modified": "2025-09-14T16:32:25+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/09/online-gambling-casino.jpg", "tags": [ "Banking Report Q2 2025", "Pierce Oel A. Montalvo", "Banking Report", "Research" ], "summary": "WHAT STARTED as a free-for-all for online gambling is about to get some serious house rules from the central bank." }, { "id": "/?p=698180", "url": "/research/2025/09/15/698180/treasure-on-the-road-less-traveled-cmepas-promise-for-filipino-investors/", "title": "Treasure on the road less traveled: CMEPA\u2019s promise for Filipino investors", "content_html": "By Matthew Miguel L. Castillo, Researcher
\nPUBLIC CLAMOR erupted on July 1 after the government announced the implementation of the Republic Act No. 12214 or the Capital Markets Efficiency Promotion Act (CMEPA) countrywide.
\nFilipinos complained of a seemingly new tax, entailed by the law, targeting their passively held savings in banks. This emerged as the law\u2019s primary point of impression on the people which led to widespread verbal dismissals of its entirety.
\nBut there are no new taxes.
\nInstead, CMEPA introduces a simpler, fairer, and more efficient income tax system to encourage saving and to boost capital markets in the Philippines.
\nThe law aims to boost capital markets, increase market participation, improve liquidity, and lower transaction costs. However, such objectives have been greatly overshadowed by the law\u2019s final withholding tax (FWT) component, leading it to be tagged as another money-making scheme that only favors greedy lawmakers.
\nRegardless of the backlash it received, the CMEPA has already changed the game in the Philippine banking landscape \u2014 a reality that investors and depositors will inevitably face.
\nVAGUE DIRECTIONS
\nMichael Gerard D. Enriquez, president of Sun Life Investment Management and Trust Corp., said that the immediate negative feedback came from a lapse in communication to the public.
\u201cIt was misconstrued that it would withhold taxes on deposits or investments as a whole,\u201d he told 大象传媒 during a Zoom interview, saying that a lot got surprised in hearing this.
\nBDO Capital and Investment Corp. President Eduardo V. Francisco said in an e-mail that the public thought a new 20% tax on investments and deposits will be added, which \u201chas already been in place for a long time.\u201d
\n\u201cThey should make it clearer next time for communication that [the tax] is only on the interest,\u201d Mr. Enriquez added.
\nTaxes on interest earnings of deposits and other interest-bearing accounts have been in effect in cascading tiers according to time kept before CMEPA came in.
\nInterest on money kept for less than three years had been taxed at 20%, between three and four years at 12%, and between four and five years at 5%. The Bangko Sentral ng Pilipinas (BSP)-certified deposits kept beyond the five-year mark were free of taxes.
\nThe CMEPA equalized the rate for all time lengths at 20% for all deposits made after July 1 for both peso- and dollar-dominated accounts.
\nMr. Francisco said that the law just \u201clevels the playing field\u201d through this adjustment.
\nIS THE GRASS GREENER?
\nAs it has taken effect, Mr. Enriquez said that the CMEPA generates \u201ca more equal opportunity for everyone,\u201d pertaining to big and small investors alike.
\u201c[It] addresses not just taxation on investments [but also] the taxes on transactions, especially on equity trading,\u201d he added.
\nThrough the act, the stock transaction tax (STT) has been lowered to 0.1% from 0.6%, implying a smaller cut in trading shares of a domestic corporation through local and foreign stock exchanges.
\nAdditionally, documentary stamp taxes (DST) on the original issuances of shares have been reduced to 0.75% from 1% and completely lifted from initial transactions on mutual and investment trust funds.
\nCMEPA also imposes a blanket 0.75% DST on bonds, debentures, and certificates of stock and indebtedness issued in a foreign country.
\nMr. Francisco said that the law makes it easier for Filipinos to try their hand at investing through such reduced transaction costs and more consistent tax schemes across diverse types of investments.
\nSales or transfers of shares listed on either local or foreign stock exchanges are consistently subject to a 0.1% STT, rather than being taxed under the capital gains tax (CGT) system.
\nMr. Enriquez said that this change \u201chas greatly brought us closer to the global industry.\u201d
\nCGTs, which are imposed on profits of unlisted domestic and foreign shares have been equalized to a 15% rate through the law.
\nPrior to CMEPA, only sales of domestic shares received the 15% tax, while those of unlisted foreign shares were subject to an income tax of 25% for corporations and a progressive tax of up to 35% for individuals.
\nMr. Enriquez also noted the benefits CMEPA provides to holders of Personal Equity Retirement Accounts (PERA).
\nThe provision is an additional 50% tax reduction on employers that contribute equal or greater amounts to their PERA beneficiary employees.
\nPERA is a voluntary retirement saving program that encourages Filipinos to increase their financial security by investing in viable products.
\nMutual funds, stocks, securities, and the like \u2014 which are nonspeculative, marketable, and provide regular income payments to investors \u2014 fall under such products.
\nFunds placed in the program may be withdrawn as the investor turns 55 years old and has made qualified contributions for at least five years.
\nTHE BIGGEST ROADBLOCK
\nIn reaping the law\u2019s benefits and reaching its objectives, both analysts mentioned that the lack of financial literacy among Filipinos must be addressed first.
\u201cWhile CMEPA is good, we have a lot of work to do in educating the Filipinos on savings and investments,\u201d Mr. Francisco said.
\n\u201cFinancial literacy is still a big problem in the Philippines\u2026 we need to bombard [Filipinos] on the importance of this,\u201d Mr. Enriquez added.
\nFinancial literacy is defined by the BSP as the ability to make informed financial decisions and to maximize the potential benefits of financial resources.
\nThe BSP\u2019s latest financial inclusion survey (FIS) of 1,200 Filipinos in 2021 showed that only 2% of respondents correctly answered all six questions on basic financial literacy.
\nFinancial concepts including division, risk-return trade-off, diversification, inflation, and simple compound interest rates were covered by the questions.
\nResults showed that 58% of all respondents were aware of portfolio diversification while only 32% knew how to calculate simple interest earned in saving accounts.
\nIn addition, only 7% of respondents said they have attended seminars on financial literacy, while 54% expressed interest in doing so.
\nTREADING THE WRONG VENTURES
\nMr. Enriquez said that Filipinos are more likely to look into get-rich-quick schemes rather than the discipline of managing their finances diligently.
\u201cThey are more susceptible to scams and online gambling,\u201d he added.
\nTransUnion\u2019s State of Omnichannel Fraud update for the first half of 2025 showed that phishing was the most prevalent scamming scheme in the Philippines.
\nPhishing involves the scammers\u2019 impersonation of reputable companies to bait victims\u2019 in providing sensitive information such as credit card details and bank account numbers.
\nMore than three-fifths (63%) of surveyed Filipino consumers reported being targeted by scams and more than 10% ended up falling victim.
\nThe study also reported that Filipino victims lost an average of $768 or more than P44,700 during the period.
\nOn the other hand, Mr. Francisco said that Filipinos have also been \u201cmore conservative with their investments and expansions.\u201d
\nThe latest FIS reflected this downtick, showing that only 37% of adults surveyed had savings in banks from the 53% seen in the previous edition.
\nLikewise, adults with insurance slipped to 17% from the 23% seen previously.
\n\u201cWe are still educating them to save, so the next stage is to teach them to how and where to invest\u2026 we have to [show] them more options,\u201d Mr. Francisco said.
\nMr. Enriquez said that financial discipline must be prioritized regardless of financial status and that low earnings should not hinder Filipinos from expanding their financial portfolio.
\nHe added that the highest consideration must be \u201chow much you save rather than how much you make.\u201d
\nJITTERS ALONG THE WAY
\nBoth analysts also identified wobbly areas in the Philippine investment atmosphere which the act could have addressed further.
Mr. Enriquez said that the country still can catch up on global practices in government securities even with the law\u2019s current provisions.
\nIndividual Filipino investors face a 20% FWT on deals concerning government securities.
\nAmong members of the Association of Southeast Asian Nations, only Thailand and Indonesia also impose FWTs on government securities, at 10% and 15%, respectively.
\nAdditionally, Mr. Enriquez noted that a drawback in CMEPA is the increased tax on foreign currency bonds.
\nThe interest income tax on foreign currency-denominated accounts climbed to 20% from the 15% imposed beforehand.
\nFor the parties concerned to deal with this, Mr. Enriquez suggested that investors may opt for alternative investment instruments offshore where interest rates would be more attractive for them.
\nMeanwhile, Mr. Francisco said that there is still \u201ca lot to be done\u201d in reducing other fees such as those seen in the Philippine Stock Exchange listing, the Securities and Exchange Commission processing, custodial fees, and the like.
\n\u201cFiling rules and documentations can be simplified, especially for small to medium enterprises, to encourage more listings,\u201d he added
\nHe also noted the persisting weakness of the stock market after CMEPA took effect, despite one of the law\u2019s objectives being to boost the local bourse.
\n\u201cMost investments are going towards bank deposits and fixed income investments,\u201d he added.
\nTHE PATH AHEAD
\nMr. Francisco said that attracting foreign investors will be key to maximizing the effectiveness of CMEPA in improving capital markets.
\u201cThere are macro issues to solve [in light of] CMEPA, we still have to [garner] more foreign direct investments as a lot of foreigners have shunned or left the Philippine stock market,\u201d he said.
\nThe latest BSP data on foreign direct investments show that cumulative investments up to June were down year on year by 23.8% to $3.42 billion from $4.49 billion.
\nThe drop was attributed to monthly levels of nonresident\u2019s net investment in equity capital with $57 million in outflows from the $85 million inflows a year earlier.
\nHe added that talks to improve PERA and Real Estate Investment Trust laws should also be done to boost CMEPA investments moving forward.
\nOn the other hand, Mr. Enriquez said that an awareness campaign is essential for the success of the law and its provisions.
\n\u201cThe tools, like PERA [and CMEPA] are there, but nobody is using them\u2026 there should be an aggressive awareness campaign on their benefits,\u201d he said.
\nHe added that the campaign should focus on the \u201cgrassroots level\u201d \u2014 the employees, which the law aims to help in fund management.
\nMr. Enriquez said Filipinos should learn and try investing to know how much the CMEPA offers and enables them.
\n\u201cThe main argument is that \u2018I am not earning enough\u2019 [\u2026] but a lot of programs have democratized investing,\u201d he added.
\nWidely used mobile wallets such as GCash and Maya offer investment opportunities in mutual funds and unit investment trust funds through various fund providers.
\n\u201c[Filipinos] should have a legitimate way to grow their money; you don\u2019t have to start big, you just have to start somewhere,\u201d Mr. Enriquez said.
\n", "content_text": "By Matthew Miguel L. Castillo, Researcher\nPUBLIC CLAMOR erupted on July 1 after the government announced the implementation of the Republic Act No. 12214 or the Capital Markets Efficiency Promotion Act (CMEPA) countrywide.\nFilipinos complained of a seemingly new tax, entailed by the law, targeting their passively held savings in banks. This emerged as the law\u2019s primary point of impression on the people which led to widespread verbal dismissals of its entirety.\nBut there are no new taxes.\nInstead, CMEPA introduces a simpler, fairer, and more efficient income tax system to encourage saving and to boost capital markets in the Philippines.\nThe law aims to boost capital markets, increase market participation, improve liquidity, and lower transaction costs. However, such objectives have been greatly overshadowed by the law\u2019s final withholding tax (FWT) component, leading it to be tagged as another money-making scheme that only favors greedy lawmakers.\nRegardless of the backlash it received, the CMEPA has already changed the game in the Philippine banking landscape \u2014 a reality that investors and depositors will inevitably face.\nVAGUE DIRECTIONS\nMichael Gerard D. Enriquez, president of Sun Life Investment Management and Trust Corp., said that the immediate negative feedback came from a lapse in communication to the public.\n\u201cIt was misconstrued that it would withhold taxes on deposits or investments as a whole,\u201d he told 大象传媒 during a Zoom interview, saying that a lot got surprised in hearing this.\nBDO Capital and Investment Corp. President Eduardo V. Francisco said in an e-mail that the public thought a new 20% tax on investments and deposits will be added, which \u201chas already been in place for a long time.\u201d\n\u201cThey should make it clearer next time for communication that [the tax] is only on the interest,\u201d Mr. Enriquez added.\nTaxes on interest earnings of deposits and other interest-bearing accounts have been in effect in cascading tiers according to time kept before CMEPA came in.\nInterest on money kept for less than three years had been taxed at 20%, between three and four years at 12%, and between four and five years at 5%. The Bangko Sentral ng Pilipinas (BSP)-certified deposits kept beyond the five-year mark were free of taxes.\nThe CMEPA equalized the rate for all time lengths at 20% for all deposits made after July 1 for both peso- and dollar-dominated accounts.\nMr. Francisco said that the law just \u201clevels the playing field\u201d through this adjustment.\nIS THE GRASS GREENER?\nAs it has taken effect, Mr. Enriquez said that the CMEPA generates \u201ca more equal opportunity for everyone,\u201d pertaining to big and small investors alike.\n\u201c[It] addresses not just taxation on investments [but also] the taxes on transactions, especially on equity trading,\u201d he added.\nThrough the act, the stock transaction tax (STT) has been lowered to 0.1% from 0.6%, implying a smaller cut in trading shares of a domestic corporation through local and foreign stock exchanges.\nAdditionally, documentary stamp taxes (DST) on the original issuances of shares have been reduced to 0.75% from 1% and completely lifted from initial transactions on mutual and investment trust funds.\nCMEPA also imposes a blanket 0.75% DST on bonds, debentures, and certificates of stock and indebtedness issued in a foreign country.\nMr. Francisco said that the law makes it easier for Filipinos to try their hand at investing through such reduced transaction costs and more consistent tax schemes across diverse types of investments.\nSales or transfers of shares listed on either local or foreign stock exchanges are consistently subject to a 0.1% STT, rather than being taxed under the capital gains tax (CGT) system.\nMr. Enriquez said that this change \u201chas greatly brought us closer to the global industry.\u201d\nCGTs, which are imposed on profits of unlisted domestic and foreign shares have been equalized to a 15% rate through the law.\nPrior to CMEPA, only sales of domestic shares received the 15% tax, while those of unlisted foreign shares were subject to an income tax of 25% for corporations and a progressive tax of up to 35% for individuals.\nMr. Enriquez also noted the benefits CMEPA provides to holders of Personal Equity Retirement Accounts (PERA).\nThe provision is an additional 50% tax reduction on employers that contribute equal or greater amounts to their PERA beneficiary employees.\nPERA is a voluntary retirement saving program that encourages Filipinos to increase their financial security by investing in viable products.\nMutual funds, stocks, securities, and the like \u2014 which are nonspeculative, marketable, and provide regular income payments to investors \u2014 fall under such products.\nFunds placed in the program may be withdrawn as the investor turns 55 years old and has made qualified contributions for at least five years.\nTHE BIGGEST ROADBLOCK\nIn reaping the law\u2019s benefits and reaching its objectives, both analysts mentioned that the lack of financial literacy among Filipinos must be addressed first.\n\u201cWhile CMEPA is good, we have a lot of work to do in educating the Filipinos on savings and investments,\u201d Mr. Francisco said.\n\u201cFinancial literacy is still a big problem in the Philippines\u2026 we need to bombard [Filipinos] on the importance of this,\u201d Mr. Enriquez added.\nFinancial literacy is defined by the BSP as the ability to make informed financial decisions and to maximize the potential benefits of financial resources.\nThe BSP\u2019s latest financial inclusion survey (FIS) of 1,200 Filipinos in 2021 showed that only 2% of respondents correctly answered all six questions on basic financial literacy.\nFinancial concepts including division, risk-return trade-off, diversification, inflation, and simple compound interest rates were covered by the questions.\nResults showed that 58% of all respondents were aware of portfolio diversification while only 32% knew how to calculate simple interest earned in saving accounts.\nIn addition, only 7% of respondents said they have attended seminars on financial literacy, while 54% expressed interest in doing so.\nTREADING THE WRONG VENTURES\nMr. Enriquez said that Filipinos are more likely to look into get-rich-quick schemes rather than the discipline of managing their finances diligently.\n\u201cThey are more susceptible to scams and online gambling,\u201d he added.\nTransUnion\u2019s State of Omnichannel Fraud update for the first half of 2025 showed that phishing was the most prevalent scamming scheme in the Philippines.\nPhishing involves the scammers\u2019 impersonation of reputable companies to bait victims\u2019 in providing sensitive information such as credit card details and bank account numbers.\nMore than three-fifths (63%) of surveyed Filipino consumers reported being targeted by scams and more than 10% ended up falling victim.\nThe study also reported that Filipino victims lost an average of $768 or more than P44,700 during the period.\nOn the other hand, Mr. Francisco said that Filipinos have also been \u201cmore conservative with their investments and expansions.\u201d\nThe latest FIS reflected this downtick, showing that only 37% of adults surveyed had savings in banks from the 53% seen in the previous edition.\nLikewise, adults with insurance slipped to 17% from the 23% seen previously.\n\u201cWe are still educating them to save, so the next stage is to teach them to how and where to invest\u2026 we have to [show] them more options,\u201d Mr. Francisco said.\nMr. Enriquez said that financial discipline must be prioritized regardless of financial status and that low earnings should not hinder Filipinos from expanding their financial portfolio.\nHe added that the highest consideration must be \u201chow much you save rather than how much you make.\u201d\nJITTERS ALONG THE WAY\nBoth analysts also identified wobbly areas in the Philippine investment atmosphere which the act could have addressed further.\nMr. Enriquez said that the country still can catch up on global practices in government securities even with the law\u2019s current provisions.\nIndividual Filipino investors face a 20% FWT on deals concerning government securities.\nAmong members of the Association of Southeast Asian Nations, only Thailand and Indonesia also impose FWTs on government securities, at 10% and 15%, respectively.\nAdditionally, Mr. Enriquez noted that a drawback in CMEPA is the increased tax on foreign currency bonds.\nThe interest income tax on foreign currency-denominated accounts climbed to 20% from the 15% imposed beforehand.\nFor the parties concerned to deal with this, Mr. Enriquez suggested that investors may opt for alternative investment instruments offshore where interest rates would be more attractive for them.\nMeanwhile, Mr. Francisco said that there is still \u201ca lot to be done\u201d in reducing other fees such as those seen in the Philippine Stock Exchange listing, the Securities and Exchange Commission processing, custodial fees, and the like.\n\u201cFiling rules and documentations can be simplified, especially for small to medium enterprises, to encourage more listings,\u201d he added\nHe also noted the persisting weakness of the stock market after CMEPA took effect, despite one of the law\u2019s objectives being to boost the local bourse.\n\u201cMost investments are going towards bank deposits and fixed income investments,\u201d he added.\nTHE PATH AHEAD\nMr. Francisco said that attracting foreign investors will be key to maximizing the effectiveness of CMEPA in improving capital markets.\n\u201cThere are macro issues to solve [in light of] CMEPA, we still have to [garner] more foreign direct investments as a lot of foreigners have shunned or left the Philippine stock market,\u201d he said.\nThe latest BSP data on foreign direct investments show that cumulative investments up to June were down year on year by 23.8% to $3.42 billion from $4.49 billion.\nThe drop was attributed to monthly levels of nonresident\u2019s net investment in equity capital with $57 million in outflows from the $85 million inflows a year earlier.\nHe added that talks to improve PERA and Real Estate Investment Trust laws should also be done to boost CMEPA investments moving forward.\nOn the other hand, Mr. Enriquez said that an awareness campaign is essential for the success of the law and its provisions.\n\u201cThe tools, like PERA [and CMEPA] are there, but nobody is using them\u2026 there should be an aggressive awareness campaign on their benefits,\u201d he said.\nHe added that the campaign should focus on the \u201cgrassroots level\u201d \u2014 the employees, which the law aims to help in fund management.\nMr. Enriquez said Filipinos should learn and try investing to know how much the CMEPA offers and enables them.\n\u201cThe main argument is that \u2018I am not earning enough\u2019 [\u2026] but a lot of programs have democratized investing,\u201d he added.\nWidely used mobile wallets such as GCash and Maya offer investment opportunities in mutual funds and unit investment trust funds through various fund providers.\n\u201c[Filipinos] should have a legitimate way to grow their money; you don\u2019t have to start big, you just have to start somewhere,\u201d Mr. Enriquez said.", "date_published": "2025-09-15T00:03:20+08:00", "date_modified": "2025-09-14T16:32:20+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/09/investment-savings.jpg", "tags": [ "Banking Report Q2 2025", "Matthew Miguel L. Castillo", "Banking Report", "Research" ], "summary": "PUBLIC CLAMOR erupted on July 1 after the government announced the implementation of the Republic Act No. 12214 or the Capital Markets Efficiency Promotion Act (CMEPA) countrywide." }, { "id": "/?p=698179", "url": "/research/2025/09/15/698179/tariffs-fed-policy-and-bsp-easing-shape-markets-in-q2/", "title": "Tariffs, Fed policy and BSP easing shape markets in Q2", "content_html": "US TARIFFS, Federal Reserve\u2019s uncertain fiscal policies, and the Bangko Sentral ng Pilipinas\u2019 (BSP) easing cycle, were the main drivers of the local financial market\u2019s performance in the second quarter of 2025, analysts said.
\nThese factors are expected to continue impacting the country\u2019s financial market for the rest of the year, the central bank said.
\nAt the end of the second quarter, the benchmark barometer Philippine Stock Exchange Index (PSEi) closed at 6,364.94, down 0.7% from a year earlier.
\n\r\n \r\n\r\nMeanwhile, data from the Bankers Association of the Philippines showed that the peso closed at P56.33 as of end-June, stronger than the P58.61 finish a year ago.
\nAt the secondary bond market, domestic yields dropped by an average of 6.22 basis points (bps) year on year, based on PHP Bloomberg Valuation (BVAL) Service Reference Rates published on the Philippine Dealing System\u2019s website as of end-June.
\nTRADE UNCERTAINTY
\nAnalysts said that the US trade policies was one of the main drivers of the domestic market movements during the second quarter.
\u201cUS President Donald J. Trump\u2019s sweeping tariffs and rapidly shifting policies triggered a wave of uncertainty across the global economy, (which) led the US Federal Reserve to hold off on interest rate cuts, and weighed on investor sentiment,\u201d Chinabank Research said in an e-mail.
\nIt added that with Mr. Trump promising more tariffs, changes to US trade policy will likely remain a significant market mover for the year.
\nThis escalation of US tariffs created volatility in global markets, said Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., in an e-mail.
\nHe added that uncertainty over future trade measures contributed to a cautious sentiment from investors and global supply chains.
\nLast Aug. 7, Mr. Trump implemented a 19% tariff on Philippine goods. This was lower than the 20% the US had threatened to carry out, but still higher than the 17% levy initially announced last April.
\nOn the other hand, Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said that while tariffs had fueled much of the market volatility since early April, this would likely be less of a concern moving forward.
\n\u201cNow that the US has arrived at a somewhat settled tax rate vis-\u00e0-vis most countries, who, for the most part, are accepting this new status quo,\u201d he said in an e-mail.
\nHe added that the 19% levy isn\u2019t a \u201chuge hit\u201d as it doesn\u2019t put the country at a disadvantage among its competitors in the region.
\nFor the central bank, this 19% levy slapped on Philippine goods had broadly similar rates with some neighboring economies and lower than others.
\n\u201cWhile the US tariffs may have downside impact on our economy, this could be less than the impact on our neighbors given that the Philippines relies less on exports,\u201d the BSP said in an e-mail.
\nThe country\u2019s new US tariff rate aligns with those of Indonesia, Cambodia, Malaysia and Thailand but is slightly lower than Vietnam\u2019s 20%.
\nFED UNCERTAINTIES
\nReinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said that speculations on US monetary policy decisions drove financial markets in the quarter.
\u201c[US] inflation risks and economic performance have spillover impacts on all markets especially for emerging markets like the Philippines,\u201d Mr. Erece said in an e-mail.
\nAside from the ongoing tariff negotiations, developments related to the resumption of the US Fed rate cut cycle have been a major market movement, said Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co.
\n\u201cDomestically, developments related to the BSP\u2019s own rate cut cycle and growth report also contributed to the movement of Philippine markets,\u201d he said in an e-mail.
\nThe US central bank\u2019s benchmark rates held steady for the second quarter with a 4.25% to 4.5% but is signaling for two rate cuts by the end of 2025.
\nAnalysts pointed out that Fed cuts could favor the emerging markets including the Philippines.
\nFor Marites M. Tiongco, professor and dean of the School of Economics at the De La Salle University, every time the Fed would hint at rate cuts, global investors were more inclined to take risks, since a weaker dollar could be an advantage for Philippine markets.
\nSimilarly, Mr. Asuncion said that the Federal Reserve may maintain a cautious stance with rate cuts in late 2025 to early 2026.
\n\u201cA weaker US dollar trend could favor emerging market assets, including the Philippines,\u201d he added.
\nThe BSP said that the peso appreciated against the dollar in the second quarter as the dollar weakened due to trade uncertainty, soft US economic data, and dovish Fed signals.
\nThe local unit is expected to remain stable despite BSP rate cuts, supported by growth, manageable inflation outlook, reforms, and steady foreign exchange inflows from BPOs, tourism, and remittances, the central bank added.
\nMONETARY EASING CYCLE
\nIn its June policy meeting, the central bank slashed policy rates by 25 basis points (bps), to 5.25%, the lowest level in two and a half years.
This came amid benign inflation and weaker-than-expected economic growth.
\n\u201cLower interest rates may hopefully encourage more borrowing to be used for household spending or capital expenditures,\u201d said Mr. Erece.
\nIn the second quarter, the Philippine economy expanded by an annual 5.5%, weaker than the 6.5% growth in the same period last year.\u00a0 Still, this was slightly faster than the 5.4% expansion in the January to March period.
\nThe latest GDP figure hit the lower end of the government\u2019s 5.5% to 6.5% growth target this year.
\nMr. Asuncion said that the recent BSP cuts since April supported \u201cliquidity, lowered borrowing costs, and boosted sentiment in equities and credit-driven sectors such as real estate and banking.\u201d
\nBSP Governor Eli M. Remolona, signaled the possibility of two more rate cuts this year, after the cut in June.
\nAt its August policy meeting, the BSP slashed the target reverse repurchase rate by 25 bps to 5% from 5.25%, its lowest level in almost three years.
\nThe central bank began its easing cycle in August last year, reducing borrowing costs by a total of 150 basis points (bps).
\n\u201cThe Bangko Sentral ng Pilipinas (BSP) is likely to continue cutting policy rates toward 4.75% by yearend,\u201d Mr. Asuncion added.
\nMeanwhile, Mr. Chanco expects that \u201cthere could be more an upside surprise for markets here if the BSP goes for three [rate] cuts, which is within the realm of possibilities from our standpoint, given how elevated rates still are after adjusting for (very low) inflation.\u201d
\nFor the central bank, the rate cut delivered in August was \u201cprobably the end of the easing cycle, unless new data will necessitate another cut for the year.\u201d
\nThe latest rate cut, the BSP said, is expected to reduce borrowing costs and support domestic spending and investment, which in turn could support the local stock market.
\nFor Ms. Tiongco, if inflation remains low, it could provide a \u201cgoldilocks\u201d environment for the Philippine market.
\nAugust inflation quickened to a five-month high of 1.5%, a tad faster than the 0.9% in July but still slower than the 3.3% recorded in the same month last year.
\nThe latest inflation reading settled with the BSP\u2019s 1%-1.8% forecast for the month and marked the six straight month it fell below the central bank\u2019s 2-4% target range.
\nFor the first eight months, headline inflation averaged 1.7%, matching the BSP\u2019s 1.7% target this year.
\nWHAT TO WATCH OUT FOR
\nThe BSP noted that global factors such as trade, immigration, fiscal policies, and US monetary easing will shape market sentiment in the second half, while its own policy stance, alongside fiscal measures and structural reforms, will also play a crucial role.
For Chinabank Research, market participants should keep an eye on US tariff policy, rate cuts of both the Fed and BSP, and geopolitical risks.
\n\u201cAn escalation in geopolitical tensions could spur market volatility and disrupt supply chains, potentially affecting commodity prices,\u201d Chinabank Research added.
\nFor Mr. Mapa, he said that tariffs and Fed policy \u201cremain the major and pivotal issues that should continue to drive market sentiment for the rest of 2025.\u201d
\nHe said that the BSP outlook as well as Philippine economic growth would influence the market in the following months.
\nMeanwhile, Mr. Chanco said that Asia\u2019s export growth is expected to slow sharply in the second half as earlier front-loaded shipments to the US begin to unwind.
\nHe noted that market sentiment could swing either way. He said that market sentiment could improve if export growth slows only gradually, suggesting first-half gains were driven by real demand.
\nHowever, risks remain should the US impose sector-specific tariffs on semiconductors and pharmaceuticals.
\nFor her part, Ms. Tiongco said the third quarter may be \u201cchoppy,\u201d with easing inflation and rate cuts balanced against US tariffs and geopolitical risks.
\n\u201cThe best trades are in domestic-facing sectors and medium-tenor bonds while the biggest risk is tariffs hitting electronics, which would dampen sentiment more than the actual economic hit,\u201d she added.
\nFIXED-INCOME MARKET
\nChinabank Research: We expect market interest rates to move lower this [third quarter], with the yield curve steeper, driven by expectations of further easing from both the BSP and Fed.
Mr. Mapa: It will take its cue from supply conditions as well as projected inflation and BSP policy. We could see a fundamental based rally if inflation remains target consistent and BSP pulls through on easing.
\nMr. Asuncion: Lower policy rates reduce borrowing costs and push yields down, making existing bonds more valuable. Analysts expect 10-year yields to fall toward 5.5% from 6.2%, creating capital gains opportunities for bondholders.
\nMr. Erece: Strong demand for assets in emerging markets may continue to persist and thus increase demand for peso-denominated bonds.
\nMs. Tiongco: Duration strategies favor the \u201cbelly\u201d of the curve (3-7Y). If yields on the 10Y spike above 6.2% due to supply or tariff noise, it\u2019s a buying opportunity.
\nEQUITY
\nChinabank Securities Corp. Research Director Rastine Mackie D. Mercado: We generally expect the PSEi to traverse the range between 6,150 and 6,550 level for most of third quarter, pending a fresh catalyst.
\nMr. Asuncion: The easing cycle signals a pro-growth stance, which could attract both domestic and foreign investors, especially as inflation risks remain muted and the peso stays relatively stable.
\nMr. Erece: We may expect to see sideways movement in equity markets as investors remain cautious with developments in the global economy as well as policy changes within the domestic economy.
\nMs. Tiongco: Likely to trade between 6,100-6,600 and could climb toward 6,700-6,800 if tariffs are softened/delayed and US cuts rates but could fall to around 5,900 if tariffs worsen or oil spikes.
\nFOREIGN EXCHANGE MARKET
\nChinabank Research: Expectations for the Fed\u2019s policy rate path would remain a key driver of the USD and PHP. A rate cut by the Fed in September and guidance for further easing could weaken the US dollar.
Mr. Mapa: A bond market rally could attract foreign flows especially if the Philippines does gain inclusion or is confirmed to be on the watchlist for inclusion in the JPMorgan bond index.
\nMr. Asuncion: Peso strength reflected resilient remittances, a narrower trade gap, and BSP\u2019s credibility, though volatility persisted due to global risk sentiment and tariff headlines.
\nMr. Erece: We may expect the Fed to remain hawkish as inflation risks continue to loom amid the tariff impositions by the Trump administration.
\nMs. Tiongco: USD/PHP stays in P56 to P58 range, but tariff-related outflows or an oil spike could push it toward P59.5. \u2014 LPQB
\n", "content_text": "US TARIFFS, Federal Reserve\u2019s uncertain fiscal policies, and the Bangko Sentral ng Pilipinas\u2019 (BSP) easing cycle, were the main drivers of the local financial market\u2019s performance in the second quarter of 2025, analysts said.\nThese factors are expected to continue impacting the country\u2019s financial market for the rest of the year, the central bank said.\nAt the end of the second quarter, the benchmark barometer Philippine Stock Exchange Index (PSEi) closed at 6,364.94, down 0.7% from a year earlier.\n\r\n \r\n\r\n \r\n \r\n \r\n \r\n\r\n \r\n 1 of 4\r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n\r\n \r\n \nMeanwhile, data from the Bankers Association of the Philippines showed that the peso closed at P56.33 as of end-June, stronger than the P58.61 finish a year ago.\nAt the secondary bond market, domestic yields dropped by an average of 6.22 basis points (bps) year on year, based on PHP Bloomberg Valuation (BVAL) Service Reference Rates published on the Philippine Dealing System\u2019s website as of end-June.\nTRADE UNCERTAINTY\nAnalysts said that the US trade policies was one of the main drivers of the domestic market movements during the second quarter.\n\u201cUS President Donald J. Trump\u2019s sweeping tariffs and rapidly shifting policies triggered a wave of uncertainty across the global economy, (which) led the US Federal Reserve to hold off on interest rate cuts, and weighed on investor sentiment,\u201d Chinabank Research said in an e-mail.\nIt added that with Mr. Trump promising more tariffs, changes to US trade policy will likely remain a significant market mover for the year.\nThis escalation of US tariffs created volatility in global markets, said Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., in an e-mail.\nHe added that uncertainty over future trade measures contributed to a cautious sentiment from investors and global supply chains.\nLast Aug. 7, Mr. Trump implemented a 19% tariff on Philippine goods. This was lower than the 20% the US had threatened to carry out, but still higher than the 17% levy initially announced last April.\nOn the other hand, Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said that while tariffs had fueled much of the market volatility since early April, this would likely be less of a concern moving forward.\n\u201cNow that the US has arrived at a somewhat settled tax rate vis-\u00e0-vis most countries, who, for the most part, are accepting this new status quo,\u201d he said in an e-mail.\nHe added that the 19% levy isn\u2019t a \u201chuge hit\u201d as it doesn\u2019t put the country at a disadvantage among its competitors in the region.\nFor the central bank, this 19% levy slapped on Philippine goods had broadly similar rates with some neighboring economies and lower than others.\n\u201cWhile the US tariffs may have downside impact on our economy, this could be less than the impact on our neighbors given that the Philippines relies less on exports,\u201d the BSP said in an e-mail.\nThe country\u2019s new US tariff rate aligns with those of Indonesia, Cambodia, Malaysia and Thailand but is slightly lower than Vietnam\u2019s 20%.\nFED UNCERTAINTIES\nReinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said that speculations on US monetary policy decisions drove financial markets in the quarter.\n\u201c[US] inflation risks and economic performance have spillover impacts on all markets especially for emerging markets like the Philippines,\u201d Mr. Erece said in an e-mail.\nAside from the ongoing tariff negotiations, developments related to the resumption of the US Fed rate cut cycle have been a major market movement, said Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co.\n\u201cDomestically, developments related to the BSP\u2019s own rate cut cycle and growth report also contributed to the movement of Philippine markets,\u201d he said in an e-mail.\nThe US central bank\u2019s benchmark rates held steady for the second quarter with a 4.25% to 4.5% but is signaling for two rate cuts by the end of 2025.\nAnalysts pointed out that Fed cuts could favor the emerging markets including the Philippines.\nFor Marites M. Tiongco, professor and dean of the School of Economics at the De La Salle University, every time the Fed would hint at rate cuts, global investors were more inclined to take risks, since a weaker dollar could be an advantage for Philippine markets.\nSimilarly, Mr. Asuncion said that the Federal Reserve may maintain a cautious stance with rate cuts in late 2025 to early 2026.\n\u201cA weaker US dollar trend could favor emerging market assets, including the Philippines,\u201d he added.\nThe BSP said that the peso appreciated against the dollar in the second quarter as the dollar weakened due to trade uncertainty, soft US economic data, and dovish Fed signals.\nThe local unit is expected to remain stable despite BSP rate cuts, supported by growth, manageable inflation outlook, reforms, and steady foreign exchange inflows from BPOs, tourism, and remittances, the central bank added.\nMONETARY EASING CYCLE\nIn its June policy meeting, the central bank slashed policy rates by 25 basis points (bps), to 5.25%, the lowest level in two and a half years.\nThis came amid benign inflation and weaker-than-expected economic growth.\n\u201cLower interest rates may hopefully encourage more borrowing to be used for household spending or capital expenditures,\u201d said Mr. Erece.\nIn the second quarter, the Philippine economy expanded by an annual 5.5%, weaker than the 6.5% growth in the same period last year.\u00a0 Still, this was slightly faster than the 5.4% expansion in the January to March period.\nThe latest GDP figure hit the lower end of the government\u2019s 5.5% to 6.5% growth target this year.\nMr. Asuncion said that the recent BSP cuts since April supported \u201cliquidity, lowered borrowing costs, and boosted sentiment in equities and credit-driven sectors such as real estate and banking.\u201d\nBSP Governor Eli M. Remolona, signaled the possibility of two more rate cuts this year, after the cut in June.\nAt its August policy meeting, the BSP slashed the target reverse repurchase rate by 25 bps to 5% from 5.25%, its lowest level in almost three years.\nThe central bank began its easing cycle in August last year, reducing borrowing costs by a total of 150 basis points (bps).\n\u201cThe Bangko Sentral ng Pilipinas (BSP) is likely to continue cutting policy rates toward 4.75% by yearend,\u201d Mr. Asuncion added.\nMeanwhile, Mr. Chanco expects that \u201cthere could be more an upside surprise for markets here if the BSP goes for three [rate] cuts, which is within the realm of possibilities from our standpoint, given how elevated rates still are after adjusting for (very low) inflation.\u201d\nFor the central bank, the rate cut delivered in August was \u201cprobably the end of the easing cycle, unless new data will necessitate another cut for the year.\u201d\nThe latest rate cut, the BSP said, is expected to reduce borrowing costs and support domestic spending and investment, which in turn could support the local stock market.\nFor Ms. Tiongco, if inflation remains low, it could provide a \u201cgoldilocks\u201d environment for the Philippine market.\nAugust inflation quickened to a five-month high of 1.5%, a tad faster than the 0.9% in July but still slower than the 3.3% recorded in the same month last year.\nThe latest inflation reading settled with the BSP\u2019s 1%-1.8% forecast for the month and marked the six straight month it fell below the central bank\u2019s 2-4% target range.\nFor the first eight months, headline inflation averaged 1.7%, matching the BSP\u2019s 1.7% target this year.\nWHAT TO WATCH OUT FOR\nThe BSP noted that global factors such as trade, immigration, fiscal policies, and US monetary easing will shape market sentiment in the second half, while its own policy stance, alongside fiscal measures and structural reforms, will also play a crucial role. \nFor Chinabank Research, market participants should keep an eye on US tariff policy, rate cuts of both the Fed and BSP, and geopolitical risks.\n\u201cAn escalation in geopolitical tensions could spur market volatility and disrupt supply chains, potentially affecting commodity prices,\u201d Chinabank Research added.\nFor Mr. Mapa, he said that tariffs and Fed policy \u201cremain the major and pivotal issues that should continue to drive market sentiment for the rest of 2025.\u201d\nHe said that the BSP outlook as well as Philippine economic growth would influence the market in the following months.\nMeanwhile, Mr. Chanco said that Asia\u2019s export growth is expected to slow sharply in the second half as earlier front-loaded shipments to the US begin to unwind.\nHe noted that market sentiment could swing either way. He said that market sentiment could improve if export growth slows only gradually, suggesting first-half gains were driven by real demand.\nHowever, risks remain should the US impose sector-specific tariffs on semiconductors and pharmaceuticals.\nFor her part, Ms. Tiongco said the third quarter may be \u201cchoppy,\u201d with easing inflation and rate cuts balanced against US tariffs and geopolitical risks.\n\u201cThe best trades are in domestic-facing sectors and medium-tenor bonds while the biggest risk is tariffs hitting electronics, which would dampen sentiment more than the actual economic hit,\u201d she added.\nFIXED-INCOME MARKET\nChinabank Research: We expect market interest rates to move lower this [third quarter], with the yield curve steeper, driven by expectations of further easing from both the BSP and Fed.\nMr. Mapa: It will take its cue from supply conditions as well as projected inflation and BSP policy. We could see a fundamental based rally if inflation remains target consistent and BSP pulls through on easing.\nMr. Asuncion: Lower policy rates reduce borrowing costs and push yields down, making existing bonds more valuable. Analysts expect 10-year yields to fall toward 5.5% from 6.2%, creating capital gains opportunities for bondholders.\nMr. Erece: Strong demand for assets in emerging markets may continue to persist and thus increase demand for peso-denominated bonds.\nMs. Tiongco: Duration strategies favor the \u201cbelly\u201d of the curve (3-7Y). If yields on the 10Y spike above 6.2% due to supply or tariff noise, it\u2019s a buying opportunity.\nEQUITY \nChinabank Securities Corp. Research Director Rastine Mackie D. Mercado: We generally expect the PSEi to traverse the range between 6,150 and 6,550 level for most of third quarter, pending a fresh catalyst.\nMr. Asuncion: The easing cycle signals a pro-growth stance, which could attract both domestic and foreign investors, especially as inflation risks remain muted and the peso stays relatively stable.\nMr. Erece: We may expect to see sideways movement in equity markets as investors remain cautious with developments in the global economy as well as policy changes within the domestic economy.\nMs. Tiongco: Likely to trade between 6,100-6,600 and could climb toward 6,700-6,800 if tariffs are softened/delayed and US cuts rates but could fall to around 5,900 if tariffs worsen or oil spikes.\nFOREIGN EXCHANGE MARKET\nChinabank Research: Expectations for the Fed\u2019s policy rate path would remain a key driver of the USD and PHP. A rate cut by the Fed in September and guidance for further easing could weaken the US dollar.\nMr. Mapa: A bond market rally could attract foreign flows especially if the Philippines does gain inclusion or is confirmed to be on the watchlist for inclusion in the JPMorgan bond index.\nMr. Asuncion: Peso strength reflected resilient remittances, a narrower trade gap, and BSP\u2019s credibility, though volatility persisted due to global risk sentiment and tariff headlines.\nMr. Erece: We may expect the Fed to remain hawkish as inflation risks continue to loom amid the tariff impositions by the Trump administration.\nMs. Tiongco: USD/PHP stays in P56 to P58 range, but tariff-related outflows or an oil spike could push it toward P59.5. \u2014 LPQB", "date_published": "2025-09-15T00:02:20+08:00", "date_modified": "2025-09-14T16:20:19+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/09/Dollar-currency.jpg", "tags": [ "Banking Report Q2 2025", "Leigh Patrick Q. Batoon", "Banking Report", "Research" ] }, { "id": "/?p=677720", "url": "/research/2025/06/09/677720/from-moratorium-to-momentum-how-2025-could-transform-philippine-cryptocurrency/", "title": "From moratorium to momentum: How 2025 could transform Philippine cryptocurrency", "content_html": "By Pierce Oel A. Montalvo, Researcher
\nTHE PHILIPPINE cryptocurrency industry that emerges this year may look vastly different from the one that entered the central bank\u2019s moratorium.
\nRecall that last September 2022, the Bangko Sentral ng Pilipinas (BSP) halted registrations for new Virtual Asset Service Provider (VASP) licenses.
\nAccording to Section 902-N of the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI), virtual assets (VAs) may refer to any type of digital-unit that can be digitally traded, or transferred, and can be used for payment or investment purposes.
\nCryptocurrencies are treated as VAs exchanged through a VASP. As of May 2025, 13 companies hold VASP licenses.
\nBut on May 30, the Securities and Exchange Commission (SEC) finally released their Crypto-Asset Service Provider (CASP) Rules and Guidelines, which aims to provide further regulations on cryptocurrency service providers and crypto-adjacent firms.
\nMeanwhile, the BSP moratorium for VASP licenses is set to expire in 2025.
\nThese twin developments signal a pivotal moment, reshaping how crypto businesses operate, how investors are protected, and how innovation navigates a more defined regulatory landscape.
\nSEC\u2019S NEW RULES
\nCryptocurrency continues to grow in the Philippines. In an interview with Bloomberg TV last January, Finance Secretary Ralph G. Recto said that P6 trillion worth of crypto investments is being done in the Philippines.
However, the SEC has made moves in the past to regulate cryptocurrency firms. Last year, the commission requested the National Telecommunications Commission as well as the app markets of Google and Apple to block access to crypto exchange Binance, as the exchange failed to secure a license to solicit funds from the public or operate exchanges for securities.
\nThe SEC\u2019s move into the crypto space is deliberate, aiming to address risks distinct from those overseen by the BSP.
\n\u201cInvestment or securities-related crypto activities fall under the jurisdiction of the SEC,\u201d the SEC\u2019s PhiliFintech Innovation Office stated in an e-mail message.
\n\u201cThe proposed SEC Rules for CASPs, when compared to BSP\u2019s existing VASP regulations, have different objectives in terms of addressing risks in the crypto market in the Philippines.\u201d
\nRepublic Act No. 11765 or the Financial Products and Services Consumer Protection Act empowers the Commission to oversee financial products other than traditional securities.
\n\u201cUnder this law, crypto-assets that take the form of investments fall within the jurisdiction of the SEC,\u201d it added.
\nUnder the new SEC rules, a \u201ccrypto-asset\u201d is defined as \u201ca cryptographically secured digital representation of value or of a right that relies on a cryptographically secured distributed ledger or a similar technology.\u201d
\nLikewise, a CASP is defined as an entity that, as a business, offers or engages in the provision of one or more crypto-asset services.
\nThese services include offering crypto-assets to the public or operating a crypto-asset trading venue.
\nThe rules state that \u201ccrypto-assets shall not be sold, offered for sale, or distributed in the Philippines without complying with the provisions of these Rules and the CASP Guidelines.\u201d
\nUnder these rules, crypto-assets generally cannot be offered or sold in the Philippines without filing a disclosure document with the SEC and publishing it at least thirty days before any marketing or offering.
\nIf a crypto-asset qualifies as a security, it requires a registration statement approved by the SEC.
\n\u201cOnce a crypto-asset takes the form of an investment or security, an obligation arises on the part of CASPs to comply with the standards set, such as those on public offerings, disclosures, registration, marketing, and intermediation activities,\u201d the SEC office said.
\nMeanwhile, the CASP guidelines show that a CASP applicant must be a corporation registered with the SEC, indicate the operation of a CASP in its primary purpose, and have a minimum paid-up capital of at least P100 million in cash or property, excluding crypto-assets.
\nApplicants must also have a physical office located in the Philippines, which must be appropriately staffed or manned during regular business hours.
\n\u201cOnce the final and approved CASP Rules and Guidelines are published, all existing natural or juridical persons that fall within the scope of these regulations \u2014 including BSP-licensed VASPs \u2014 will have thirty (30) days from the date of publication in two (2) newspapers of general circulation to begin complying with the new requirements,\u201d the SEC office added.
\nBSP\u2019S EVOLVING STANCE
\nBSP, which has been the primary regulator for entities dealing with VAs as payment instruments, maintains its focus on financial stability and consumer protection.
\u201cThe moratorium for new VASP applications is currently under review,\u201d the central bank said in a separate e-mail interview.
\n\u201cKey considerations include the developments in the local and global VASP landscape and the results of supervisory activities, among others.\u201d
\nThe BSP has sustained its regulation of VASPs during the moratorium. Last year, it revoked the license of VASP and remittance company Atomtrans Tech Corp. In 2023, it canceled the certificates of registration of Coinville Phils., Inc. and Bexpress, Inc.
\nWhen evaluating new applicants post-moratorium, the BSP said it would prioritize corporate governance structure and the applicant\u2019s capacity to manage risks in anti-money laundering, IT cybersecurity, and consumer protection.
\nIt will also evaluate applicants\u2019 business models to determine whether they support the BSP\u2019s digitalization and financial inclusion agenda.
\nFurthermore, the central bank said that it is planning to adjust minimum capital requirements in its rules, to ensure VASPs can continue to provide services amid tumultuous market conditions. The proposed new capital requirements stem from evaluations during regular VASP examinations and are currently awaiting industry feedback.
\nThe MORNBFI currently sets minimum capital requirements for VASPs at P10 million for those without safekeeping and/or administration services for VAs, and P50 million for VASPs with such services (i.e., VA custodians).
\nPost-moratorium, the BSP is also working to enhance control measures over corporate governance particularly concerning Related Party Transactions (RPTs), improve liquidity management to ensure continuous service, and reinforce requirements for the proper recording and segregation of customer VAs from proprietary VAs.
\nThe central bank will approach the moratorium considering recent incidents like the Bybit crypto exchange breach, crypto exchange and hedge fund FTX\u2019s corporate governance collapse, widespread scams and rugpulls in the crypto industry, and market volatility.
\n\u201cThe moratorium has enabled the BSP to lay the groundwork for a more bespoke regulatory environment for VASP,\u201d the BSP said.
\nNAVIGATING DUAL FRAMEWORKS
\nThe introduction of the SEC\u2019s CASP framework alongside the BSP\u2019s existing VASP regulations necessitates clear coordination to prevent undue burden on industry players.
\u201cThe BSP and SEC have existing coordination mechanisms, such as the Financial Sector Forum,\u201d the BSP said.
\nIt added that both regulators are \u201cclosely working on the review of existing rules and regulations on VASPs, focusing on key aspects such as scope of regulatory and supervisory powers, information sharing, alignment of reporting requirements, and consultation about emerging products and services.\u201d
\nThe SEC echoed this, noting that its primary strategy for existing BSP-licensed VASPs revolves around \u201cclose collaboration and formal agreements with the BSP,\u201d as the commission continues to work on a Memorandum of Agreement (MoA) with the central bank.
\nThis MoA specifically addresses jurisdictional overlaps to ensure a smooth transition to a well-regulated financial market for investors in cryptocurrency.
\nINNOVATION MEETS REGULATION
\nWei Zhou, chief executive officer (CEO) of Coins.ph, expressed a desire for a regulatory framework that enables local players to compete fairly with offshore exchanges that aggressively market a wider range of products, such as derivatives and margin trading, to Filipinos.
Coins.ph is a VASP duly registered with the BSP as a remittance and transfer company, serving over 16 million users.
\nMr. Zhou said that his company built its business in accordance with the existing BSP VASP regulations. He anticipated that the Philippines might align its rules with developments in the US regulation for cryptocurrencies and suggested a cautious approach to avoid frequent operational changes.
\n\u201cWhat I would love to have is a regulatory framework that allows us to provide these products and services so that at least day-to-day normal Filipinos have financial access, have financial empowerment,\u201d he said in a Google Meet interview.
\nMr. Zhou also pointed to the potential for crypto technology beyond common trading, envisioning their exchange as a platform for tokenized real-world assets, including local agricultural commodities like cacao or coffee beans, if the regulatory framework would permit.
\n\u201cDon\u2019t try to regulate for the past. Try to build, you know, rules for the future, right?\u201d Mr. Zhou said.
\nJiro Reyes, CEO of Bitskwela, a crypto education platform, said that the proposed CASP regulations as a \u201cstep in the right direction,\u201d covering necessary bases from investor protection to operational standards.
\nHowever, Mr. Reyes advocated for a tiered licensing system under the SEC\u2019s CASP framework.
\nHe said that the P100 million paid-up capital requirement, while sensible for large exchanges, could \u201cunintentionally shut out smaller builders, communities, and education-focused organizations who still want to operate responsibly in the space.\u201d
\n\u201cI personally know a lot of passionate and credible teams in the local Web3 scene who are building real value, but don\u2019t have that kind of capital yet. A more flexible, tiered system \u2014 maybe based on risk level or business type would give them a pathway to legitimacy without being held to the same standards as major financial intermediaries,\u201d Mr. Reyes said.
\nBoth Mr. Reyes and Mr. Zhou highlighted the need for greater clarity and a supportive environment for innovation.
\n\u201cHarmonization is long overdue \u2014 and honestly, it\u2019s one of the biggest unlocks we need for Web3 to thrive in the Philippines,\u201d said Mr. Reyes on the coordination between the BSP and SEC.
\n\u201cWhat you don\u2019t want is like you want to do something and then everybody else but the Philippines is doing it. And then there\u2019s no guidance on how to do it here in the Philippines. I think that\u2019s what we don\u2019t want to happen,\u201d said Mr. Zhou.
\nAs the Philippines continues refining its efforts in allowing its local crypto industry to develop, the interplay between these regulatory efforts and the industry\u2019s bleeding edge in financial technology can only give way to further developments.
\n", "content_text": "By Pierce Oel A. Montalvo, Researcher\nTHE PHILIPPINE cryptocurrency industry that emerges this year may look vastly different from the one that entered the central bank\u2019s moratorium.\nRecall that last September 2022, the Bangko Sentral ng Pilipinas (BSP) halted registrations for new Virtual Asset Service Provider (VASP) licenses.\nAccording to Section 902-N of the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI), virtual assets (VAs) may refer to any type of digital-unit that can be digitally traded, or transferred, and can be used for payment or investment purposes.\nCryptocurrencies are treated as VAs exchanged through a VASP. As of May 2025, 13 companies hold VASP licenses.\nBut on May 30, the Securities and Exchange Commission (SEC) finally released their Crypto-Asset Service Provider (CASP) Rules and Guidelines, which aims to provide further regulations on cryptocurrency service providers and crypto-adjacent firms.\nMeanwhile, the BSP moratorium for VASP licenses is set to expire in 2025.\nThese twin developments signal a pivotal moment, reshaping how crypto businesses operate, how investors are protected, and how innovation navigates a more defined regulatory landscape.\nSEC\u2019S NEW RULES\nCryptocurrency continues to grow in the Philippines. In an interview with Bloomberg TV last January, Finance Secretary Ralph G. Recto said that P6 trillion worth of crypto investments is being done in the Philippines.\nHowever, the SEC has made moves in the past to regulate cryptocurrency firms. Last year, the commission requested the National Telecommunications Commission as well as the app markets of Google and Apple to block access to crypto exchange Binance, as the exchange failed to secure a license to solicit funds from the public or operate exchanges for securities.\nThe SEC\u2019s move into the crypto space is deliberate, aiming to address risks distinct from those overseen by the BSP.\n\u201cInvestment or securities-related crypto activities fall under the jurisdiction of the SEC,\u201d the SEC\u2019s PhiliFintech Innovation Office stated in an e-mail message.\n\u201cThe proposed SEC Rules for CASPs, when compared to BSP\u2019s existing VASP regulations, have different objectives in terms of addressing risks in the crypto market in the Philippines.\u201d\nRepublic Act No. 11765 or the Financial Products and Services Consumer Protection Act empowers the Commission to oversee financial products other than traditional securities.\n\u201cUnder this law, crypto-assets that take the form of investments fall within the jurisdiction of the SEC,\u201d it added.\nUnder the new SEC rules, a \u201ccrypto-asset\u201d is defined as \u201ca cryptographically secured digital representation of value or of a right that relies on a cryptographically secured distributed ledger or a similar technology.\u201d\nLikewise, a CASP is defined as an entity that, as a business, offers or engages in the provision of one or more crypto-asset services.\nThese services include offering crypto-assets to the public or operating a crypto-asset trading venue.\nThe rules state that \u201ccrypto-assets shall not be sold, offered for sale, or distributed in the Philippines without complying with the provisions of these Rules and the CASP Guidelines.\u201d\nUnder these rules, crypto-assets generally cannot be offered or sold in the Philippines without filing a disclosure document with the SEC and publishing it at least thirty days before any marketing or offering.\nIf a crypto-asset qualifies as a security, it requires a registration statement approved by the SEC.\n\u201cOnce a crypto-asset takes the form of an investment or security, an obligation arises on the part of CASPs to comply with the standards set, such as those on public offerings, disclosures, registration, marketing, and intermediation activities,\u201d the SEC office said.\nMeanwhile, the CASP guidelines show that a CASP applicant must be a corporation registered with the SEC, indicate the operation of a CASP in its primary purpose, and have a minimum paid-up capital of at least P100 million in cash or property, excluding crypto-assets.\nApplicants must also have a physical office located in the Philippines, which must be appropriately staffed or manned during regular business hours.\n\u201cOnce the final and approved CASP Rules and Guidelines are published, all existing natural or juridical persons that fall within the scope of these regulations \u2014 including BSP-licensed VASPs \u2014 will have thirty (30) days from the date of publication in two (2) newspapers of general circulation to begin complying with the new requirements,\u201d the SEC office added.\nBSP\u2019S EVOLVING STANCE\nBSP, which has been the primary regulator for entities dealing with VAs as payment instruments, maintains its focus on financial stability and consumer protection.\n\u201cThe moratorium for new VASP applications is currently under review,\u201d the central bank said in a separate e-mail interview.\n\u201cKey considerations include the developments in the local and global VASP landscape and the results of supervisory activities, among others.\u201d\nThe BSP has sustained its regulation of VASPs during the moratorium. Last year, it revoked the license of VASP and remittance company Atomtrans Tech Corp. In 2023, it canceled the certificates of registration of Coinville Phils., Inc. and Bexpress, Inc.\nWhen evaluating new applicants post-moratorium, the BSP said it would prioritize corporate governance structure and the applicant\u2019s capacity to manage risks in anti-money laundering, IT cybersecurity, and consumer protection.\nIt will also evaluate applicants\u2019 business models to determine whether they support the BSP\u2019s digitalization and financial inclusion agenda.\nFurthermore, the central bank said that it is planning to adjust minimum capital requirements in its rules, to ensure VASPs can continue to provide services amid tumultuous market conditions. The proposed new capital requirements stem from evaluations during regular VASP examinations and are currently awaiting industry feedback.\nThe MORNBFI currently sets minimum capital requirements for VASPs at P10 million for those without safekeeping and/or administration services for VAs, and P50 million for VASPs with such services (i.e., VA custodians).\nPost-moratorium, the BSP is also working to enhance control measures over corporate governance particularly concerning Related Party Transactions (RPTs), improve liquidity management to ensure continuous service, and reinforce requirements for the proper recording and segregation of customer VAs from proprietary VAs.\nThe central bank will approach the moratorium considering recent incidents like the Bybit crypto exchange breach, crypto exchange and hedge fund FTX\u2019s corporate governance collapse, widespread scams and rugpulls in the crypto industry, and market volatility.\n\u201cThe moratorium has enabled the BSP to lay the groundwork for a more bespoke regulatory environment for VASP,\u201d the BSP said.\nNAVIGATING DUAL FRAMEWORKS\nThe introduction of the SEC\u2019s CASP framework alongside the BSP\u2019s existing VASP regulations necessitates clear coordination to prevent undue burden on industry players.\n\u201cThe BSP and SEC have existing coordination mechanisms, such as the Financial Sector Forum,\u201d the BSP said.\nIt added that both regulators are \u201cclosely working on the review of existing rules and regulations on VASPs, focusing on key aspects such as scope of regulatory and supervisory powers, information sharing, alignment of reporting requirements, and consultation about emerging products and services.\u201d\nThe SEC echoed this, noting that its primary strategy for existing BSP-licensed VASPs revolves around \u201cclose collaboration and formal agreements with the BSP,\u201d as the commission continues to work on a Memorandum of Agreement (MoA) with the central bank.\nThis MoA specifically addresses jurisdictional overlaps to ensure a smooth transition to a well-regulated financial market for investors in cryptocurrency.\nINNOVATION MEETS REGULATION\nWei Zhou, chief executive officer (CEO) of Coins.ph, expressed a desire for a regulatory framework that enables local players to compete fairly with offshore exchanges that aggressively market a wider range of products, such as derivatives and margin trading, to Filipinos.\nCoins.ph is a VASP duly registered with the BSP as a remittance and transfer company, serving over 16 million users.\nMr. Zhou said that his company built its business in accordance with the existing BSP VASP regulations. He anticipated that the Philippines might align its rules with developments in the US regulation for cryptocurrencies and suggested a cautious approach to avoid frequent operational changes.\n\u201cWhat I would love to have is a regulatory framework that allows us to provide these products and services so that at least day-to-day normal Filipinos have financial access, have financial empowerment,\u201d he said in a Google Meet interview.\nMr. Zhou also pointed to the potential for crypto technology beyond common trading, envisioning their exchange as a platform for tokenized real-world assets, including local agricultural commodities like cacao or coffee beans, if the regulatory framework would permit.\n\u201cDon\u2019t try to regulate for the past. Try to build, you know, rules for the future, right?\u201d Mr. Zhou said.\nJiro Reyes, CEO of Bitskwela, a crypto education platform, said that the proposed CASP regulations as a \u201cstep in the right direction,\u201d covering necessary bases from investor protection to operational standards.\nHowever, Mr. Reyes advocated for a tiered licensing system under the SEC\u2019s CASP framework.\nHe said that the P100 million paid-up capital requirement, while sensible for large exchanges, could \u201cunintentionally shut out smaller builders, communities, and education-focused organizations who still want to operate responsibly in the space.\u201d\n\u201cI personally know a lot of passionate and credible teams in the local Web3 scene who are building real value, but don\u2019t have that kind of capital yet. A more flexible, tiered system \u2014 maybe based on risk level or business type would give them a pathway to legitimacy without being held to the same standards as major financial intermediaries,\u201d Mr. Reyes said.\nBoth Mr. Reyes and Mr. Zhou highlighted the need for greater clarity and a supportive environment for innovation.\n\u201cHarmonization is long overdue \u2014 and honestly, it\u2019s one of the biggest unlocks we need for Web3 to thrive in the Philippines,\u201d said Mr. Reyes on the coordination between the BSP and SEC.\n\u201cWhat you don\u2019t want is like you want to do something and then everybody else but the Philippines is doing it. And then there\u2019s no guidance on how to do it here in the Philippines. I think that\u2019s what we don\u2019t want to happen,\u201d said Mr. Zhou.\nAs the Philippines continues refining its efforts in allowing its local crypto industry to develop, the interplay between these regulatory efforts and the industry\u2019s bleeding edge in financial technology can only give way to further developments.", "date_published": "2025-06-09T00:05:19+08:00", "date_modified": "2025-06-08T20:24:02+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/06/beautiful-cryptocurrency-concept.jpg", "tags": [ "Banking Report Q1 2025", "Pierce Oel A. Montalvo", "Banking Report", "Research" ], "summary": "THE PHILIPPINE cryptocurrency industry that emerges this year may look vastly different from the one that entered the central bank\u2019s moratorium." }, { "id": "/?p=677719", "url": "/research/2025/06/09/677719/how-digital-banks-reshape-the-philippine-financial-landscape/", "title": "How digital banks reshape the Philippine financial landscape", "content_html": "By Abigail Marie P. Yraola, Deputy Research Head
\nEMBRACING digital banking was a leap the Bangko Sentral ng Pilipinas (BSP) took since it began opening its doors to the idea of fully digital banks to operate in the country alongside traditional banks.
\nIn December 2020, the BSP released guidelines on the establishment of digital banking licenses and by 2021, it approved six digital banks: Overseas Filipino Bank, Tonik Digital Bank, Inc., UNO Digital Bank, GoTyme Bank,\u00a0 Maya Bank, Inc., and UnionDigital Bank, Inc.
\nShortly after, it then imposed a three-year pause in granting licenses for the central bank to monitor the banks\u2019 performances.
\nThe central bank believes that these banks are key drivers for financial inclusion and will contribute innovative financial solution.
\nFast forward, these frontrunners will now face competition as the BSP allow four more banks to operate, meaning, a total of 10 banks will hold digital licenses, wherein the four will probably be fully operational by next year.
\nIssued on Dec. 26 last year, the BSP Circular No. 1205 approved the issuance of digital banking licenses, including the conversion of existing bank\u2019s license to digital bank license beginning Jan. 1, but still subject to prudential limits and conditions.
\n\u201cThis move further advances BSP\u2019s agenda on greater financial inclusion and digital transformation by encouraging the entry of new players with robust, distinctive customer value propositions and innovative business models,\u201d the BSP said in an e-mail.
\nThis proves the central bank\u2019s significant efforts and initiatives to support the growth of digital banking.
\nAdditionally, it shows that digital banks are positioned for growth and reshape the financial landscape in the country, however, it would raise a concern on how these banks will leverage its potential while managing risks and establishing fair competition in the banking industry.
\nDIGITAL BANKS vs. TRADITIONAL BANKS
\nGeorge N. Manzano, an economist from the University of Asia and the Pacific, said that digital banks are not necessarily threats but rather should be seen as complementary players that can better serve specific market segments, which includes the unbanked, tech-savvy clients, or small digital entrepreneurs.
\u201cTo stay relevant and competitive, traditional banks may find it strategic to establish digital bank subsidiaries. This allows them to test new models, reach underserved markets, and offer a full suite of services that cater to both traditional and digital-first customers,\u201d Mr. Manzano said in an e-mail.
\nHe added that instead of viewing digital banking as a zero-sum game, the future may lie in finding synergies and complementarities between the two approaches.
\nFor Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., while digital banks emerge, this doesn\u2019t mean that it will replace traditional banking institutions and practices in the short term.
\nHe added that there are still a lot who are concerned with security and still prefer face-to-face transactions for availing their banking needs plus poor digital infrastructure is also a reason why consumers will favor traditional banks.
\nFor UnionDigital Bank, the rise of digital banks is not a disruption to traditional financial institutions, but as a complementary force that expands the reach and depth of financial services across the country.
\n\u201cWe believe that the BSP\u2019s initiative to issue digital banking licenses is a bold and necessary step to bridge the gap in financial access. It\u2019s not about replacing traditional banks \u2014 it\u2019s about working alongside them to build a more inclusive, resilient, and future-ready financial ecosystem for every Filipino,\u201d it said in an e-mail.
\nFor Greg Krasnov, founder and chief executive officer of Tonik Digital Bank, digital banks are fundamentally shifting how banking services are accessed, delivered, and scaled.
\n\u201cTraditional institutions have historically relied on physical infrastructure and manual processes, with a focus on affluent segments and corporate clients, [while] digital banks, by contrast, are mobile-first, data-driven, and designed for scale across underserved mass-market segments,\u201d Mr. Krasnov said in an e-mail interview.
\nMORE PLAYERS
\nMr. Krasnov explained that the lifting of the moratorium reopens a crucial avenue for innovation in the sector. This, he added, is a positive step that recognizes the need for increased competition, better services, and broader coverage \u2014 especially for consumers who are underbanked or entirely excluded.
Manish Bhai, founder and president and chief executive officer at UNO Digital Bank, said that the interest from new players confirms that the country is a highly promising market for digital banking.
\n\u201cThe central bank\u2019s decision to reopen the window \u2014 this time with stricter differentiation requirements \u2014 is a clear sign of confidence in the sector\u2019s long-term potential,\u201d Mr. Bhai said in an e-mail.
\nFor Shailesh Baidwan, Maya Group president and Maya Bank cofounder, the central bank has set a high bar for new applicants, requiring them to present unique value propositions, innovative business models, and demonstrate their readiness to operate sustainably.
\nHe further explained that this rigorous licensing process ensures that only players who can set themselves apart and contribute to the financial ecosystem \u2014 particularly by reaching untapped or underserved segments \u2014 will be granted a digital banking license.
\n\u201cThe added focus on value and innovation aligns with the BSP\u2019s vision of advancing financial inclusion through meaningful, differentiated services,\u201d he said.
\nThe entry of more digital banks can enhance competition and financial inclusion, provided that the regulatory capacity of the central bank is strong enough to manage the associated risks, Mr. Manzano said.
\nHe highlighted that the core issue lies in supervision if the BSP can effectively oversee digital banks, especially in areas such as credit risk, cybersecurity, and compliance.
\nHowever, he cautioned that if supervision capacity is limited, the risk of destabilizing the system increases.
\n\u201cIn that case, stricter entry requirements would be prudent. The long-term viability of these banks will depend on both their business models and the strength of the regulatory environment,\u201d he said.
\nPITFALLS IN REGULATORY COMPLIANCE
\nThe BSP said that digital banks are facing various operational and regulatory challenges as they navigate the nascent of their operations. Among these, is the need for sustained investment in cybersecurity infrastructure to protect against increasingly sophisticated cyberthreats.
Additionally, maintaining strong capital buffers to support rapid business growth, and the establishment of comprehensive risk management frameworks tailored to digital banking operations is crucial.
\nThe central bank also highlighted that strengthening risk management capabilities across key areas, including credit, technology, and internal control functions (such as audit and compliance is significant.
\nIt added that enhancing these core areas is vital for sustaining financial soundness and aligning operations with long-term business strategies.
\nFor UNO\u2019s Mr. Bhai, compliance in digital banking is multifaceted but mainly, the challenge is balancing the speed of technology with the rigor of regulatory expectations.
\nHe added that while digital banks operate in real time, regulations tend to prioritize stability and thoroughness over speed.
\n\u201cAs digital banks begin to serve more previously unbanked and underbanked customers, the regulatory framework will naturally evolve,\u201d he said.
\nAdditionally, these new segments may have different needs, vulnerabilities, and risk profiles and forward-looking institutions must be prepared to adapt \u201cand that means building with compliance baked into the company\u2019s DNA from day one.\u201d
\nMeanwhile, Maya\u2019s Mr. Baidwan reiterated that the central bank has been clear and consistent in laying out the regulatory requirements for digital banks.
\n\u201cThese standards \u2014 whether around capitalization, governance, cybersecurity, or consumer protection \u2014 are straightforward and aligned with the broader goal of ensuring trust and stability in the financial system,\u201d he said.
\nHe emphasized that similar with any fully regulated bank, the challenge is not in understanding the requirements, but in executing them consistently.
\nHe also pointed out that for the new players, building the necessary infrastructure can be demanding, particularly in areas like risk management, compliance systems, and IT security.
\nINCREASED COMPETITION
\nThe BSP said that the emergence of these digital banks is expected to intensify competition within the banking sector, particularly regarding product innovation, service delivery, and customer experience.
Traditional banks, which are burdened by high costs of maintaining extensive branch networks, may struggle to compete effectively in terms of market reach unless they accelerate their digital transformation and innovate their product and service offerings.
\n\u201cWhile this heightened competition may exert downward pressure on traditional banks\u2019 margins, it also presents an opportunity for them to modernize, enhance operational efficiencies, and better align with evolving consumer demand for digital financial services,\u201d the central bank said.
\nLatest BSP data showed that as of end-March, digital banks\u2019 total assets reached P125.49 billion, higher than the P96.9 billion posted a year earlier.
\nMeanwhile, these banks posted a combined net loss of P1.04 billion during the first quarter from a net loss of P2.07 billion a year earlier.
\nIn comparison with traditional banks, Oikonomia\u2019s Mr. Erece said that to remain profitable and competitive in the long run, traditional banks must embrace digital transformation to meet the demands of customers seeking efficiency, convenience, and speed.
\n\u201cTraditional banks will still have robust revenue streams from traditional users such as older demographics and larger institutions,\u201d he said.
\nFor Maya, with banking penetration in the country still low, access to formal credit for individuals and small businesses is still highly limited.
\n\u201cThe vast majority of loans from the banks are extended to corporates, while consumers and small businesses have limited access to unsecured credit. These gaps underscore the ongoing need for inclusive, accessible, and technology-driven financial solutions.\u201d
\nFor Tonik Bank, traditional banks have focused on corporate lending and high-net-worth retail customers, while overlooking unsecured consumer credit and small businesses.
\nGiven this, Mr. Krasnov explained that the gap exists due to legacy banks lack the operational models and risk appetite needed to profitably serve these markets.
\n\u201cDigital banks are now capturing that opportunity by deploying alternative data, automated underwriting, and embedded distribution models like payroll deduction or point-of-sale lending.\u201d
\nHe said that these models are structurally better suited to serve the mass market at scale.
\nFor UNO Bank, the biggest shift is not only technological but also behavioral.
\n\u201cCustomers today expect more from their banks. It\u2019s no longer a seller\u2019s market. It\u2019s a buyer\u2019s market \u2014 driven by expectations shaped by seamless experiences in retail, transport, entertainment, and logistics,\u201d Mr. Bhai explained.
\nHe further explained that banks are no longer just compared to other banks but to the best digital experiences available.
\nDigital banks, he added, are structurally designed to meet these expectations.
\n\u201cWith leaner cost bases and modern tech stacks, we deliver faster onboarding, lower fees, and deeply personalized services \u2014 especially for mobile-first and underserved segments.\u201d
\nHowever, he pointed out that this shift is not a zero-sum game. Traditional banks will still hold advantages \u2014 such as capital scale, brand equity, and long-standing client relationships.
\n\u201cInstitutions that can\u2019t evolve may see margin compression and market share loss, especially among younger, more digital native users.\u201d
\nECONOMIC GROWTH \u2018DRIVERS\u2019
\nDigital banking services can improve access to credit, leading to higher consumer spending and potential business expansions which are both vital to economic growth.
\u201cA well-managed growth of credit to pair along with growth in productivity leads to faster economic growth. In addition, more players mean more competition and hopefully leads to better services and even job generation if more players are willing to enter the space,\u201d Mr. Erece said.
\nUNO Bank\u2019s Mr. Bhai said that the entry of new digital banks has the potential to contribute to long-term economic growth \u2014 but not by simply increasing the number of players.
\n\u201cThe real value lies in how these banks expand access to new services capital, especially for individuals and small businesses that the traditional system often overlooks.\u201d
\nMoreover, he said that digital banks are structurally better equipped to cater to the evolving nature of work. As more people earn income through freelance platforms, remote work, and digital entrepreneurship, there is a need for financial institutions that can understand and support non-linear income patterns, thin-file customers, and real-time financial needs.
\nMeanwhile, Mr. Krasnov of Tonik Bank said that access to formal credit is a proven driver of household resilience and economic activity, explaining that when consumers can borrow safely \u2014 whether to manage expenses, invest in education, or purchase durable goods \u2014 it stimulates consumption and improves quality of life.
\nSimilarly, when small business can access working capital, they grow and have increased profits and hire more staff.
\n\u201cDigital banks, by lowering the cost of service delivery and expanding reach, have a unique role in catalyzing this type of growth,\u201d he said.
\nHe said that digital banks can drive both broader access and better quality \u2014 and that\u2019s the engine of long-term impact.
\nFor Maya Bank, digital banks have the potential to support long-term economic growth, particularly if players can meaningfully reach underserved segments, enable financial activity, and introduce innovation that deepens trust and engagement in the financial system.
\n", "content_text": "By Abigail Marie P. Yraola, Deputy Research Head\nEMBRACING digital banking was a leap the Bangko Sentral ng Pilipinas (BSP) took since it began opening its doors to the idea of fully digital banks to operate in the country alongside traditional banks.\nIn December 2020, the BSP released guidelines on the establishment of digital banking licenses and by 2021, it approved six digital banks: Overseas Filipino Bank, Tonik Digital Bank, Inc., UNO Digital Bank, GoTyme Bank,\u00a0 Maya Bank, Inc., and UnionDigital Bank, Inc.\nShortly after, it then imposed a three-year pause in granting licenses for the central bank to monitor the banks\u2019 performances.\nThe central bank believes that these banks are key drivers for financial inclusion and will contribute innovative financial solution.\nFast forward, these frontrunners will now face competition as the BSP allow four more banks to operate, meaning, a total of 10 banks will hold digital licenses, wherein the four will probably be fully operational by next year.\nIssued on Dec. 26 last year, the BSP Circular No. 1205 approved the issuance of digital banking licenses, including the conversion of existing bank\u2019s license to digital bank license beginning Jan. 1, but still subject to prudential limits and conditions.\n\u201cThis move further advances BSP\u2019s agenda on greater financial inclusion and digital transformation by encouraging the entry of new players with robust, distinctive customer value propositions and innovative business models,\u201d the BSP said in an e-mail.\nThis proves the central bank\u2019s significant efforts and initiatives to support the growth of digital banking.\nAdditionally, it shows that digital banks are positioned for growth and reshape the financial landscape in the country, however, it would raise a concern on how these banks will leverage its potential while managing risks and establishing fair competition in the banking industry.\nDIGITAL BANKS vs. TRADITIONAL BANKS\nGeorge N. Manzano, an economist from the University of Asia and the Pacific, said that digital banks are not necessarily threats but rather should be seen as complementary players that can better serve specific market segments, which includes the unbanked, tech-savvy clients, or small digital entrepreneurs.\n\u201cTo stay relevant and competitive, traditional banks may find it strategic to establish digital bank subsidiaries. This allows them to test new models, reach underserved markets, and offer a full suite of services that cater to both traditional and digital-first customers,\u201d Mr. Manzano said in an e-mail.\nHe added that instead of viewing digital banking as a zero-sum game, the future may lie in finding synergies and complementarities between the two approaches.\nFor Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., while digital banks emerge, this doesn\u2019t mean that it will replace traditional banking institutions and practices in the short term.\nHe added that there are still a lot who are concerned with security and still prefer face-to-face transactions for availing their banking needs plus poor digital infrastructure is also a reason why consumers will favor traditional banks.\nFor UnionDigital Bank, the rise of digital banks is not a disruption to traditional financial institutions, but as a complementary force that expands the reach and depth of financial services across the country.\n\u201cWe believe that the BSP\u2019s initiative to issue digital banking licenses is a bold and necessary step to bridge the gap in financial access. It\u2019s not about replacing traditional banks \u2014 it\u2019s about working alongside them to build a more inclusive, resilient, and future-ready financial ecosystem for every Filipino,\u201d it said in an e-mail.\nFor Greg Krasnov, founder and chief executive officer of Tonik Digital Bank, digital banks are fundamentally shifting how banking services are accessed, delivered, and scaled.\n\u201cTraditional institutions have historically relied on physical infrastructure and manual processes, with a focus on affluent segments and corporate clients, [while] digital banks, by contrast, are mobile-first, data-driven, and designed for scale across underserved mass-market segments,\u201d Mr. Krasnov said in an e-mail interview.\nMORE PLAYERS\nMr. Krasnov explained that the lifting of the moratorium reopens a crucial avenue for innovation in the sector. This, he added, is a positive step that recognizes the need for increased competition, better services, and broader coverage \u2014 especially for consumers who are underbanked or entirely excluded.\nManish Bhai, founder and president and chief executive officer at UNO Digital Bank, said that the interest from new players confirms that the country is a highly promising market for digital banking.\n\u201cThe central bank\u2019s decision to reopen the window \u2014 this time with stricter differentiation requirements \u2014 is a clear sign of confidence in the sector\u2019s long-term potential,\u201d Mr. Bhai said in an e-mail.\nFor Shailesh Baidwan, Maya Group president and Maya Bank cofounder, the central bank has set a high bar for new applicants, requiring them to present unique value propositions, innovative business models, and demonstrate their readiness to operate sustainably.\nHe further explained that this rigorous licensing process ensures that only players who can set themselves apart and contribute to the financial ecosystem \u2014 particularly by reaching untapped or underserved segments \u2014 will be granted a digital banking license.\n\u201cThe added focus on value and innovation aligns with the BSP\u2019s vision of advancing financial inclusion through meaningful, differentiated services,\u201d he said.\nThe entry of more digital banks can enhance competition and financial inclusion, provided that the regulatory capacity of the central bank is strong enough to manage the associated risks, Mr. Manzano said.\nHe highlighted that the core issue lies in supervision if the BSP can effectively oversee digital banks, especially in areas such as credit risk, cybersecurity, and compliance.\nHowever, he cautioned that if supervision capacity is limited, the risk of destabilizing the system increases.\n\u201cIn that case, stricter entry requirements would be prudent. The long-term viability of these banks will depend on both their business models and the strength of the regulatory environment,\u201d he said.\nPITFALLS IN REGULATORY COMPLIANCE\nThe BSP said that digital banks are facing various operational and regulatory challenges as they navigate the nascent of their operations. Among these, is the need for sustained investment in cybersecurity infrastructure to protect against increasingly sophisticated cyberthreats.\nAdditionally, maintaining strong capital buffers to support rapid business growth, and the establishment of comprehensive risk management frameworks tailored to digital banking operations is crucial.\nThe central bank also highlighted that strengthening risk management capabilities across key areas, including credit, technology, and internal control functions (such as audit and compliance is significant.\nIt added that enhancing these core areas is vital for sustaining financial soundness and aligning operations with long-term business strategies.\nFor UNO\u2019s Mr. Bhai, compliance in digital banking is multifaceted but mainly, the challenge is balancing the speed of technology with the rigor of regulatory expectations.\nHe added that while digital banks operate in real time, regulations tend to prioritize stability and thoroughness over speed.\n\u201cAs digital banks begin to serve more previously unbanked and underbanked customers, the regulatory framework will naturally evolve,\u201d he said.\nAdditionally, these new segments may have different needs, vulnerabilities, and risk profiles and forward-looking institutions must be prepared to adapt \u201cand that means building with compliance baked into the company\u2019s DNA from day one.\u201d\nMeanwhile, Maya\u2019s Mr. Baidwan reiterated that the central bank has been clear and consistent in laying out the regulatory requirements for digital banks.\n\u201cThese standards \u2014 whether around capitalization, governance, cybersecurity, or consumer protection \u2014 are straightforward and aligned with the broader goal of ensuring trust and stability in the financial system,\u201d he said.\nHe emphasized that similar with any fully regulated bank, the challenge is not in understanding the requirements, but in executing them consistently.\nHe also pointed out that for the new players, building the necessary infrastructure can be demanding, particularly in areas like risk management, compliance systems, and IT security.\nINCREASED COMPETITION\nThe BSP said that the emergence of these digital banks is expected to intensify competition within the banking sector, particularly regarding product innovation, service delivery, and customer experience.\nTraditional banks, which are burdened by high costs of maintaining extensive branch networks, may struggle to compete effectively in terms of market reach unless they accelerate their digital transformation and innovate their product and service offerings.\n\u201cWhile this heightened competition may exert downward pressure on traditional banks\u2019 margins, it also presents an opportunity for them to modernize, enhance operational efficiencies, and better align with evolving consumer demand for digital financial services,\u201d the central bank said.\nLatest BSP data showed that as of end-March, digital banks\u2019 total assets reached P125.49 billion, higher than the P96.9 billion posted a year earlier.\nMeanwhile, these banks posted a combined net loss of P1.04 billion during the first quarter from a net loss of P2.07 billion a year earlier.\nIn comparison with traditional banks, Oikonomia\u2019s Mr. Erece said that to remain profitable and competitive in the long run, traditional banks must embrace digital transformation to meet the demands of customers seeking efficiency, convenience, and speed.\n\u201cTraditional banks will still have robust revenue streams from traditional users such as older demographics and larger institutions,\u201d he said.\nFor Maya, with banking penetration in the country still low, access to formal credit for individuals and small businesses is still highly limited.\n\u201cThe vast majority of loans from the banks are extended to corporates, while consumers and small businesses have limited access to unsecured credit. These gaps underscore the ongoing need for inclusive, accessible, and technology-driven financial solutions.\u201d\nFor Tonik Bank, traditional banks have focused on corporate lending and high-net-worth retail customers, while overlooking unsecured consumer credit and small businesses.\nGiven this, Mr. Krasnov explained that the gap exists due to legacy banks lack the operational models and risk appetite needed to profitably serve these markets.\n\u201cDigital banks are now capturing that opportunity by deploying alternative data, automated underwriting, and embedded distribution models like payroll deduction or point-of-sale lending.\u201d\nHe said that these models are structurally better suited to serve the mass market at scale.\nFor UNO Bank, the biggest shift is not only technological but also behavioral.\n\u201cCustomers today expect more from their banks. It\u2019s no longer a seller\u2019s market. It\u2019s a buyer\u2019s market \u2014 driven by expectations shaped by seamless experiences in retail, transport, entertainment, and logistics,\u201d Mr. Bhai explained.\nHe further explained that banks are no longer just compared to other banks but to the best digital experiences available.\nDigital banks, he added, are structurally designed to meet these expectations.\n\u201cWith leaner cost bases and modern tech stacks, we deliver faster onboarding, lower fees, and deeply personalized services \u2014 especially for mobile-first and underserved segments.\u201d\nHowever, he pointed out that this shift is not a zero-sum game. Traditional banks will still hold advantages \u2014 such as capital scale, brand equity, and long-standing client relationships.\n\u201cInstitutions that can\u2019t evolve may see margin compression and market share loss, especially among younger, more digital native users.\u201d\nECONOMIC GROWTH \u2018DRIVERS\u2019\nDigital banking services can improve access to credit, leading to higher consumer spending and potential business expansions which are both vital to economic growth.\n\u201cA well-managed growth of credit to pair along with growth in productivity leads to faster economic growth. In addition, more players mean more competition and hopefully leads to better services and even job generation if more players are willing to enter the space,\u201d Mr. Erece said.\nUNO Bank\u2019s Mr. Bhai said that the entry of new digital banks has the potential to contribute to long-term economic growth \u2014 but not by simply increasing the number of players.\n\u201cThe real value lies in how these banks expand access to new services capital, especially for individuals and small businesses that the traditional system often overlooks.\u201d\nMoreover, he said that digital banks are structurally better equipped to cater to the evolving nature of work. As more people earn income through freelance platforms, remote work, and digital entrepreneurship, there is a need for financial institutions that can understand and support non-linear income patterns, thin-file customers, and real-time financial needs.\nMeanwhile, Mr. Krasnov of Tonik Bank said that access to formal credit is a proven driver of household resilience and economic activity, explaining that when consumers can borrow safely \u2014 whether to manage expenses, invest in education, or purchase durable goods \u2014 it stimulates consumption and improves quality of life.\nSimilarly, when small business can access working capital, they grow and have increased profits and hire more staff.\n\u201cDigital banks, by lowering the cost of service delivery and expanding reach, have a unique role in catalyzing this type of growth,\u201d he said.\nHe said that digital banks can drive both broader access and better quality \u2014 and that\u2019s the engine of long-term impact.\nFor Maya Bank, digital banks have the potential to support long-term economic growth, particularly if players can meaningfully reach underserved segments, enable financial activity, and introduce innovation that deepens trust and engagement in the financial system.", "date_published": "2025-06-09T00:04:19+08:00", "date_modified": "2025-06-08T20:23:58+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/06/man-holding-mobile-phone-credit-card-laptop-online-shopping.jpg", "tags": [ "Abigail Marie P. Yraola", "Banking Report Q1 2025", "Banking Report", "Research" ], "summary": "EMBRACING digital banking was a leap the Bangko Sentral ng Pilipinas (BSP) took since it began opening its doors to the idea of fully digital banks to operate in the country alongside traditional banks." }, { "id": "/?p=677718", "url": "/research/2025/06/09/677718/digital-peso-in-the-philippines-ready-or-not/", "title": "Digital peso in the Philippines: Ready or not?", "content_html": "By Lourdes O. Pilar, Researcher
\nCHEAPER cross-border remittances, greater financial inclusion, enhanced liquidity management, reduced settlement risks, and financial stability support are the many promises of central bank digital currency (CBDC) to the country\u2019s financial landscape. But would a digital peso work in the Philippine financial system?
\nA CBDC is a form of digital currency issued by a country\u2019s central bank. It was like cryptocurrencies, except that its value is fixed by the central bank and is equivalent to the country\u2019s fiat currency.
\nLast year, the country\u2019s central bank completed its testing phase for Project Agila, its prototype wholesale CBDC.
\nRizal Commercial Banking Corp. (RCBC) views the potential adoption of a CBDC as a strategic move toward modernizing the Philippine financial ecosystem.
\n\u201cCBDCs provide a secure, efficient, and transparent alternative to physical cash, enabling real-time, government-backed digital settlements that enhance the integrity of payments nationwide,\u201d said Angelito M. Villanueva, RCBC executive vice-president and chief innovation and inclusion officer.
\nChina Banking Corp. (Chinabank) recognizes that the adoption of wholesale CBDC technology can bring significant benefits to the banking system.
\n\u201cThrough Project Agila, we have observed that wholesale CBDC (wCBDC) can facilitate 24/7 domestic fund transfers, leading to enhanced efficiency in interbank settlements and faster turnaround times for financial transactions,\u201d said Delfin Jay M. Sabido IX, Chinabank chief innovation and transformation officer.
\nThere are two types of CBDC, wholesale and retail. Financial institutions are the primary users of wholesale CBDCs in which the BSP is introducing in the country, while retail CBDC are for consumers\u2019 and businesses\u2019 use.
\nFinancial institutions included in the pilot study see CBDCs as a powerful enabler and have the potential to promote broader financial inclusion.
\n\u201cDesigned with offline capabilities, CBDCs can reach unbanked populations in geographically isolated and disadvantaged areas. Even without internet access, individuals can transact digitally using feature phones or offline wallets via SIM toolkit, Bluetooth, or QR-based solutions,\u201d Mr. Villanueva of RCBC said.
\nMr. Villanueva also added that CBDCs also enable direct government-to-person disbursements, bypassing the need for a bank account and ensuring aid reaches the intended recipients fast and securely.
\n\u201cUnderbanked and underserved Filipinos can indirectly benefit from wholesale CBDCs through micro, small, and medium enterprises, cooperatives, lending institutions, and the government sector. These entities can leverage the efficiencies and capabilities of wholesale CBDCs to provide better financial services and support to their communities,\u201d said Mr. Sabido of Chinabank.
\nHOW IT WORKS
\nAccording to Mr. Villanueva, the BSP selected Hyperledger Fabric, a distributed ledger technology, as the foundation for pilot testing due to its ability to record, synchronize, and share data across a network of participants. This makes it ideal for off-hours inter-institutional fund transfers \u2014 such as during evenings, weekends, holidays, or when the PhilPaSSplus system is offline.
The selection was based on its strengths in security, system access, 24/7 availability, interoperability, and programmability \u2014 all critical to building a resilient CBDC infrastructure.
\nRCBC said that digital access alone isn\u2019t enough. In areas with limited or no internet connectivity, hybrid solutions will be essential. This includes offline-capable CBDC transactions and mobile-based technologies like SIM toolkit integration.
\nEqually important is the human element. As the country undergoes digital transformation, trusted community intermediaries are critical to bridge the gap.
\nThe project aims to assess the technology\u2019s viability and its potential to improve financial operations, but some advantages and disadvantages were experienced by banks in the implementation of CBDC during pilot testing.
\nRCBC\u2019s participation in the Project Agila pilot presents a unique opportunity to explore the real-world functionality and potential of a wCBDC. The pilot demonstrated key benefits, including faster settlement speeds, reduced reliance on clearing intermediaries, and greater transaction transparency.
\n\u201cHowever, the pilot also surfaced important challenges, such as the need to integrate CBDC systems with legacy banking infrastructure, which often lacks built-in interoperability,\u201d said Mr. Villanueva.
\nBroad adoption will require extensive user education and strategic change management to avoid fragmentation and ensure alignment across financial institutions, Mr. Villanueva added.
\nChinabank experienced several positive outcomes, including the ability to conduct programmable transactions tailored to specific systems using smart contracts, faster interbank settlements, and expanded flexibility in fund management.
\n\u201cThese developments have the potential to significantly improve transaction efficiency and operational risk management,\u201d said Mr. Sabido
\nHe added that areas for further study may include the need for robust cybersecurity measures to protect against potential threats, the requirement for comprehensive staff training to ensure smooth adoption, and the necessity to update existing regulatory frameworks to accommodate new technological advancements.
\nREADY OR NOT?
\nAs one of the Philippines\u2019 most digitally progressive banks, RCBC is strongly positioned to lead in the CBDC and digital finance space.
\u201cRCBC has built a proven track record in delivering innovative, inclusive, and impactful financial technologies. We\u2019ve shown that innovation and inclusion can \u2014 and must \u2014 go hand in hand. We have launched groundbreaking platforms designed to bring banking closer to every Filipino,\u201d Mr. Villanueva said.
\nChinabank\u2019s participation in Project Agila has enabled it to thoroughly assess their technical, operational, and strategic capabilities in adopting wCBDC technology.
\n\u201cChinabank continues to monitor developments closely and will carefully evaluate future requirements, opportunities, and challenges as the project progresses. We remain committed to adapting and evolving our systems to ensure readiness for innovative financial technologies,\u201d Mr. Sabido said.
\nThe BSP said that the project will likely be launched by 2029, still within the six-year term of BSP Governor Eli M. Remolona, Jr.
\n", "content_text": "By Lourdes O. Pilar, Researcher\nCHEAPER cross-border remittances, greater financial inclusion, enhanced liquidity management, reduced settlement risks, and financial stability support are the many promises of central bank digital currency (CBDC) to the country\u2019s financial landscape. But would a digital peso work in the Philippine financial system?\nA CBDC is a form of digital currency issued by a country\u2019s central bank. It was like cryptocurrencies, except that its value is fixed by the central bank and is equivalent to the country\u2019s fiat currency.\nLast year, the country\u2019s central bank completed its testing phase for Project Agila, its prototype wholesale CBDC.\nRizal Commercial Banking Corp. (RCBC) views the potential adoption of a CBDC as a strategic move toward modernizing the Philippine financial ecosystem.\n\u201cCBDCs provide a secure, efficient, and transparent alternative to physical cash, enabling real-time, government-backed digital settlements that enhance the integrity of payments nationwide,\u201d said Angelito M. Villanueva, RCBC executive vice-president and chief innovation and inclusion officer.\nChina Banking Corp. (Chinabank) recognizes that the adoption of wholesale CBDC technology can bring significant benefits to the banking system.\n\u201cThrough Project Agila, we have observed that wholesale CBDC (wCBDC) can facilitate 24/7 domestic fund transfers, leading to enhanced efficiency in interbank settlements and faster turnaround times for financial transactions,\u201d said Delfin Jay M. Sabido IX, Chinabank chief innovation and transformation officer.\nThere are two types of CBDC, wholesale and retail. Financial institutions are the primary users of wholesale CBDCs in which the BSP is introducing in the country, while retail CBDC are for consumers\u2019 and businesses\u2019 use.\nFinancial institutions included in the pilot study see CBDCs as a powerful enabler and have the potential to promote broader financial inclusion.\n\u201cDesigned with offline capabilities, CBDCs can reach unbanked populations in geographically isolated and disadvantaged areas. Even without internet access, individuals can transact digitally using feature phones or offline wallets via SIM toolkit, Bluetooth, or QR-based solutions,\u201d Mr. Villanueva of RCBC said.\nMr. Villanueva also added that CBDCs also enable direct government-to-person disbursements, bypassing the need for a bank account and ensuring aid reaches the intended recipients fast and securely.\n\u201cUnderbanked and underserved Filipinos can indirectly benefit from wholesale CBDCs through micro, small, and medium enterprises, cooperatives, lending institutions, and the government sector. These entities can leverage the efficiencies and capabilities of wholesale CBDCs to provide better financial services and support to their communities,\u201d said Mr. Sabido of Chinabank.\nHOW IT WORKS\nAccording to Mr. Villanueva, the BSP selected Hyperledger Fabric, a distributed ledger technology, as the foundation for pilot testing due to its ability to record, synchronize, and share data across a network of participants. This makes it ideal for off-hours inter-institutional fund transfers \u2014 such as during evenings, weekends, holidays, or when the PhilPaSSplus system is offline.\nThe selection was based on its strengths in security, system access, 24/7 availability, interoperability, and programmability \u2014 all critical to building a resilient CBDC infrastructure.\nRCBC said that digital access alone isn\u2019t enough. In areas with limited or no internet connectivity, hybrid solutions will be essential. This includes offline-capable CBDC transactions and mobile-based technologies like SIM toolkit integration.\nEqually important is the human element. As the country undergoes digital transformation, trusted community intermediaries are critical to bridge the gap.\nThe project aims to assess the technology\u2019s viability and its potential to improve financial operations, but some advantages and disadvantages were experienced by banks in the implementation of CBDC during pilot testing.\nRCBC\u2019s participation in the Project Agila pilot presents a unique opportunity to explore the real-world functionality and potential of a wCBDC. The pilot demonstrated key benefits, including faster settlement speeds, reduced reliance on clearing intermediaries, and greater transaction transparency.\n\u201cHowever, the pilot also surfaced important challenges, such as the need to integrate CBDC systems with legacy banking infrastructure, which often lacks built-in interoperability,\u201d said Mr. Villanueva.\nBroad adoption will require extensive user education and strategic change management to avoid fragmentation and ensure alignment across financial institutions, Mr. Villanueva added.\nChinabank experienced several positive outcomes, including the ability to conduct programmable transactions tailored to specific systems using smart contracts, faster interbank settlements, and expanded flexibility in fund management.\n\u201cThese developments have the potential to significantly improve transaction efficiency and operational risk management,\u201d said Mr. Sabido\nHe added that areas for further study may include the need for robust cybersecurity measures to protect against potential threats, the requirement for comprehensive staff training to ensure smooth adoption, and the necessity to update existing regulatory frameworks to accommodate new technological advancements.\nREADY OR NOT?\nAs one of the Philippines\u2019 most digitally progressive banks, RCBC is strongly positioned to lead in the CBDC and digital finance space.\n\u201cRCBC has built a proven track record in delivering innovative, inclusive, and impactful financial technologies. We\u2019ve shown that innovation and inclusion can \u2014 and must \u2014 go hand in hand. We have launched groundbreaking platforms designed to bring banking closer to every Filipino,\u201d Mr. Villanueva said.\nChinabank\u2019s participation in Project Agila has enabled it to thoroughly assess their technical, operational, and strategic capabilities in adopting wCBDC technology.\n\u201cChinabank continues to monitor developments closely and will carefully evaluate future requirements, opportunities, and challenges as the project progresses. We remain committed to adapting and evolving our systems to ensure readiness for innovative financial technologies,\u201d Mr. Sabido said.\nThe BSP said that the project will likely be launched by 2029, still within the six-year term of BSP Governor Eli M. Remolona, Jr.", "date_published": "2025-06-09T00:03:19+08:00", "date_modified": "2025-06-08T20:23:53+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/06/PHL-flag-Peso-currency.jpg", "tags": [ "Banking Report Q1 2025", "Lourdes O. Pilar", "Banking Report", "Research" ], "summary": "CHEAPER cross-border remittances, greater financial inclusion, enhanced liquidity management, reduced settlement risks, and financial stability support are the many promises of central bank digital currency (CBDC) to the country\u2019s financial landscape. But would a digital peso work in the Philippine financial system?" }, { "id": "/?p=677717", "url": "/research/2025/06/09/677717/big-banks-share-prices-rose-in-q1-despite-uncertainties/", "title": "Big banks\u2019 share prices rose in Q1 despite uncertainties", "content_html": "LISTED BANKS weathered the first quarter despite trade uncertainties and easing interest rates.
\nBut these same sentiments will still linger in the succeeding quarters, analysts said.
\nThe bellwether Philippine Stock Exchange index dropped by 10.5% year on year to 6,180.72 at the end of the first quarter.
\n![\"\"](\"/wp-content/uploads/2025/06/2506Bank_Share.jpg\")
However, the financial subindex, which the banks fall under, climbed by 16.7% annually to 2,374.49 during the period.
\nIn the first three months of the year, 11 of the country\u2019s 14 listed universal and commercial banks\u2019 share prices posted growth year on year.
\nChina Banking Corp. (ticker symbol: CBC) led the pack with a 154.8% annual surge in its share price at the end of the first quarter. It was followed by Philippine National Bank (PNB, 148.2%), Asia United Bank Corp. (AUB, 75%), Rizal Commercial Banking Corp. (RCB, 15.4%), and Philippine Trust Co. (PTC, 15.3%).
\nMeanwhile, Union Bank of the Philippines\u2019 (UBP) stock declined by 26.7% annually as of end-March, while Philippine Bank of Communications (PBC) dropped by 2.7% drop and BDO Unibank, Inc. (BDO) slipped by 0.8%.
\n\u201cThe performance of listed banks in the first quarter was supported by favorable macroeconomic tailwinds \u2014 namely sustained GDP (gross domestic product) growth and a marked decline in inflation \u2014 alongside a stable regulatory environment. The BSP\u2019s cautious stance on monetary easing preserved credit stability while allowing room for potential policy support,\u201d said Arielle Anne D. Santos, an equity analyst at Regina Capital Development Corp.
\n\u201cThe weaker-than-expected first-quarter GDP growth (largely due to reduced exports and slower investments amid global trade uncertainties), and still high interest rates have likely contributed to the moderation in industry loan growth for the quarter,\u201d said Abigail Kathryn L. Chiw, BDO Securities Corp. first vice-president and head of research.
\n![\"\"](\"/wp-content/uploads/2025/06/1QBR25-Income-scaled.jpg\")
She added that the lag effect of the central bank\u2019s policy rate cuts has tempered lending margins for some banks, with the benefit of the reserve requirement ratio (RRR) cuts yet to reflect in the coming quarters.
\nJarrod Leighton M. Tin, an equity research analyst at DragonFi Securities, Inc., said that the RRR cuts led to a decline a banks\u2019 deposits with the BSP, effectively freeing up more liquidity used for lending.
\n\u201cThis easing measure has, to some extent, supported loan growth across the banking sector. With the BSP targeting a gradual reduction of the RRR to 0% by 2028, we expect this to contribute to more sustainable credit expansion and help keep NIMs (net interest margins) more manageable, especially as policy rates continue to ease,\u201d he said.
\nThe Philippine economy grew by 5.4% in the first three months of the year, missing the government\u2019s 6-8% growth target.
\nInflation eased further to almost five-year low of 1.8% in March, bringing the first quarter average to 2.2%, within the 2-4% target of the Bangko Sentral ng Pilipinas (BSP).
\nThe central bank\u2019s key rate was left untouched in the first three months of the year. But in April, BSP resumed its easing cycle by cutting 25 basis points (bps).
\nThe central bank has so far slashed 100 bps to its key rate since it started its easing cycle in August last year.
\nAlso in February, the central bank announced it will slash the RRR of big banks and nonbank financial institutions with quasi-banking functions by 200 bps to 5% from 7%, effective March 28.
\nIt also trimmed the digital banks\u2019 RRR by 150 bps to 2.5%, while the thrift lenders\u2019 will be lowered by 100 bps to 0%.
\nSince October last year, rural and cooperative banks\u2019 RRR has been zero.
\nRRR represents the share of deposits that banks are mandated to retain instead of deploying as loans. A reduction in the RRR effectively frees up liquidity within the banking system, enabling lenders to extend more credit to borrowers and stimulate economic activity.
\nThe country\u2019s largest banks posted an aggregate net income of P94.49 billion as of end-March, growing by 8.6% year on year from P87 billion, data from the BSP showed.
\nSimilarly, the universal and commercial banks\u2019 total assets rose by 7.6% to P25.91 trillion as of end-March, according to central bank data. The big banks\u2019 gross total loan portfolio, which forms the bulk of the total assets, expanded by 13.8% to P14.47 trillion during the period.
\nThe gross nonperforming loans ratio of these big banks improved to 3.02% as of end-March from 3.07% in the same period last year.
\nTheir NIM \u2014 a ratio that measures banks\u2019 efficiency in investing their funds by dividing annualized net interest income to average earning asset \u2014 likewise inched up to 4.11% as of end-March from 3.96% a year ago.
\nBig banks\u2019 provision for credit losses, however, climbed by 41.2% to P29.46 billion as of end-March from P20.87 billion last year.
\nSTANDOUTS
\nBPI and CBC stood out in the first quarter amid strong earnings and loan expansion during the period, analysts said.
\u201cBPI delivered robust results, underpinned by broad-based loan expansion and improved net interest income, reflecting solid execution in a benign credit environment,\u201d Regina Capital\u2019s Ms. Santos said.
\n\u201cAmong the index banks, BPI and CBC stood out, on sustained double-digit earnings growth and RoE (return on equity) of over 15% for the quarter, on the back of: 1) robust loan growth (13% and 19%); 2) better NIMs (+30 bps and +7 bps y-y); and 3) solid asset quality (with NPLs still low at 2.26% and 1.5%),\u201d BDO Securities\u2019 Ms. Chiw said.
\nMeanwhile, UBP and Security Bank Corp. (SECB) were singled out as underperformers during the period.
\n\u201cUnionBank\u2019s net income for the first quarter of 2025 was P1.43 billion, a 28.5% decline from the same time the year before. The primary reasons for this decline were front-loaded nonrecurring expenses and one-time, tax-related write-offs from a subsidiary,\u201d said Juan Alfonso G. Teodoro, an equity research analyst at Timson Securities, Inc.
\n\u201cSecurity Bank surprisingly stood out negatively as Moody\u2019s downgraded the bank\u2019s outlook from stable to negative,\u201d DragonFi\u2019s Mr. Tin said.
\n\u201cSECB earnings results came in behind consensus estimate likely due to higher-than-expected provisions in 1Q25. Investor sentiment was further dampened by Moody\u2019s recent outlook revision from stable to negative, which outlined concerns over its capital ratios given the impact of its loan growth to risk-weighted assets, and the stake acquisition in Home Credit Philippines,\u201d said Ralph Jonathan B. Fausto, research associate in Chinabank Securities Corp.
\nLast May, SECB completed its acquisition of 25% in HC Consumer Finance Philippines, Inc. (aka Home Credit) from MUFG Bank Ltd. for P10.365 billion.
\nTHINGS TO WATCH OUT FOR
\nMoving forward, investors should continue to monitor the central bank\u2019s policy stance and its current trajectory of rate cuts as well as RRR cuts and GDP growth, DragonFi\u2019s Mr. Tin said.
\u201cBanks may continue to target consumer loans to avoid steeper NIM compression amid lower rates. However, this can also lead to higher provisions for loans, weighing on earnings. Although, this is unlikely to have a serious impact as the banks remain very healthy due to their high NPL coverage,\u201d he added.
\n\u201cInvestors should closely monitor asset quality as banks continue to expand their exposure to the high-yield segments in an effort to sustain lending margins amid expectations of further policy easing,\u201d Chinabank Securities\u2019 Mr. Fausto said.
\n\u201cWe believe market participants should closely monitor lingering global trade uncertainties, particularly the outcome of US President Trump\u2019s tariff measures once the 90-day moratorium expires,\u201d said Jash Matthew M. Baylon, an equity analyst at First Resources Management and Securities Corp.
\nHe added that a renewed flare-up in trade tensions could pressure the Philippine peso and strain foreign exchange liquidity in the banking sector.
\nIn addition, BDO Securities\u2019 Ms. Chiw said: \u201cRisks of reaccelerating inflation and interest rates remaining high and restrictive, could also have knock-on effects to the ability of borrowers to repay their debts. And such risks may require banks to incur more loan loss provisions to buffer against the potential rise in loan delinquencies.\u201d \u2014 JPGV
\n", "content_text": "LISTED BANKS weathered the first quarter despite trade uncertainties and easing interest rates. \nBut these same sentiments will still linger in the succeeding quarters, analysts said.\nThe bellwether Philippine Stock Exchange index dropped by 10.5% year on year to 6,180.72 at the end of the first quarter.\n\nHowever, the financial subindex, which the banks fall under, climbed by 16.7% annually to 2,374.49 during the period.\nIn the first three months of the year, 11 of the country\u2019s 14 listed universal and commercial banks\u2019 share prices posted growth year on year.\nChina Banking Corp. (ticker symbol: CBC) led the pack with a 154.8% annual surge in its share price at the end of the first quarter. It was followed by Philippine National Bank (PNB, 148.2%), Asia United Bank Corp. (AUB, 75%), Rizal Commercial Banking Corp. (RCB, 15.4%), and Philippine Trust Co. (PTC, 15.3%).\nMeanwhile, Union Bank of the Philippines\u2019 (UBP) stock declined by 26.7% annually as of end-March, while Philippine Bank of Communications (PBC) dropped by 2.7% drop and BDO Unibank, Inc. (BDO) slipped by 0.8%.\n\u201cThe performance of listed banks in the first quarter was supported by favorable macroeconomic tailwinds \u2014 namely sustained GDP (gross domestic product) growth and a marked decline in inflation \u2014 alongside a stable regulatory environment. The BSP\u2019s cautious stance on monetary easing preserved credit stability while allowing room for potential policy support,\u201d said Arielle Anne D. Santos, an equity analyst at Regina Capital Development Corp. \n\u201cThe weaker-than-expected first-quarter GDP growth (largely due to reduced exports and slower investments amid global trade uncertainties), and still high interest rates have likely contributed to the moderation in industry loan growth for the quarter,\u201d said Abigail Kathryn L. Chiw, BDO Securities Corp. first vice-president and head of research.\n\nShe added that the lag effect of the central bank\u2019s policy rate cuts has tempered lending margins for some banks, with the benefit of the reserve requirement ratio (RRR) cuts yet to reflect in the coming quarters.\nJarrod Leighton M. Tin, an equity research analyst at DragonFi Securities, Inc., said that the RRR cuts led to a decline a banks\u2019 deposits with the BSP, effectively freeing up more liquidity used for lending. \n\u201cThis easing measure has, to some extent, supported loan growth across the banking sector. With the BSP targeting a gradual reduction of the RRR to 0% by 2028, we expect this to contribute to more sustainable credit expansion and help keep NIMs (net interest margins) more manageable, especially as policy rates continue to ease,\u201d he said.\nThe Philippine economy grew by 5.4% in the first three months of the year, missing the government\u2019s 6-8% growth target.\nInflation eased further to almost five-year low of 1.8% in March, bringing the first quarter average to 2.2%, within the 2-4% target of the Bangko Sentral ng Pilipinas (BSP).\nThe central bank\u2019s key rate was left untouched in the first three months of the year. But in April, BSP resumed its easing cycle by cutting 25 basis points (bps).\nThe central bank has so far slashed 100 bps to its key rate since it started its easing cycle in August last year.\nAlso in February, the central bank announced it will slash the RRR of big banks and nonbank financial institutions with quasi-banking functions by 200 bps to 5% from 7%, effective March 28.\nIt also trimmed the digital banks\u2019 RRR by 150 bps to 2.5%, while the thrift lenders\u2019 will be lowered by 100 bps to 0%.\nSince October last year, rural and cooperative banks\u2019 RRR has been zero.\nRRR represents the share of deposits that banks are mandated to retain instead of deploying as loans. A reduction in the RRR effectively frees up liquidity within the banking system, enabling lenders to extend more credit to borrowers and stimulate economic activity.\nThe country\u2019s largest banks posted an aggregate net income of P94.49 billion as of end-March, growing by 8.6% year on year from P87 billion, data from the BSP showed.\nSimilarly, the universal and commercial banks\u2019 total assets rose by 7.6% to P25.91 trillion as of end-March, according to central bank data. The big banks\u2019 gross total loan portfolio, which forms the bulk of the total assets, expanded by 13.8% to P14.47 trillion during the period. \nThe gross nonperforming loans ratio of these big banks improved to 3.02% as of end-March from 3.07% in the same period last year.\nTheir NIM \u2014 a ratio that measures banks\u2019 efficiency in investing their funds by dividing annualized net interest income to average earning asset \u2014 likewise inched up to 4.11% as of end-March from 3.96% a year ago. \nBig banks\u2019 provision for credit losses, however, climbed by 41.2% to P29.46 billion as of end-March from P20.87 billion last year.\nSTANDOUTS\nBPI and CBC stood out in the first quarter amid strong earnings and loan expansion during the period, analysts said.\n\u201cBPI delivered robust results, underpinned by broad-based loan expansion and improved net interest income, reflecting solid execution in a benign credit environment,\u201d Regina Capital\u2019s Ms. Santos said.\n\u201cAmong the index banks, BPI and CBC stood out, on sustained double-digit earnings growth and RoE (return on equity) of over 15% for the quarter, on the back of: 1) robust loan growth (13% and 19%); 2) better NIMs (+30 bps and +7 bps y-y); and 3) solid asset quality (with NPLs still low at 2.26% and 1.5%),\u201d BDO Securities\u2019 Ms. Chiw said. \nMeanwhile, UBP and Security Bank Corp. (SECB) were singled out as underperformers during the period.\n\u201cUnionBank\u2019s net income for the first quarter of 2025 was P1.43 billion, a 28.5% decline from the same time the year before. The primary reasons for this decline were front-loaded nonrecurring expenses and one-time, tax-related write-offs from a subsidiary,\u201d said Juan Alfonso G. Teodoro, an equity research analyst at Timson Securities, Inc.\n\u201cSecurity Bank surprisingly stood out negatively as Moody\u2019s downgraded the bank\u2019s outlook from stable to negative,\u201d DragonFi\u2019s Mr. Tin said.\n\u201cSECB earnings results came in behind consensus estimate likely due to higher-than-expected provisions in 1Q25. Investor sentiment was further dampened by Moody\u2019s recent outlook revision from stable to negative, which outlined concerns over its capital ratios given the impact of its loan growth to risk-weighted assets, and the stake acquisition in Home Credit Philippines,\u201d said Ralph Jonathan B. Fausto, research associate in Chinabank Securities Corp.\nLast May, SECB completed its acquisition of 25% in HC Consumer Finance Philippines, Inc. (aka Home Credit) from MUFG Bank Ltd. for P10.365 billion.\nTHINGS TO WATCH OUT FOR\nMoving forward, investors should continue to monitor the central bank\u2019s policy stance and its current trajectory of rate cuts as well as RRR cuts and GDP growth, DragonFi\u2019s Mr. Tin said.\n\u201cBanks may continue to target consumer loans to avoid steeper NIM compression amid lower rates. However, this can also lead to higher provisions for loans, weighing on earnings. Although, this is unlikely to have a serious impact as the banks remain very healthy due to their high NPL coverage,\u201d he added. \n\u201cInvestors should closely monitor asset quality as banks continue to expand their exposure to the high-yield segments in an effort to sustain lending margins amid expectations of further policy easing,\u201d Chinabank Securities\u2019 Mr. Fausto said.\n\u201cWe believe market participants should closely monitor lingering global trade uncertainties, particularly the outcome of US President Trump\u2019s tariff measures once the 90-day moratorium expires,\u201d said Jash Matthew M. Baylon, an equity analyst at First Resources Management and Securities Corp.\nHe added that a renewed flare-up in trade tensions could pressure the Philippine peso and strain foreign exchange liquidity in the banking sector.\nIn addition, BDO Securities\u2019 Ms. Chiw said: \u201cRisks of reaccelerating inflation and interest rates remaining high and restrictive, could also have knock-on effects to the ability of borrowers to repay their debts. And such risks may require banks to incur more loan loss provisions to buffer against the potential rise in loan delinquencies.\u201d \u2014 JPGV", "date_published": "2025-06-09T00:02:18+08:00", "date_modified": "2025-06-08T20:23:49+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2022/01/ATM-2.jpg", "tags": [ "Banking Report Q1 2025", "John Phoebus G. Villanueva", "Banking Report", "Research" ] }, { "id": "/?p=677716", "url": "/research/2025/06/09/677716/trade-spat-dragged-financial-markets-in-q1/", "title": "Trade spat dragged financial markets in Q1", "content_html": "\r\n \r\n\r\nBy Matthew Miguel L. Castillo
\nTARIFFS imposed by United States President Donald J. Trump, along with uncertain trade and fiscal policies, drove the local financial market\u2019s movement in the first quarter of 2025, analysts said.
\nThese factors are expected to persist in the second quarter as well, the central bank said.
\nThe Philippine Stock Exchange index (PSEi), the barometer for the country\u2019s stock market, closed at 6,180.72 in the first quarter, declining 10.5% from 6,903.53 a year earlier.
\nMeanwhile, data from the Bankers Association of the Philippines showed the peso closed at P57.21 against the dollar in the January-to-March period, weakening by 1.7% from P56.24 a year earlier.
\nAt the secondary bond market, domestic yields fell by an average of 3.59 basis points (bps) annually based on the PHP Bloomberg Valuation (BVAL) Service Reference Rates posted on the Philippine Dealing System\u2019s website as of end-March.
\nTRADE WAR WOES
\nAnalysts attributed that US trade policies have been the primary catalyst of the domestic market movements during the period.
Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics, said that there was a lot of uncertainty in the global markets due to Mr. Trump\u2019s unclear intentions on global tariffs.
\nThis uncertainty, he added, will likely persist in the second quarter, \u201cas uncertainty of the postponed and more punitive \u2018reciprocal\u2019 tariffs continues amid their 90-day pause.\u201d
\nMetropolitan Bank & Trust Co. (Metrobank) Chief Economist Nicholas Antonio T. Mapa said that Mr. Trump\u2019s stance on \u201cUS exceptionalism\u201d was already expected by markets which drove their sentiment in the direction during the period.
\nFor Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., global financial markets were attentive to Mr. Trump\u2019s plans and policies, similar with the fourth quarter.
\nAdditionally, he said that new policies, especially on tariffs and taxes, will impact trade and interest rates. He added that gradual economic growth dragged domestic markets as growth expectations turned pessimistic.
\nMeanwhile, for Sun Life Investment Management and Trust Corp. economist Patrick M. Ella, Mr. Trump\u2019s moves on trade seen in the last quarter \u201ccame worse than expected\u201d from speculations held for his administration last year.
\nEarly in February, Mr. Trump has signaled his plans to announce reciprocal tariffs on many countries, with the intent to reshape global trade relationships in favor of the US.
\nBy April, Mr. Trump implemented a 10% blanket tariffs on all its trading partners. However, the plan to impose higher reciprocal tariffs on certain countries was paused for 90 days or until July.
\nMr. Trump slapped a 17% reciprocal tariff in the Philippines, the second lowest among Association of Southeast Asian Nations member countries trailing behind Singapore\u2019s baseline rate of 10%.
\nThe Philippine economy grew by 5.4% in the first quarter, official government data showed, falling short of the 6%-8% target of the government for 2025.
\nThe expansion was driven by government spending climbing to 18.7% and private consumption, which accounts for 70% of the national economy, picking up by 5.3%.
\nState spending was fueled by the government frontloading infrastructure spending before the 45-day election ban which started on late March while the growth in household spending was due to easing inflation.
\nFor the Bangko Sentral ng Pilipinas (BSP), uncertainty surrounding US trade and fiscal policies, coupled with their perceived impact on the global economy, dragged the prices of local bonds, equities, and foreign exchange (FX) markets during the period.
\nHowever, it added that positive investor sentiment fueled by easing domestic inflation and heightened expectations of a policy interest rate reduction tempered the downturn in the domestic market.
\nLatest government data showed that in March, inflation eased by 1.8%, the slowest in almost five years since the 1.6% posted in May 2020.
\nThis brought inflation to average 2.2% in the first quarter, settling within BSP\u2019s target of 2-4%.
\nBSP RESUMES EASING CYCLE
\nOn the other hand, the central bank has slashed key rates by a total of 100\u00a0 bps since it began its easing cycle in August last year.
During its first policy meeting in February, the central bank held interest rates steady at 5.75%. But in its April meeting, the BSP cut borrowing costs by 25 bps, resuming its easing cycle.
\nPolicy rate cuts are implemented by central banks to stimulate productivity and growth as lower rates allow for more spending in the economy when the threat of inflation is low.
\nFor Pantheon\u2019s Mr. Chanco, he said that it is still early to determine what implications the rate cuts have had on financial markets as it takes time for these rate cuts to translate into stronger real economic activity.
\n\u201cMonetary policy in the Philippines remains very tight despite the cuts pursued to date. This is still very much reflected in business surveys who still see credit access and high interest rates as a material constraint,\u201d Mr. Chanco said.
\nMeanwhile, Metrobank\u2019s Mr. Mapa, rate cuts are designed to bolster growth through the credit channel, as monetary easing is expected to fire up modest capital formation.
\nMr. Erece, on the other hand, expects monetary policy will be further relaxed this year but cautioned that even though there are foreign exchange risks looms with a dovish BSP and a hawkish US Federal Reserve, the underwhelming growth and employment indicators in the country highlight the need for expansionary fiscal and monetary measures.
\n\u201cRate cuts can spur growth through higher activity in lending. Furthermore, interest rates set by the central bank and bond yields follow a similar trend,\u201d he explained.
\nHe also noted that monetary policy can serve as benchmark of expectations on the economy as rate cuts signal confidence that inflation is managed and money can be \u201ccheaper\u201d again.
\nWHAT MARKET TRENDS SHOULD BE MONITORED
\n\u201cGiven a more manageable inflation outlook and emerging risks to growth, the BSP saw scope to further reduce the policy interest rate in April. The continued monetary policy easing cycle will help sustain domestic economic activity amid risks of a global slowdown,\u201d the central bank said.
The BSP recognizes that tariffs and other policies in advanced economies could hinder global growth, which may pose downside risks to the local economy, it added.
\nIt further explained that even though the country is relatively insulated from the tariff wars due to its limited exposure to the US, factors such as potential supply chain disruptions, weak global demand, and subdued investor sentiment could impact domestic growth.
\n\u201cA more accommodative monetary policy stance should enable banks to allocate additional funds toward more productive uses, such as loans and investments,\u201d the BSP said.
\nAdditionally, it will continue to take a measured approach to monetary easing.
\nFor Mr. Chanco, he believes that there is still a general under-appreciation of how sluggish economic growth is in the country regarding domestic demand.
\n\u201cMarkets may also favor the likes of the Philippines this year because its domestic demand driven economy is much less exposed to further flare-ups in global trade tensions,\u201d he added.
\nMonetary policy easing may lead to increased capital expenditures by firms as borrowing costs decrease, which could result in higher consumer spending, Mr. Erece said.
\n\u201cMonetary policy easing is something that the equities market monitor and rate cuts seem to be good news for the market,\u201d he advised, adding that developments that include tariffs, trade conflicts, and political talks, should be monitored as well.
\nFIXED-INCOME MARKET
\nMr. Chanco: Government bond yields probably have further room to fall from our vantage point, as more rate cuts are likely to be priced-in, with the Monetary Board likely to see more space for easing.
Mr. Erece: Bond yields may continue to slip especially on shorter tenors, especially as growth expectations and interest rate cuts continue while longer tenors may see higher yields again.
\nMr. Mapa: BSP easing should support with investors also keeping an eye on [Bureau of the Treasury] issuance volume and timing.
\nEQUITIES
\nMr. Erece: Strong earnings for most industries can boost confidence with the growth potential of publicly listed corporations. Rate cuts may be a sign of faster economic activity. Furthermore, rate cuts can also increase market premium, thus making equities more attractive.
Mr. Chanco: Equities will probably continue to recoup some of their [first quarter] losses, as long as the news on US trade talks with a host of countries continues to show forward progress before the end of the 90-day pause.
\nMr. Ella: [They may move] sideways for the quarter.
\nFOREIGN EXCHANGE MARKET
\nMr. Erece: A dovish BSP with a hawkish Fed may cause the peso to depreciate this year. Although the peso experienced an appreciation rally last March to April, this was mainly caused by the fall of the USD as seen by the [US Dollar Index].
Mr. Chanco: [The peso\u2019s] recent strong run against the US dollar looks overdone, so I expect to see some downward retracement in the remaining weeks of the [second quarter].
\n", "content_text": "1 of 4\r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n\r\n \r\n \nBy Matthew Miguel L. Castillo\nTARIFFS imposed by United States President Donald J. Trump, along with uncertain trade and fiscal policies, drove the local financial market\u2019s movement in the first quarter of 2025, analysts said.\nThese factors are expected to persist in the second quarter as well, the central bank said.\nThe Philippine Stock Exchange index (PSEi), the barometer for the country\u2019s stock market, closed at 6,180.72 in the first quarter, declining 10.5% from 6,903.53 a year earlier.\nMeanwhile, data from the Bankers Association of the Philippines showed the peso closed at P57.21 against the dollar in the January-to-March period, weakening by 1.7% from P56.24 a year earlier.\nAt the secondary bond market, domestic yields fell by an average of 3.59 basis points (bps) annually based on the PHP Bloomberg Valuation (BVAL) Service Reference Rates posted on the Philippine Dealing System\u2019s website as of end-March.\nTRADE WAR WOES\nAnalysts attributed that US trade policies have been the primary catalyst of the domestic market movements during the period.\nMiguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics, said that there was a lot of uncertainty in the global markets due to Mr. Trump\u2019s unclear intentions on global tariffs.\nThis uncertainty, he added, will likely persist in the second quarter, \u201cas uncertainty of the postponed and more punitive \u2018reciprocal\u2019 tariffs continues amid their 90-day pause.\u201d\nMetropolitan Bank & Trust Co. (Metrobank) Chief Economist Nicholas Antonio T. Mapa said that Mr. Trump\u2019s stance on \u201cUS exceptionalism\u201d was already expected by markets which drove their sentiment in the direction during the period.\nFor Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., global financial markets were attentive to Mr. Trump\u2019s plans and policies, similar with the fourth quarter.\nAdditionally, he said that new policies, especially on tariffs and taxes, will impact trade and interest rates. He added that gradual economic growth dragged domestic markets as growth expectations turned pessimistic.\nMeanwhile, for Sun Life Investment Management and Trust Corp. economist Patrick M. Ella, Mr. Trump\u2019s moves on trade seen in the last quarter \u201ccame worse than expected\u201d from speculations held for his administration last year.\nEarly in February, Mr. Trump has signaled his plans to announce reciprocal tariffs on many countries, with the intent to reshape global trade relationships in favor of the US.\nBy April, Mr. Trump implemented a 10% blanket tariffs on all its trading partners. However, the plan to impose higher reciprocal tariffs on certain countries was paused for 90 days or until July.\nMr. Trump slapped a 17% reciprocal tariff in the Philippines, the second lowest among Association of Southeast Asian Nations member countries trailing behind Singapore\u2019s baseline rate of 10%.\nThe Philippine economy grew by 5.4% in the first quarter, official government data showed, falling short of the 6%-8% target of the government for 2025.\nThe expansion was driven by government spending climbing to 18.7% and private consumption, which accounts for 70% of the national economy, picking up by 5.3%.\nState spending was fueled by the government frontloading infrastructure spending before the 45-day election ban which started on late March while the growth in household spending was due to easing inflation.\nFor the Bangko Sentral ng Pilipinas (BSP), uncertainty surrounding US trade and fiscal policies, coupled with their perceived impact on the global economy, dragged the prices of local bonds, equities, and foreign exchange (FX) markets during the period.\nHowever, it added that positive investor sentiment fueled by easing domestic inflation and heightened expectations of a policy interest rate reduction tempered the downturn in the domestic market.\nLatest government data showed that in March, inflation eased by 1.8%, the slowest in almost five years since the 1.6% posted in May 2020.\nThis brought inflation to average 2.2% in the first quarter, settling within BSP\u2019s target of 2-4%.\nBSP RESUMES EASING CYCLE\nOn the other hand, the central bank has slashed key rates by a total of 100\u00a0 bps since it began its easing cycle in August last year.\nDuring its first policy meeting in February, the central bank held interest rates steady at 5.75%. But in its April meeting, the BSP cut borrowing costs by 25 bps, resuming its easing cycle.\nPolicy rate cuts are implemented by central banks to stimulate productivity and growth as lower rates allow for more spending in the economy when the threat of inflation is low.\nFor Pantheon\u2019s Mr. Chanco, he said that it is still early to determine what implications the rate cuts have had on financial markets as it takes time for these rate cuts to translate into stronger real economic activity.\n\u201cMonetary policy in the Philippines remains very tight despite the cuts pursued to date. This is still very much reflected in business surveys who still see credit access and high interest rates as a material constraint,\u201d Mr. Chanco said.\nMeanwhile, Metrobank\u2019s Mr. Mapa, rate cuts are designed to bolster growth through the credit channel, as monetary easing is expected to fire up modest capital formation.\nMr. Erece, on the other hand, expects monetary policy will be further relaxed this year but cautioned that even though there are foreign exchange risks looms with a dovish BSP and a hawkish US Federal Reserve, the underwhelming growth and employment indicators in the country highlight the need for expansionary fiscal and monetary measures.\n\u201cRate cuts can spur growth through higher activity in lending. Furthermore, interest rates set by the central bank and bond yields follow a similar trend,\u201d he explained.\nHe also noted that monetary policy can serve as benchmark of expectations on the economy as rate cuts signal confidence that inflation is managed and money can be \u201ccheaper\u201d again.\nWHAT MARKET TRENDS SHOULD BE MONITORED\n\u201cGiven a more manageable inflation outlook and emerging risks to growth, the BSP saw scope to further reduce the policy interest rate in April. The continued monetary policy easing cycle will help sustain domestic economic activity amid risks of a global slowdown,\u201d the central bank said.\nThe BSP recognizes that tariffs and other policies in advanced economies could hinder global growth, which may pose downside risks to the local economy, it added.\nIt further explained that even though the country is relatively insulated from the tariff wars due to its limited exposure to the US, factors such as potential supply chain disruptions, weak global demand, and subdued investor sentiment could impact domestic growth.\n\u201cA more accommodative monetary policy stance should enable banks to allocate additional funds toward more productive uses, such as loans and investments,\u201d the BSP said.\nAdditionally, it will continue to take a measured approach to monetary easing.\nFor Mr. Chanco, he believes that there is still a general under-appreciation of how sluggish economic growth is in the country regarding domestic demand.\n\u201cMarkets may also favor the likes of the Philippines this year because its domestic demand driven economy is much less exposed to further flare-ups in global trade tensions,\u201d he added.\nMonetary policy easing may lead to increased capital expenditures by firms as borrowing costs decrease, which could result in higher consumer spending, Mr. Erece said.\n\u201cMonetary policy easing is something that the equities market monitor and rate cuts seem to be good news for the market,\u201d he advised, adding that developments that include tariffs, trade conflicts, and political talks, should be monitored as well.\nFIXED-INCOME MARKET\nMr. Chanco: Government bond yields probably have further room to fall from our vantage point, as more rate cuts are likely to be priced-in, with the Monetary Board likely to see more space for easing.\nMr. Erece: Bond yields may continue to slip especially on shorter tenors, especially as growth expectations and interest rate cuts continue while longer tenors may see higher yields again.\nMr. Mapa: BSP easing should support with investors also keeping an eye on [Bureau of the Treasury] issuance volume and timing.\nEQUITIES\nMr. Erece: Strong earnings for most industries can boost confidence with the growth potential of publicly listed corporations. Rate cuts may be a sign of faster economic activity. Furthermore, rate cuts can also increase market premium, thus making equities more attractive.\nMr. Chanco: Equities will probably continue to recoup some of their [first quarter] losses, as long as the news on US trade talks with a host of countries continues to show forward progress before the end of the 90-day pause.\nMr. Ella: [They may move] sideways for the quarter.\nFOREIGN EXCHANGE MARKET\nMr. Erece: A dovish BSP with a hawkish Fed may cause the peso to depreciate this year. Although the peso experienced an appreciation rally last March to April, this was mainly caused by the fall of the USD as seen by the [US Dollar Index].\nMr. Chanco: [The peso\u2019s] recent strong run against the US dollar looks overdone, so I expect to see some downward retracement in the remaining weeks of the [second quarter].", "date_published": "2025-06-09T00:01:18+08:00", "date_modified": "2025-06-08T20:23:46+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/06/2025-1QBR-inflation-rates-thumb.jpg", "tags": [ "Banking Report Q1 2025", "Matthew Miguel L. Castillo", "Banking Report", "Research" ] }, { "id": "/?p=658918", "url": "/research/2025/03/12/658918/rural-banks-turned-digital-banks-boon-or-bane/", "title": "Rural banks turned digital banks: Boon or bane?", "content_html": "The Bangko Sentral ng Pilipinas (BSP) lifted the moratorium on new digital banking licenses this year, allowing 10 digital banks to operate in the country. This means that it will grant four available slots for new and existing players if it meets the BSP\u2019s requirements.
\nThis aligned with the central bank\u2019s goal to harness the potential of these banks in bringing positive impact to the financial system while remaining considerate to possible risks.
\n\u201cNew digital bank applicants will be subjected to a rigorous licensing process that will look into their value proposition, business models, and resources capabilities,\u201d the BSP said in a\u00a0statement.
\nIt reiterated that this follows the standard licensing criteria which includes the assessment of the banks\u2019 ownership and control structure, suitability of shareholders, fitness and propriety of directors and senior management, adequacy of capital, as well as banks\u2019 strategic and operating plan, including an appropriate system of corporate governance and risk management.
\nThe BSP said in an e-mail that its digitalization agenda includes not only traditional banks but also rural banks.
\nGiven this, the agenda will encourage customers to better serve them by making services accessible online on the back of their brick-and-mortar banking operations.
\nThanks to BSP\u2019s Rural Bank Strengthening Program (RBSP), coupled with the initiatives of rural banks\u2019 themselves, the rural banking system in the country remains strong and stable, Rural Bankers Association of the Philippines (RBAP) Executive Director Rafael Francisco D. Amparo said in an e-mail.
\nLaunched in 2022 by the central bank, the RBSP is a structured program which aims to strengthen the rural banking landscape to provide better services to rural areas.
\nAmong those expected to apply for digital bank licenses are financial technology (fintech) companies that entered the market through rural banks.
\nPreviously, several rural banks have been used as an entry point for foreign fintech companies to establish digicentric financial institutions.
\nAmong these are Singaporean-based consumer internet company Sea Ltd. and Streetcorner Group, an association between Indonesia-based fintech company Akulaku and nonlife insurer Metropolitan Insurance Co., Inc.
\nSea, which owns the e-commerce platform Shopee, acquired Banco Laguna, Inc. in 2020 and later on launched its digital banking app SeaBank in June 2022.
\nOn the other hand, Streetcorner Group started the digital transformation of Rural Bank of Cavite City, Inc. and launched OwnBank in June 2022.
\n\u201cWe believe that these rural banks that transitioned to digital banks were always meant to be digital banks in the first\u00a0place,\u201d RBAP\u2019s Mr. Amparo said.
\nHe emphasized that these banks\u2019 foreign fintech shareholders recognized the appropriateness of acquiring rural banks as an entry strategy and then developing digital capabilities until reaching maturity as a digital bank.
\nHe said that digitalization provided rural bank clients fast and convenient services to rural bank clients and noted that utmost care should be observed to manage the vulnerabilities that digitalization inadvertently opens.
\nBE COMPLIANT
\nThe central bank recognizes this value, and the contribution foreign investors bring in to drive growth in the financial system.
However, it still stands its ground: rural banks operating as digital banks should comply with regulatory requirements and upgrade their licenses.
\n\u201cNo bank should\u00a0be operating as a digital bank using a rural banking license unless they convert their license to a digital banking license,\u201d the BSP said in an e-mail.
\n\u201cSome of these investors have bought a few rural banks to convert them into digital banking platforms. While new investment is a positive development, it requires careful assessment due to potential regulatory and financial risks,\u201d the BSP said.
\n\u201cWhile we do not see material risk at this point, we don\u2019t want digital banks created via the \u2018backdoor,\u2019 or operating under rural banking regulations,\u201d it added.
\n\u201cIf a rural bank is acting like a digital bank, then it should comply with the appropriate capital and other regulatory requirements for a digital bank,\u201d the central bank said.
\nThe BSP also emphasized that foreign entities must understand the local financial landscape to manage risks effectively.
\nThe new technology, it said, would help rural banks become more resilient, improve operations, and enable them to offer better financial products and services to their original market through more distribution channels.
\nIt is a good move that rural banks are shifting towards digitalization, however, adherence to regulatory compliances should be considered.
\nThere are possible risks if they fail to meet the requirements set by the central bank.
\nAccording to the BSP, rural bank turned digital banks will face higher capital and prudential requirements but will be given a transition period to comply and the central bank will closely monitor its progress and ensure timely regulatory interventions.
\nThe BSP said that complying with the higher capital requirements and specific regulations are among the main measures rural banks should adhere to.\u00a0
\nRural banks-turned-digital banks must maintain a minimum capital of P1 billion, under the BSP Circular No.1154.
\nAdditionally, the BSP will apply targeted supervisory actions to thrift, rural, and cooperative banks converting to digital banks or digitalizing their operations, setting key indicators to assess their digital operations.
\nThese measures will include regulatory requirements on capitalization, prudential ratios, and governance.
\n\u201cUltimately, these digital banks will be supervised based on their risk profile and activities,\u201d the central bank said.
\nNEOBANKS
\nAside from digital banks, another nontraditional financial entity has been gobbling up rural banks \u2014 the neobanks.
Neobanks are a digital-only financial intermediaries that operates through applications and websites but still offer services and operations similar to banks (or in this case, rural banks).
\nRBAP\u2019s Mr. Amparo\u00a0earlier said\u00a0that neobanks are the \u201cway forward\u201d for the rural banks.
\nNetbank (A Rural Bank), Inc.,\u00a0(Netbank), formerly Community Rural Bank of Romblon (Romblon), Inc., is operating as a neobank but with\u00a0rural banking license.
\nFounded in 2019 by Gus Poston\u00a0and David Paulo Dela Paz, it was the first banking-as-a-service platform in the country, which aims to help other fintech companies offer financial products.
\n\u201c[Netbank] does not hold a digital bank license but operates as a fully digital-focused financial institution, categorized as a neobank,\u201d Netbank Executive Director and Head of Branch operations Alexandra Q. De Chavez said in an e-mail.\u00a0
\n\u201cThe Bank plans to retain its rural banking license, utilizing its existing regulatory compliance and service offerings through the previously secured EPFS (Electronic Payment and Financial Services)\u00a0and EMI (Electronic Money Issuer) licenses,\u201d Ms. De Chavez said.
\nSalmon, also known as the Rural Bank of Sta. Rosa Laguna, Inc., is another neobank operating under a rural bank license.
\nThe neobank was founded by Pavel Fedorov, George Chesakov, and Raffy Montemayor and its services include buy now, pay later credit products, as well as high-interest rate deposits.
\nIt bought 59.7% of the rural bank in 2024.
\nSalmon\u2019s chairman, Raffy Montemayor,\u00a0explained that they are not a digital bank but Salmon is \u201cbuilding a modern bank with branches, ATMs, and other types of physical presence and with customer interactions held offline, online, and everything in between.\u201d
\nMr. Montemayor added that Salmon plans to upgrade to a thrift bank license subject to BSP\u2019s approval which will build its presence in the country through various channels and a capital base more than what most digital banks have.
\n\u201cUnlike digital banks, we will combine physical branches with best-in-class technology solutions, ensuring access to customers both offline and online,\u201d he said in an e-mail.
\n\u2018COOPETITION\u2019
\nIf rural banks will convert to digital banks, then it meant that it would face higher capital and prudential requirements. The BSP said that it will monitor these banks\u2019 progress and ensure timely regulatory interventions.
\u201cRural banks should assess the financial, technological, and operational resources needed for digitalization,\u201d BSP said.
\nThis includes acquiring tech infrastructure and innovations like cloud-based core banking systems, cybersecurity, and fraud management tools.
\nThe central bank also added that management and staff should build the technical expertise necessary for successful digital transformation.
\n\u201cDigitalization creates unique challenges for the entire financial system,\u201d RBAP\u2019s Mr. Amparo said. \u201cWe are confident that the rural banking industry and the entire banking industry for that matter can turn these threats into opportunities for cooperation and collaboration.\u201d
\nFor its part, the central bank sees digital banks as key drivers of financial inclusion contributing innovative financial solutions.
\n\u201cWith the rise of digital-focused rural banks, the BSP anticipates a \u2018coopetition\u2019 dynamic among these institutions, benefiting all stakeholders,\u201d the central bank said. \u2014\u00a0AMPY\u00a0with KHH
\n", "content_text": "The Bangko Sentral ng Pilipinas (BSP) lifted the moratorium on new digital banking licenses this year, allowing 10 digital banks to operate in the country. This means that it will grant four available slots for new and existing players if it meets the BSP\u2019s requirements.\nThis aligned with the central bank\u2019s goal to harness the potential of these banks in bringing positive impact to the financial system while remaining considerate to possible risks.\n\u201cNew digital bank applicants will be subjected to a rigorous licensing process that will look into their value proposition, business models, and resources capabilities,\u201d the BSP said in a\u00a0statement.\nIt reiterated that this follows the standard licensing criteria which includes the assessment of the banks\u2019 ownership and control structure, suitability of shareholders, fitness and propriety of directors and senior management, adequacy of capital, as well as banks\u2019 strategic and operating plan, including an appropriate system of corporate governance and risk management.\nThe BSP said in an e-mail that its digitalization agenda includes not only traditional banks but also rural banks.\nGiven this, the agenda will encourage customers to better serve them by making services accessible online on the back of their brick-and-mortar banking operations.\nThanks to BSP\u2019s Rural Bank Strengthening Program (RBSP), coupled with the initiatives of rural banks\u2019 themselves, the rural banking system in the country remains strong and stable, Rural Bankers Association of the Philippines (RBAP) Executive Director Rafael Francisco D. Amparo said in an e-mail.\nLaunched in 2022 by the central bank, the RBSP is a structured program which aims to strengthen the rural banking landscape to provide better services to rural areas.\nAmong those expected to apply for digital bank licenses are financial technology (fintech) companies that entered the market through rural banks.\nPreviously, several rural banks have been used as an entry point for foreign fintech companies to establish digicentric financial institutions.\nAmong these are Singaporean-based consumer internet company Sea Ltd. and Streetcorner Group, an association between Indonesia-based fintech company Akulaku and nonlife insurer Metropolitan Insurance Co., Inc.\nSea, which owns the e-commerce platform Shopee, acquired Banco Laguna, Inc. in 2020 and later on launched its digital banking app SeaBank in June 2022.\nOn the other hand, Streetcorner Group started the digital transformation of Rural Bank of Cavite City, Inc. and launched OwnBank in June 2022.\n\u201cWe believe that these rural banks that transitioned to digital banks were always meant to be digital banks in the first\u00a0place,\u201d RBAP\u2019s Mr. Amparo said.\nHe emphasized that these banks\u2019 foreign fintech shareholders recognized the appropriateness of acquiring rural banks as an entry strategy and then developing digital capabilities until reaching maturity as a digital bank.\nHe said that digitalization provided rural bank clients fast and convenient services to rural bank clients and noted that utmost care should be observed to manage the vulnerabilities that digitalization inadvertently opens.\nBE COMPLIANT\nThe central bank recognizes this value, and the contribution foreign investors bring in to drive growth in the financial system.\nHowever, it still stands its ground: rural banks operating as digital banks should comply with regulatory requirements and upgrade their licenses.\n\u201cNo bank should\u00a0be operating as a digital bank using a rural banking license unless they convert their license to a digital banking license,\u201d the BSP said in an e-mail.\n\u201cSome of these investors have bought a few rural banks to convert them into digital banking platforms. While new investment is a positive development, it requires careful assessment due to potential regulatory and financial risks,\u201d the BSP said.\n\u201cWhile we do not see material risk at this point, we don\u2019t want digital banks created via the \u2018backdoor,\u2019 or operating under rural banking regulations,\u201d it added.\n\u201cIf a rural bank is acting like a digital bank, then it should comply with the appropriate capital and other regulatory requirements for a digital bank,\u201d the central bank said.\nThe BSP also emphasized that foreign entities must understand the local financial landscape to manage risks effectively.\nThe new technology, it said, would help rural banks become more resilient, improve operations, and enable them to offer better financial products and services to their original market through more distribution channels.\nIt is a good move that rural banks are shifting towards digitalization, however, adherence to regulatory compliances should be considered.\nThere are possible risks if they fail to meet the requirements set by the central bank.\nAccording to the BSP, rural bank turned digital banks will face higher capital and prudential requirements but will be given a transition period to comply and the central bank will closely monitor its progress and ensure timely regulatory interventions.\nThe BSP said that complying with the higher capital requirements and specific regulations are among the main measures rural banks should adhere to.\u00a0\nRural banks-turned-digital banks must maintain a minimum capital of P1 billion, under the BSP Circular No.1154.\nAdditionally, the BSP will apply targeted supervisory actions to thrift, rural, and cooperative banks converting to digital banks or digitalizing their operations, setting key indicators to assess their digital operations.\nThese measures will include regulatory requirements on capitalization, prudential ratios, and governance.\n\u201cUltimately, these digital banks will be supervised based on their risk profile and activities,\u201d the central bank said.\nNEOBANKS\nAside from digital banks, another nontraditional financial entity has been gobbling up rural banks \u2014 the neobanks.\nNeobanks are a digital-only financial intermediaries that operates through applications and websites but still offer services and operations similar to banks (or in this case, rural banks).\nRBAP\u2019s Mr. Amparo\u00a0earlier said\u00a0that neobanks are the \u201cway forward\u201d for the rural banks.\nNetbank (A Rural Bank), Inc.,\u00a0(Netbank), formerly Community Rural Bank of Romblon (Romblon), Inc., is operating as a neobank but with\u00a0rural banking license.\nFounded in 2019 by Gus Poston\u00a0and David Paulo Dela Paz, it was the first banking-as-a-service platform in the country, which aims to help other fintech companies offer financial products.\n\u201c[Netbank] does not hold a digital bank license but operates as a fully digital-focused financial institution, categorized as a neobank,\u201d Netbank Executive Director and Head of Branch operations Alexandra Q. De Chavez said in an e-mail.\u00a0\n\u201cThe Bank plans to retain its rural banking license, utilizing its existing regulatory compliance and service offerings through the previously secured EPFS (Electronic Payment and Financial Services)\u00a0and EMI (Electronic Money Issuer) licenses,\u201d Ms. De Chavez said.\nSalmon, also known as the Rural Bank of Sta. Rosa Laguna, Inc., is another neobank operating under a rural bank license.\nThe neobank was founded by Pavel Fedorov, George Chesakov, and Raffy Montemayor and its services include buy now, pay later credit products, as well as high-interest rate deposits.\nIt bought 59.7% of the rural bank in 2024.\nSalmon\u2019s chairman, Raffy Montemayor,\u00a0explained that they are not a digital bank but Salmon is \u201cbuilding a modern bank with branches, ATMs, and other types of physical presence and with customer interactions held offline, online, and everything in between.\u201d\nMr. Montemayor added that Salmon plans to upgrade to a thrift bank license subject to BSP\u2019s approval which will build its presence in the country through various channels and a capital base more than what most digital banks have.\n\u201cUnlike digital banks, we will combine physical branches with best-in-class technology solutions, ensuring access to customers both offline and online,\u201d he said in an e-mail.\n\u2018COOPETITION\u2019\nIf rural banks will convert to digital banks, then it meant that it would face higher capital and prudential requirements. The BSP said that it will monitor these banks\u2019 progress and ensure timely regulatory interventions.\n\u201cRural banks should assess the financial, technological, and operational resources needed for digitalization,\u201d BSP said.\nThis includes acquiring tech infrastructure and innovations like cloud-based core banking systems, cybersecurity, and fraud management tools.\nThe central bank also added that management and staff should build the technical expertise necessary for successful digital transformation.\n\u201cDigitalization creates unique challenges for the entire financial system,\u201d RBAP\u2019s Mr. Amparo said. \u201cWe are confident that the rural banking industry and the entire banking industry for that matter can turn these threats into opportunities for cooperation and collaboration.\u201d\nFor its part, the central bank sees digital banks as key drivers of financial inclusion contributing innovative financial solutions.\n\u201cWith the rise of digital-focused rural banks, the BSP anticipates a \u2018coopetition\u2019 dynamic among these institutions, benefiting all stakeholders,\u201d the central bank said. \u2014\u00a0AMPY\u00a0with KHH", "date_published": "2025-03-12T18:51:07+08:00", "date_modified": "2025-03-13T18:36:39+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/03/Seabank.jpg", "tags": [ "Abigail Marie P. Yraola", "Kenneth H. Hernandez", "Banking Report", "Research" ] }, { "id": "/?p=658089", "url": "/research/2025/03/10/658089/breaking-banks-to-make-them-stronger-inside-financial-vapt/", "title": "Breaking banks to make them stronger: inside financial VAPT", "content_html": "By Pierce Oel A. Montalvo, Researcher
\nFORGET STEEL VAULTS \u2014 today\u2019s financial industry is built with code, and security is a high-stakes game of who finds the digital backdoor first.
\nThe fintech industry continues to expand. Data from the Bangko Sentral ng Pilipinas (BSP) showed that digital transactions grew to 55.3% of the total retail transaction value in 2023 from 40.1% in 2022, signaling a growing acceptance of digitalization among consumers.
\nSimilarly, the central bank resumed accepting digital banking license applications effective Jan. 1, 2025, now allowing four more digital banks to operate in the Philippines.
\nAmid rapid growth, financial institutions in the Philippines continue their race to fortify their digital operations. The BSP has reinforced its cybersecurity stance through Memorandum M-2024-029, which provides detailed guidelines for financial institutions following the implementation of the Anti-Financial Account Scamming Act (AFASA) in July 2024.
\nThe AFASA law was only a glimpse of what was to come in the 2024-2029 Financial Services Cyber Resilience Plan (FSCRP), a roadmap for the Philippine financial ecosystem\u2019s security, launched August last year.
\n\u201cIt\u2019s our commitment to creating a robust, secure, and resilient\u00a0financial system that can withstand cyber\u00a0incidents and recover quickly from them,\u201d BSP Governor Eli M. Remolona, Jr. said at the launch of the FSCRP.
\nDeep Web Konek, a cybersecurity advocacy group based in Manila, said that Philippine banks are becoming more proactive in their cybersecurity efforts.
\nIts coverage on breaches and threat intelligence reveals that data from myriads of Philippine companies continue to be leaked, to be sold in dark web markets \u2014 including banking credentials.
\n\u201cThis indicates gaps in detecting and mitigating breaches before fraud occurs,\u201d the group said in an e-mail interview.
\nConsidering these breaches, Philippine banks have made progress in strengthening their cybersecurity, adopting measures like penetration testing and red teaming, the group added.
\nA key component among the requirements listed in the M-2024-029 memo is a mandatory Vulnerability Assessment and Penetration Testing (VAPT), which must be performed to ensure Bangko Sentral-supervised financial institutions (BSFIs) maintain a proper Information Security Program.
\n\u201cHowever, inconsistencies remain, and not all institutions rigorously implement these defenses,\u201d Deep Web Konek said.
\n\u201cSome banks pass security audits but remain vulnerable to real-world attacks, especially through social engineering and application programming interface exploits.\u201d
\nWhile banks and financial service providers rush to digitize their operations, the challenge lies in ensuring their security measures keep pace with innovation. This dynamic has spurred both banks and cybersecurity firms in the Philippines to strengthen local VAPT capabilities, recognizing it as a critical aspect of modern financial security.
\nWHAT IS VAPT?
\nThe finance industry continues to be compromised. IBM\u2019s X-Force Threat Intelligence Index showed finance and insurance ranked second among targeted sectors in 2023, accounting for 18.2% of cyberattacks globally.
Locally, cybercrime complaints have tripled to 10,004 reported cases in 2024, totaling almost P198 million in losses among cybercrime victims, data from the Cybercrime Investigation and Coordinating Center showed.
\nCyber fraud losses among BSFIs also soared by 212% year on year in 2023, with account takeovers, identity theft, and phishing accounting for almost 60% of total cases, according to the BSP.
\nThese figures underscore the growing necessity of ensuring, through rigorous testing, that banks are safe.
\n\u201cVAPT requires a risk-based approach to effectively identify and mitigate security vulnerabilities,\u201d said the BSP in an e-mail statement.
\nThe BSP Manual of Regulations for Banks requires these tests for BSFIs. Vulnerability assessments (VA) refer to the identification of security vulnerabilities in systems and networks using automated vulnerability scanners.
\nMeanwhile, penetration testing (PT) involves subjecting systems or networks to simulated or real-world attacks that exploit vulnerabilities under controlled conditions. Both terms are often jointly referred to as \u201cVAPT.\u201d
\n\u201cThis risk-based approach tailors cybersecurity assessments to the unique complexities of each BSFI\u2019s IT operations,\u201d it added.
\n\u201cVAPT is a way for banks to ensure that the systems and applications they roll out to serve customers are being audited by a third party or an external provider, to ensure that the features or applications they roll out are secure,\u201d Secuna Software Technologies, Inc., a cybersecurity firm that offers penetration testing, said in a video interview.
\nBSFIs with digital or electronic financial services are also required to conduct VAPT tests at least annually.
\n\u201cMeeting the annual VAPT requirement involves careful planning, allocation of resources and execution,\u201d the Philippine National Bank\u2019s (PNB) Office of the Chief Information Security Officer (CISO) and Data Privacy Officer (DPO) said in an e-mail interview.
\n\u201cEach activity should be properly scheduled including assigning of champions and determining the scope of review, required tools, connectivity to the systems and credentials to be used in the testing.\u201d
\n\u201cBSFIs must ensure providers have the necessary expertise to meet their operational and security needs,\u201d said the central bank.
\nTo make sure banking operations are not affected during VAPT exercises, separate setups are often employed to prevent tests from interfering with the bank\u2019s critical systems.
\nOtherwise, attack simulations and exercises would be employed during non-critical days and hours, said Red Rock IT Security, a cybersecurity service provider.
\n\u201cIt\u2019s also important to have backups and extra systems in place, so that in case of any setbacks, systems can be recovered quickly, minimizing downtime and potential data loss,\u201d it said in an e-mail interview.
\nCarlos T. Tengkiat, CISO of Rizal Commercial Banking Corp. (RCBC), said that business units within the scope of VAPT exercises also require coordination.
\n\u201cThese include provisioning of test accounts, personnel to do a walkthrough of the system, and allocation of resources to address any findings that may come of the exercise,\u201d he said in an e-mail interview.
\nDuring the VAPT exercise, which could last upwards of a month, banks and cybersecurity firms cooperate with one another to find critical flaws in the bank\u2019s systems, recommend changes, and implement solutions \u2014 all happening within a set timeframe.
\n\u201cVulnerabilities are assessed on their impact. These are then addressed based on the criticality of the systems involved,\u201d Mr. Tengkiat said.
\nThe PNB\u2019s Office of the CISO/DPO added that remediation of the vulnerabilities is a collaborative effort between the business owner, Infosec and IT team.
\n\u201cThis requires remediation planning, analysis, testing, deployment and validation if the fix deployed resolved the issue.\u201d
\nConsidering these extensive measures, VAPT exercises help banks reach global standards in security, strengthening consumer trust.
\n\u201cFinancial institutions must adhere to regulatory and international compliance requirements to follow cybersecurity best practices,\u201d Justin David G. Pineda, president of Pineda Cybersecurity, said in an e-mail interview.
\nRed Rock stated that institutions are implementing stronger and more reliable practices such as adhering to the CIS Critical Security Controls, a globally recognized benchmark for the implementation of safeguards for various systems.
\n\u201cGlobal benchmarks, like the Penetration Testing Execution Standard (PTES) and Open Worldwide Application Security Project (OWASP), are available for reference,\u201d said the BSP.
\nThe central bank added that it does not accredit VAPT providers for BSFIs.
\n\u201cInstead, it requires BSFIs to conduct due diligence using a risk-based approach when selecting service providers.\u201d
\nVULNERABILITIES
\nThrough VAPT exercises, banks can work on preventing discovered exploits in their system, ensuring that their services are secure. In the industry, cybersecurity firms continue to discover common vulnerabilities in the financial industry.
Mr. Pineda said that his firm usually finds vulnerabilities in unpatched workstations and servers, with updates available that have yet to be implemented.
\n\u201cUnfortunately, vulnerabilities with critical severity can severely damage IT assets and exfiltrate confidential and highly confidential data.\u201d
\nHe also added that parameter tampering is a common vulnerability they still observe in financial apps and sites.
\n\u201cFor example, you may send money supposedly worth P100 but modify it to P10,000 using tools. If successful, the data sent may be different, or you may even send money more than what you have in your account,\u201d Mr. Pineda said.
\nLikewise, Red Rock said that security features like one-time passwords (OTPs) were observed to be vulnerable points.
\n\u201cThere are instances such as the misconfiguration of OTP implementations which disrupt the intended process allowing the OTP to be bypassed or manipulated to even be received by the attackers.\u201d
\nIt has highlighted several other security vulnerabilities, ranging from broken access controls that enable unauthorized account access to insufficient input validation that could allow balance manipulation through negative amounts.
\nAdditionally, it has identified a lack of security awareness training that leaves organizations vulnerable to phishing and social engineering attacks.
\nBased on its evaluations with clients from the financial industry last year, Secuna has observed injection attacks, where malicious actors enter malware into ordinary text fields, giving hackers an entry point into a bank\u2019s database.
\nIt has also observed access control issues where users can access unauthorized areas or data, and authentication and session management issues where login systems and user sessions are not properly secured.
\nAdditionally, Secuna\u2019s data revealed information disclosure issues where sensitive data is unintentionally exposed, and security misconfigurations where systems are set up with weak or incorrect security settings.
\nSETBACKS
\nWhile VAPT exercises help banks identify and patch vulnerabilities in their systems, the process itself isn\u2019t immune to challenges. The effectiveness of these security assessments often depends on complex interactions between the banks\u2019 existing infrastructure and the cybersecurity firms\u2019 testing capabilities.
In a double-bind, cybersecurity firms could get hindered by their own clients due to their clients\u2019 technological setbacks. This affects the very tools and results these firms may use to test and diagnose vulnerabilities properly.
\nFor Red Rock, a common challenge is the lack of usable logs for investigation \u2014 \u201cakin to investigating a crime scene without any security camera footage to review.\u201d
\nIt also said that while capturing system snapshots is the crucial next step after a security incident, it frequently encounters cases where the relevant computers have already been wiped clean.
\n\u201cIn this instance, it would be comparable to investigating a crime wherein the victims\u2019 bodies were already disposed of and missing,\u201d Red Rock said.
\nMeanwhile, Mr. Pineda said that despite outlining clear requirements and prerequisites during the planning and scoping phase, some clients attempt to proceed with incomplete data and setup due to the resource-intensive nature of the preparation process.
\nAnother challenge for the firm is the depth of the assessment.
\n\u201cIn VAPT, you usually try to simulate what an attacker would actually do,\u201d Mr. Pineda said. \u201cHowever, in actual testing, the customer will sometimes halt intrusive tests, which may affect the quality and results of the tests.\u201d
\nSecuna identified slow vulnerability remediation as a widespread challenge across all sectors, not just finance.
\nIt added that despite offering a month of unlimited retesting and validation services to verify their clients\u2019 security fixes, organizations often fail to address all identified vulnerabilities within this timeframe, even though such security issues demand urgent attention.
\n\u201cIt\u2019s pretty much obligatory that [security vulnerabilities] should be addressed as soon as possible, because the longer we keep those vulnerabilities out in the open without fixing them, the higher the risk that they\u2019ll be discovered by malicious hackers or threat actors.\u201d
\nGOING BEYOND COMPLIANCE
\nThese hindrances, as constraining as they may be, only point towards a need for more rigorous and VAPT exercises for financial institutions in the Philippines.
\u201cOrganizations should go beyond compliance by including more assets in the testing scope instead of just focusing on assets that are needed to meet regulatory requirements,\u201d Secuna said.
\n\u201cThe government should establish clear requirements for VAPT and Red Teaming engagements to ensure penetration testing is performed effectively, rather than relying solely on automated VA,\u201d Red Rock said.
\n\u201cI always say that VAPT programs should be included in all phases of the IT service lifecycle,\u201d said Mr. Pineda.
\n\u201cIf we do security assessments as early as project initiation/inception, we can identify weaknesses and fix them prior to implementation.\u201d
\nOn the bright side, financial industries continue to develop their security posture in light of developments in VAPT.
\nMr. Tengkiat said that one of the main goals of the RCBC is to address vulnerabilities not only at the tail end but also during development.
\n\u201cWe are currently shifting our development approach to adopt more of the DevSecOps (development, security, and operations) approach.\u201d
\n\u201cFrom 2020 to 2024, PNB undoubtedly saw a significant improvement in its security processes,\u201d the PNB Office of the CISO/DPO said.
\n\u201cThe VAPT program helped in strengthening the Bank\u2019s security architecture and played a key role in fostering a security-centric culture within the organization.\u201d
\n\u201cUnder the Financial Services Cyber Resilience Plan, BSP is considering updates to VAPT requirements, focusing on scope, deliverables, team qualifications, and methodology,\u201d said the BSP.
\n\u201cBSP is also benchmarking testing methodologies from other jurisdictions and will make policy improvements as needed.\u201d
\n", "content_text": "By Pierce Oel A. Montalvo, Researcher\nFORGET STEEL VAULTS \u2014 today\u2019s financial industry is built with code, and security is a high-stakes game of who finds the digital backdoor first.\nThe fintech industry continues to expand. Data from the Bangko Sentral ng Pilipinas (BSP) showed that digital transactions grew to 55.3% of the total retail transaction value in 2023 from 40.1% in 2022, signaling a growing acceptance of digitalization among consumers.\nSimilarly, the central bank resumed accepting digital banking license applications effective Jan. 1, 2025, now allowing four more digital banks to operate in the Philippines.\nAmid rapid growth, financial institutions in the Philippines continue their race to fortify their digital operations. The BSP has reinforced its cybersecurity stance through Memorandum M-2024-029, which provides detailed guidelines for financial institutions following the implementation of the Anti-Financial Account Scamming Act (AFASA) in July 2024.\nThe AFASA law was only a glimpse of what was to come in the 2024-2029 Financial Services Cyber Resilience Plan (FSCRP), a roadmap for the Philippine financial ecosystem\u2019s security, launched August last year.\n\u201cIt\u2019s our commitment to creating a robust, secure, and resilient\u00a0financial system that can withstand cyber\u00a0incidents and recover quickly from them,\u201d BSP Governor Eli M. Remolona, Jr. said at the launch of the FSCRP.\nDeep Web Konek, a cybersecurity advocacy group based in Manila, said that Philippine banks are becoming more proactive in their cybersecurity efforts.\nIts coverage on breaches and threat intelligence reveals that data from myriads of Philippine companies continue to be leaked, to be sold in dark web markets \u2014 including banking credentials.\n\u201cThis indicates gaps in detecting and mitigating breaches before fraud occurs,\u201d the group said in an e-mail interview.\nConsidering these breaches, Philippine banks have made progress in strengthening their cybersecurity, adopting measures like penetration testing and red teaming, the group added.\nA key component among the requirements listed in the M-2024-029 memo is a mandatory Vulnerability Assessment and Penetration Testing (VAPT), which must be performed to ensure Bangko Sentral-supervised financial institutions (BSFIs) maintain a proper Information Security Program.\n\u201cHowever, inconsistencies remain, and not all institutions rigorously implement these defenses,\u201d Deep Web Konek said.\n\u201cSome banks pass security audits but remain vulnerable to real-world attacks, especially through social engineering and application programming interface exploits.\u201d\nWhile banks and financial service providers rush to digitize their operations, the challenge lies in ensuring their security measures keep pace with innovation. This dynamic has spurred both banks and cybersecurity firms in the Philippines to strengthen local VAPT capabilities, recognizing it as a critical aspect of modern financial security.\nWHAT IS VAPT?\nThe finance industry continues to be compromised. IBM\u2019s X-Force Threat Intelligence Index showed finance and insurance ranked second among targeted sectors in 2023, accounting for 18.2% of cyberattacks globally.\nLocally, cybercrime complaints have tripled to 10,004 reported cases in 2024, totaling almost P198 million in losses among cybercrime victims, data from the Cybercrime Investigation and Coordinating Center showed.\nCyber fraud losses among BSFIs also soared by 212% year on year in 2023, with account takeovers, identity theft, and phishing accounting for almost 60% of total cases, according to the BSP.\nThese figures underscore the growing necessity of ensuring, through rigorous testing, that banks are safe.\n\u201cVAPT requires a risk-based approach to effectively identify and mitigate security vulnerabilities,\u201d said the BSP in an e-mail statement.\nThe BSP Manual of Regulations for Banks requires these tests for BSFIs. Vulnerability assessments (VA) refer to the identification of security vulnerabilities in systems and networks using automated vulnerability scanners.\nMeanwhile, penetration testing (PT) involves subjecting systems or networks to simulated or real-world attacks that exploit vulnerabilities under controlled conditions. Both terms are often jointly referred to as \u201cVAPT.\u201d\n\u201cThis risk-based approach tailors cybersecurity assessments to the unique complexities of each BSFI\u2019s IT operations,\u201d it added.\n\u201cVAPT is a way for banks to ensure that the systems and applications they roll out to serve customers are being audited by a third party or an external provider, to ensure that the features or applications they roll out are secure,\u201d Secuna Software Technologies, Inc., a cybersecurity firm that offers penetration testing, said in a video interview.\nBSFIs with digital or electronic financial services are also required to conduct VAPT tests at least annually.\n\u201cMeeting the annual VAPT requirement involves careful planning, allocation of resources and execution,\u201d the Philippine National Bank\u2019s (PNB) Office of the Chief Information Security Officer (CISO) and Data Privacy Officer (DPO) said in an e-mail interview.\n\u201cEach activity should be properly scheduled including assigning of champions and determining the scope of review, required tools, connectivity to the systems and credentials to be used in the testing.\u201d\n\u201cBSFIs must ensure providers have the necessary expertise to meet their operational and security needs,\u201d said the central bank.\nTo make sure banking operations are not affected during VAPT exercises, separate setups are often employed to prevent tests from interfering with the bank\u2019s critical systems.\nOtherwise, attack simulations and exercises would be employed during non-critical days and hours, said Red Rock IT Security, a cybersecurity service provider.\n\u201cIt\u2019s also important to have backups and extra systems in place, so that in case of any setbacks, systems can be recovered quickly, minimizing downtime and potential data loss,\u201d it said in an e-mail interview.\nCarlos T. Tengkiat, CISO of Rizal Commercial Banking Corp. (RCBC), said that business units within the scope of VAPT exercises also require coordination.\n\u201cThese include provisioning of test accounts, personnel to do a walkthrough of the system, and allocation of resources to address any findings that may come of the exercise,\u201d he said in an e-mail interview.\nDuring the VAPT exercise, which could last upwards of a month, banks and cybersecurity firms cooperate with one another to find critical flaws in the bank\u2019s systems, recommend changes, and implement solutions \u2014 all happening within a set timeframe.\n\u201cVulnerabilities are assessed on their impact. These are then addressed based on the criticality of the systems involved,\u201d Mr. Tengkiat said.\nThe PNB\u2019s Office of the CISO/DPO added that remediation of the vulnerabilities is a collaborative effort between the business owner, Infosec and IT team.\n\u201cThis requires remediation planning, analysis, testing, deployment and validation if the fix deployed resolved the issue.\u201d\nConsidering these extensive measures, VAPT exercises help banks reach global standards in security, strengthening consumer trust.\n\u201cFinancial institutions must adhere to regulatory and international compliance requirements to follow cybersecurity best practices,\u201d Justin David G. Pineda, president of Pineda Cybersecurity, said in an e-mail interview.\nRed Rock stated that institutions are implementing stronger and more reliable practices such as adhering to the CIS Critical Security Controls, a globally recognized benchmark for the implementation of safeguards for various systems.\n\u201cGlobal benchmarks, like the Penetration Testing Execution Standard (PTES) and Open Worldwide Application Security Project (OWASP), are available for reference,\u201d said the BSP.\nThe central bank added that it does not accredit VAPT providers for BSFIs.\n\u201cInstead, it requires BSFIs to conduct due diligence using a risk-based approach when selecting service providers.\u201d\nVULNERABILITIES\nThrough VAPT exercises, banks can work on preventing discovered exploits in their system, ensuring that their services are secure. In the industry, cybersecurity firms continue to discover common vulnerabilities in the financial industry.\nMr. Pineda said that his firm usually finds vulnerabilities in unpatched workstations and servers, with updates available that have yet to be implemented.\n\u201cUnfortunately, vulnerabilities with critical severity can severely damage IT assets and exfiltrate confidential and highly confidential data.\u201d\nHe also added that parameter tampering is a common vulnerability they still observe in financial apps and sites.\n\u201cFor example, you may send money supposedly worth P100 but modify it to P10,000 using tools. If successful, the data sent may be different, or you may even send money more than what you have in your account,\u201d Mr. Pineda said.\nLikewise, Red Rock said that security features like one-time passwords (OTPs) were observed to be vulnerable points.\n\u201cThere are instances such as the misconfiguration of OTP implementations which disrupt the intended process allowing the OTP to be bypassed or manipulated to even be received by the attackers.\u201d\nIt has highlighted several other security vulnerabilities, ranging from broken access controls that enable unauthorized account access to insufficient input validation that could allow balance manipulation through negative amounts.\nAdditionally, it has identified a lack of security awareness training that leaves organizations vulnerable to phishing and social engineering attacks.\nBased on its evaluations with clients from the financial industry last year, Secuna has observed injection attacks, where malicious actors enter malware into ordinary text fields, giving hackers an entry point into a bank\u2019s database.\nIt has also observed access control issues where users can access unauthorized areas or data, and authentication and session management issues where login systems and user sessions are not properly secured.\nAdditionally, Secuna\u2019s data revealed information disclosure issues where sensitive data is unintentionally exposed, and security misconfigurations where systems are set up with weak or incorrect security settings.\nSETBACKS\nWhile VAPT exercises help banks identify and patch vulnerabilities in their systems, the process itself isn\u2019t immune to challenges. The effectiveness of these security assessments often depends on complex interactions between the banks\u2019 existing infrastructure and the cybersecurity firms\u2019 testing capabilities.\nIn a double-bind, cybersecurity firms could get hindered by their own clients due to their clients\u2019 technological setbacks. This affects the very tools and results these firms may use to test and diagnose vulnerabilities properly.\nFor Red Rock, a common challenge is the lack of usable logs for investigation \u2014 \u201cakin to investigating a crime scene without any security camera footage to review.\u201d\nIt also said that while capturing system snapshots is the crucial next step after a security incident, it frequently encounters cases where the relevant computers have already been wiped clean.\n\u201cIn this instance, it would be comparable to investigating a crime wherein the victims\u2019 bodies were already disposed of and missing,\u201d Red Rock said.\nMeanwhile, Mr. Pineda said that despite outlining clear requirements and prerequisites during the planning and scoping phase, some clients attempt to proceed with incomplete data and setup due to the resource-intensive nature of the preparation process.\nAnother challenge for the firm is the depth of the assessment.\n\u201cIn VAPT, you usually try to simulate what an attacker would actually do,\u201d Mr. Pineda said. \u201cHowever, in actual testing, the customer will sometimes halt intrusive tests, which may affect the quality and results of the tests.\u201d\nSecuna identified slow vulnerability remediation as a widespread challenge across all sectors, not just finance.\nIt added that despite offering a month of unlimited retesting and validation services to verify their clients\u2019 security fixes, organizations often fail to address all identified vulnerabilities within this timeframe, even though such security issues demand urgent attention.\n\u201cIt\u2019s pretty much obligatory that [security vulnerabilities] should be addressed as soon as possible, because the longer we keep those vulnerabilities out in the open without fixing them, the higher the risk that they\u2019ll be discovered by malicious hackers or threat actors.\u201d\nGOING BEYOND COMPLIANCE\nThese hindrances, as constraining as they may be, only point towards a need for more rigorous and VAPT exercises for financial institutions in the Philippines.\n\u201cOrganizations should go beyond compliance by including more assets in the testing scope instead of just focusing on assets that are needed to meet regulatory requirements,\u201d Secuna said.\n\u201cThe government should establish clear requirements for VAPT and Red Teaming engagements to ensure penetration testing is performed effectively, rather than relying solely on automated VA,\u201d Red Rock said.\n\u201cI always say that VAPT programs should be included in all phases of the IT service lifecycle,\u201d said Mr. Pineda.\n\u201cIf we do security assessments as early as project initiation/inception, we can identify weaknesses and fix them prior to implementation.\u201d\nOn the bright side, financial industries continue to develop their security posture in light of developments in VAPT.\nMr. Tengkiat said that one of the main goals of the RCBC is to address vulnerabilities not only at the tail end but also during development.\n\u201cWe are currently shifting our development approach to adopt more of the DevSecOps (development, security, and operations) approach.\u201d\n\u201cFrom 2020 to 2024, PNB undoubtedly saw a significant improvement in its security processes,\u201d the PNB Office of the CISO/DPO said.\n\u201cThe VAPT program helped in strengthening the Bank\u2019s security architecture and played a key role in fostering a security-centric culture within the organization.\u201d\n\u201cUnder the Financial Services Cyber Resilience Plan, BSP is considering updates to VAPT requirements, focusing on scope, deliverables, team qualifications, and methodology,\u201d said the BSP.\n\u201cBSP is also benchmarking testing methodologies from other jurisdictions and will make policy improvements as needed.\u201d", "date_published": "2025-03-10T00:04:54+08:00", "date_modified": "2025-03-09T18:46:39+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/03/cybersecurity-hacker.jpg", "tags": [ "Banking Report Q4 2024", "Pierce Oel A. Montalvo", "Banking Report", "Research" ], "summary": "FORGET STEEL VAULTS \u2014 today\u2019s financial industry is built with code, and security is a high-stakes game of who finds the digital backdoor first." }, { "id": "/?p=658088", "url": "/research/2025/03/10/658088/hellomoney-making-banking-and-financial-services-as-easy-as-saying-hello/", "title": "HelloMoney: Making banking and financial services as easy as saying \u2018hello\u2019", "content_html": "By Lourdes O. Pilar, Researcher
\n\u201cSAY HELLO to a Worry-Free Life!\u201d
\nThis is HelloMoney\u2019s promise to provide Filipinos with secure, fast, and efficient access to integrated digital financial services, emphasizing its commitment to financial inclusion.
\nHelloMoney is the e-wallet mobile app or a prepaid banking account powered by Asia United Bank (AUB) where customers can operate a convenient and secure 24/7 mobile banking transactions provided with internet connections.
\nIt was launched by AUB in 2019 to enable users to open an account without experiencing the problems encountered in a physical branch.
\nTo improve HelloMoney\u2019s e-wallet market share, the bank will venture on more innovations in the future such as offering microinsurance, digital savings solutions, in addition to further widening its global reach and acceptance network.
\nIt will further enhance the e-wallet\u2019s user experience and streamline its features.
\nTo gain insights into HelloMoney\u2019s plans and developments six years after its launch, 大象传媒 interviewed AUB President Manuel A. Gomez to discuss the e-wallet\u2019s market offerings and future ventures in the Philippines.
\nAs one of the e-wallets in the Philippines and backed by Asia United Bank, what advantages does HelloMoney have over other e-wallets in the country?
\nHelloMoney has a unique advantage in the Philippine e-wallet space because it\u2019s backed by AUB. This means HelloMoney users can be confident their money and transactions are protected by bank-grade security and regulatory compliance. Being part of AUB\u2019s ecosystem also allows HelloMoney to offer more integrated financial services to its users.
\nOther advantages of HelloMoney:
\n\u2022 AUB pioneered the country\u2019s first fully digital registration through National ID integration. This means there\u2019s no need for a physical ID to open an account on HelloMoney because the user\u2019s face already serves as their ID.
\n\u2022 Lowest InstaPay fee of P8 and zero convenience fees for billers.
\n\u2022 Partnership with Para\u00f1aque Integrated Terminal Exchange to digitalize public transportation and modernize how Filipinos pay for their daily commute.
\n\u2022 Digital partnership with Alipay+ made AUB the first Philippine bank with an e-wallet that can be used for cross-border mobile payments in 2022. This also brought HelloMoney closer to Filipinos in Japan, South Korea, Malaysia, Hong Kong SAR, and Singapore.
\nWhat are AUB and HelloMoney doing to reach unbanked and underserved Filipinos?
\nAUB is deeply committed to financial inclusion. Its strategy involves partnering with reputable institutions across the Philippines to reach the unbanked population. Through these collaborations, AUB is creating easier ways for Filipinos to access basic financial services, especially in areas where traditional banking might be limited.
\nOne of these partnerships is with the Philippine Statistics Authority on the National ID integration in which AUB pioneered the country\u2019s first fully digital registration. Even if the unbanked and underserved do not have a physical ID, they can open an account on HelloMoney and enjoy the benefits of digital banking just by having a digital National ID and having their biometrics done. Soon, they can also open an account in a physical branch of AUB just by looking at a camera.
\nWhat ongoing programs of AUB and HelloMoney do customers mostly use for their transactions?
\nIt\u2019s exciting to see how our customers are embracing digital transactions. We\u2019re seeing significant growth in three main areas: InstaPay transfers, mobile load and gaming pin purchases, and bill payments. These services have become essential tools in our users\u2019 daily lives.
\nAUB has partnered with Alipay+ to enable HelloMoney for cross-country transactions. How does the partnership help the users to get an efficient payment and other transactions experience?
\nOur partnership with Alipay+ has been transformative for our international capabilities. Our users can now make QR payments across multiple Asian countries including Japan, South Korea, Malaysia, Hong Kong SAR, and Singapore. This has really simplified cross-border transactions for our customers, whether they\u2019re traveling, working, or studying abroad.
\nWhat consumer benefits arise from AUB\u2019s partnership with Smart Communications, Inc.?
\nThe collaboration with Smart Communications has been fantastic as it enabled AUB to expand its services. AUB has launched several successful campaigns offering special promos and HelloMoney credits for load purchases. It will continue to roll out more exciting campaigns through the end of the year to bring added value to HelloMoney users.
\nWhat security measures have you developed to prevent illicit online banking transactions? What are the preventive tools that are being used to protect its clients from fraud and anti-financial crime?
\nSecurity is a top priority at AUB. The bank recently integrated with the National ID\u2019s e-Verify system, which gives it more confidence to verify customer identities. This is just one part of a comprehensive security framework to protect its customers.
\nWhat are your plans and innovations in the coming years? What products and services do you plan to offer in the market, and how would you differentiate these offerings from those provided by other e-wallets?
\nAUB has several exciting projects in the pipeline. Its focus is on creating more value within the HelloMoney app, making banking access even easier and more convenient to users.\u00a0 The bank is constantly innovating to meet customers\u2019 evolving needs.
\nTo continue growing HelloMoney\u2019s e-wallet market share, the bank will embark on more innovations in the coming years such as offering microinsurance, digital savings solutions, in addition to further widening its global reach and acceptance network.
\nIt is also introducing more enhancements in user experience and simplifying HelloMoney\u2019s features. Ultimately, making banking and financial services more accessible, secure, and simple for Filipinos through HelloMoney should be as easy as saying \u201chello.\u201d
\nWhat do you think are the biggest risks faced by e-wallets and what do you currently doing to eliminate these risks?
\nIn the e-wallet industry, scams and fraud are certainly the biggest challenges. That\u2019s why AUB is continuously enhancing its onboarding process and proper KYC (know your customer) is crucial. It has also made its fraud monitoring systems more robust to review transactions and protect users.
\nHow much did the HelloMoney\u2019s customer base have grown since it was launched in 2019? How about the total volume and value of transactions since the launch? Please provide year-on-year data.
\nAUB takes pride in HelloMoney\u2019s growth trajectory. As of December 2024, its user base has reached 6.3 million, a 37% increase from 2023. Transaction count hit 51.8 million, up 33% from 2023, while transaction value has grown to P196.5 billion, a 34% increase. These numbers reflect the trust users place on HelloMoney and on AUB\u2019s commitment to serving their financial needs.
\nTo know more about AUB\u2019s HelloMoney, visit https://www.aub.com.ph/hellomoney. You may download the app via App Store (Apple), Google Play (Android), and App Gallery (Huawei).
\n", "content_text": "By Lourdes O. Pilar, Researcher\n\u201cSAY HELLO to a Worry-Free Life!\u201d\nThis is HelloMoney\u2019s promise to provide Filipinos with secure, fast, and efficient access to integrated digital financial services, emphasizing its commitment to financial inclusion.\nHelloMoney is the e-wallet mobile app or a prepaid banking account powered by Asia United Bank (AUB) where customers can operate a convenient and secure 24/7 mobile banking transactions provided with internet connections.\nIt was launched by AUB in 2019 to enable users to open an account without experiencing the problems encountered in a physical branch.\nTo improve HelloMoney\u2019s e-wallet market share, the bank will venture on more innovations in the future such as offering microinsurance, digital savings solutions, in addition to further widening its global reach and acceptance network.\nIt will further enhance the e-wallet\u2019s user experience and streamline its features.\nTo gain insights into HelloMoney\u2019s plans and developments six years after its launch, 大象传媒 interviewed AUB President Manuel A. Gomez to discuss the e-wallet\u2019s market offerings and future ventures in the Philippines.\nAs one of the e-wallets in the Philippines and backed by Asia United Bank, what advantages does HelloMoney have over other e-wallets in the country?\nHelloMoney has a unique advantage in the Philippine e-wallet space because it\u2019s backed by AUB. This means HelloMoney users can be confident their money and transactions are protected by bank-grade security and regulatory compliance. Being part of AUB\u2019s ecosystem also allows HelloMoney to offer more integrated financial services to its users.\nOther advantages of HelloMoney:\n\u2022 AUB pioneered the country\u2019s first fully digital registration through National ID integration. This means there\u2019s no need for a physical ID to open an account on HelloMoney because the user\u2019s face already serves as their ID.\n\u2022 Lowest InstaPay fee of P8 and zero convenience fees for billers.\n\u2022 Partnership with Para\u00f1aque Integrated Terminal Exchange to digitalize public transportation and modernize how Filipinos pay for their daily commute.\n\u2022 Digital partnership with Alipay+ made AUB the first Philippine bank with an e-wallet that can be used for cross-border mobile payments in 2022. This also brought HelloMoney closer to Filipinos in Japan, South Korea, Malaysia, Hong Kong SAR, and Singapore.\nWhat are AUB and HelloMoney doing to reach unbanked and underserved Filipinos?\nAUB is deeply committed to financial inclusion. Its strategy involves partnering with reputable institutions across the Philippines to reach the unbanked population. Through these collaborations, AUB is creating easier ways for Filipinos to access basic financial services, especially in areas where traditional banking might be limited.\nOne of these partnerships is with the Philippine Statistics Authority on the National ID integration in which AUB pioneered the country\u2019s first fully digital registration. Even if the unbanked and underserved do not have a physical ID, they can open an account on HelloMoney and enjoy the benefits of digital banking just by having a digital National ID and having their biometrics done. Soon, they can also open an account in a physical branch of AUB just by looking at a camera. \nWhat ongoing programs of AUB and HelloMoney do customers mostly use for their transactions?\nIt\u2019s exciting to see how our customers are embracing digital transactions. We\u2019re seeing significant growth in three main areas: InstaPay transfers, mobile load and gaming pin purchases, and bill payments. These services have become essential tools in our users\u2019 daily lives.\nAUB has partnered with Alipay+ to enable HelloMoney for cross-country transactions. How does the partnership help the users to get an efficient payment and other transactions experience?\nOur partnership with Alipay+ has been transformative for our international capabilities. Our users can now make QR payments across multiple Asian countries including Japan, South Korea, Malaysia, Hong Kong SAR, and Singapore. This has really simplified cross-border transactions for our customers, whether they\u2019re traveling, working, or studying abroad.\nWhat consumer benefits arise from AUB\u2019s partnership with Smart Communications, Inc.?\nThe collaboration with Smart Communications has been fantastic as it enabled AUB to expand its services. AUB has launched several successful campaigns offering special promos and HelloMoney credits for load purchases. It will continue to roll out more exciting campaigns through the end of the year to bring added value to HelloMoney users.\nWhat security measures have you developed to prevent illicit online banking transactions? What are the preventive tools that are being used to protect its clients from fraud and anti-financial crime?\nSecurity is a top priority at AUB. The bank recently integrated with the National ID\u2019s e-Verify system, which gives it more confidence to verify customer identities. This is just one part of a comprehensive security framework to protect its customers.\nWhat are your plans and innovations in the coming years? What products and services do you plan to offer in the market, and how would you differentiate these offerings from those provided by other e-wallets?\nAUB has several exciting projects in the pipeline. Its focus is on creating more value within the HelloMoney app, making banking access even easier and more convenient to users.\u00a0 The bank is constantly innovating to meet customers\u2019 evolving needs. \nTo continue growing HelloMoney\u2019s e-wallet market share, the bank will embark on more innovations in the coming years such as offering microinsurance, digital savings solutions, in addition to further widening its global reach and acceptance network.\nIt is also introducing more enhancements in user experience and simplifying HelloMoney\u2019s features. Ultimately, making banking and financial services more accessible, secure, and simple for Filipinos through HelloMoney should be as easy as saying \u201chello.\u201d\nWhat do you think are the biggest risks faced by e-wallets and what do you currently doing to eliminate these risks?\nIn the e-wallet industry, scams and fraud are certainly the biggest challenges. That\u2019s why AUB is continuously enhancing its onboarding process and proper KYC (know your customer) is crucial. It has also made its fraud monitoring systems more robust to review transactions and protect users.\nHow much did the HelloMoney\u2019s customer base have grown since it was launched in 2019? How about the total volume and value of transactions since the launch? Please provide year-on-year data.\nAUB takes pride in HelloMoney\u2019s growth trajectory. As of December 2024, its user base has reached 6.3 million, a 37% increase from 2023. Transaction count hit 51.8 million, up 33% from 2023, while transaction value has grown to P196.5 billion, a 34% increase. These numbers reflect the trust users place on HelloMoney and on AUB\u2019s commitment to serving their financial needs.\nTo know more about AUB\u2019s HelloMoney, visit https://www.aub.com.ph/hellomoney. You may download the app via App Store (Apple), Google Play (Android), and App Gallery (Huawei).", "date_published": "2025-03-10T00:03:54+08:00", "date_modified": "2025-03-09T18:45:39+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/03/HelloMoney.jpg", "tags": [ "Banking Report Q4 2024", "Lourdes O. Pilar", "Banking Report", "Research" ], "summary": "\u201cSAY HELLO to a Worry-Free Life!\u201d" }, { "id": "/?p=658087", "url": "/research/2025/03/10/658087/rate-cuts-and-us-economic-policy-uncertainty-fuel-markets-in-q4/", "title": "Rate cuts and US economic policy uncertainty fuel markets in Q4", "content_html": "US ECONOMIC POLICY uncertainties coupled with peso depreciation and policy rate cuts by both the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP) drove the local financial market in the last quarter of 2024.
\nThese developments, analysts said, were likely to persist this quarter and throughout 2025.
\nIn the fourth quarter, the Philippine Stock Exchange index (PSEi) \u2014 the barometer for the country\u2019s stock market \u2014 closed at 6,528.79. This was lower by 10.2% from 7,272.65 in the July to September period last year.
\n\r\n \r\n\r\nA year earlier, the local bourse went up by 1.2% from 6,450.04.
\nMeanwhile, data from the Bankers Association of the Philippines showed the peso closed at P57.85 to the dollar in the October to December period, weakening by 3.2% and 4.5% from a quarter earlier and a year earlier, respectively.
\nYields on government securities rose by 49.90 basis points (bps) on average quarter on quarter based on the PHP Bloomberg Valuation (BVAL) Service Reference Rates published on the Philippine Dealing System\u2019s website.
\nOn an annual basis, yields also grew by 21.81 bps.
\nDuring the period, domestic markets were influenced primarily by the reduction of interest rates set by the BSP and economic policies of US President Donald J. Trump, analysts said.
\nHarumi Taguchi, principal economist at S&P Global Market Intelligence, said that market sentiment has been influenced by uncertainties over US economic policy and expectations for fewer and slower policy rate cuts by the US Federal Reserve in the last quarter of 2024 which is still likely to persist this year.
\nFor Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co. (Metrobank), these projected economic policies set by Mr. Trump could have repercussions for global trade, global economic growth, and the direction of US Fed policy rates on the mind of investors.
\n\u201cThe new US administration is set to raise tariffs over the next four years. However, there remains a degree of uncertainty over the pace and magnitude of such tariffs, and whether other trading economies would retaliate by raising their own tariffs,\u201d HSBC ASEAN economist Aris D. Dacanay said in an e-mail.
\nHe added that market players will monitor how protectionism will develop, considering the inflationary risks of tariffs affecting how monetary policy in the US will take effect.
\nMeanwhile, for Sun Life Investment Management and Trust Corp. economist Patrick M. Ella, optimism surrounding the new US government was a big driver during the period.
\nAdditionally, he said that the Philippine peso weakened alongside other Asian currencies following the win of Mr. Trump in November.
\n\u201cFixed income\u00a0markets were elevated as the prospect of slightly elevated domestic inflation due to the weather-related disruptions to food supply and the seasonal demand,\u201d he said in an e-mail.
\nHe also added that the US Federal Reserve\u2019s signaling a lowered rate cut this year helped keep both foreign and domestic interest rates higher.
\nReinielle Matt M. Erece, economist at Oikonomia Advisory and Research, Inc. on the other hand, said that the BSP\u2019s reduction of rates had a significant impact on the financial markets last quarter.
\nThis suggests that further monetary policy easing measures are likely to happen.
\nHowever, he noted that uncertainties by Mr. Trump and his campaigns steered a great deal of uncertainty in our capital markets, causing foreign investors to sell and reposition themselves.
\nDue to this, the local bourse was not able to recover back to its October levels, he said, noting that the stock market rose to above 7,300 levels after the first rate cut of the BSP since the pandemic.
\n\u201cThis level of the PSEi was the highest since the first half of 2022 when the economy started to reopen,\u201d he said.
\nLooking ahead, he said that interest rates and other economic indicators will fuel market movements this year.
\nAdditionally, he said that economic uncertainty by Mr. Trump\u2019s aggressive raise of tariffs on China and Mexico are still the reason why the stock market has a relatively weaker performance.
\nEarlier this year, he imposed tariffs on US\u2019 key trade partners namely Canada, China, and Mexico which may have consequences in global trade.
\nBased on a weekly report by Capital Economics published in February, Mr. Trump has abandoned the idea to impose a flat universal tariff of 10%-20% on all imports to the US and instead favors for a new reciprocal tariff that will be imposed on a country-by-country basis.
\nA reciprocal tariff is a tax or trade restriction that one country places on another in response to similar actions taken by that country and the idea for this is to create a balance in trade between nations.
\nIf one country raises tariffs on goods from another, the affected country might respond by imposing its own tariffs on imports from the first country.
\nTo explain, governments impose tariffs to increase revenues and protect local industries from foreign competition.
\nOn the other hand, locally, the central bank slashed its key rate by 25 bps to 5.75% in their Monetary Board meeting last December.
\nSince its easing cycle in August, the BSP has reduced rate by a total of 75 bps.
\nCENTRAL BANK HOLDS OFF RATE CUTS
\nBut at its first policy meeting this year, the BSP maintained its policy settings, surprising market expectations and at the same time signaled fewer rate cuts this year.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said that lower local interest rates would lead to decreased borrowing and financing costs.
\nThis would then lead to an increase in the demand for loans and credit, and in turn, would result in more investments in new and expansion projects, improve trade, create more jobs, and boost business and economic activities.
\nFor Mr. Taguchi, he also pointed out that policy rate cuts are likely to boost the economy and attract foreign direct investments in the country.
\n\u201cThis could limit further depreciation and support financial\u00a0markets,\u201d he added.
\n\u201cDespite the hawkish stance from the [US Fed], I still see BSP to continue its easing cycle to encourage consumption and investments in the country amid the disappointing GDP growth report for 2024,\u201d Mr. Erece said.
\nHe added that while this may lead to the depreciation of the local unit, stable inflation coupled with weak growth will suffice to continue monetary policy easing.
\n\u201cThe BSP\u2019s accommodative stance aims to ease financial conditions, supporting credit growth and economic activity while maintaining a target-consistent inflation outlook,\u201d the central bank said in an e-mail.
\nBSP also said that following these rate cuts, credit activity has increased, and demand for government securities has been strong, with interest rates generally trending downward.
\nAdditionally, the BSP highlighted that it remains in easing mode to support growth as well as continue gradual rate reductions.
\nThis, alongside monitoring the impact of previous policy changes on the economy. It added that the future decisions on monetary policy will be data dependent.
\nWHAT TO CONSIDER IN 2025
\nAnalysts highlighted significant developments that market participants should consider this quarter, and for the entire year, what trends will persist and how the market should take caution
For Mr. Taguchi, rising protectionism as well as geopolitical tensions are what market players should consider in 2025.
\nFor Metrobank\u2019s Mr. Mapa, the influence of Mr. Trump as he sat office will affect global trade, inflation, and geopolitical concerns.
\n\u201cThe full new tariff schedules that the US will impose, and the conditions attached will be a key source of attention for the\u00a0market,\u201d Sun Life\u2019s Mr. Ella said.
\nOn the other hand, Mr. Ricafort said that increased government spending on infrastructure and election-related expenditures for the May 2025 midterm elections could benefit manufacturers involved in supply chains for various infrastructure projects in which they may also gain from the campaign spending by candidates and their donors or sponsors.
\nInterest rates, coupled with energy prices and world politics, are factors that should be taken into account this year, Mr. Erece said.
\nHe further explained that as the central bank continues its easing cycle, companies will invest in growth expansion which in turn will increase their capital expenditure.
\nAdditionally, energy prices are seen to stabilize as world oil prices are forecasted to be on a decline.
\nMoreover, world politics may cause speculation and hesitation in capital markets.
\n\u201cThe ongoing imposition of tariffs by the US and the retaliatory tariffs set by other countries such as Canada will cause inflation expectations to rise,\u201d Mr. Erece said.
\nLikewise, for the BSP, these external factors will impact domestic financial markets this year.
\n\u201cIn particular, markets will likely continue to be influenced by the protectionist trade policies and fiscal measures of the US, and the resulting policy uncertainty,\u201d BSP said.
\nThese factors, it added could put pressure on foreign exchange, equities, and bond markets, potentially delaying the US Federal Reserve\u2019s easing cycle and affecting global output and inflation.
\nAdditionally, the BSP noted that macroeconomic factors by goods exports, inflows from overseas Filipino workers\u2019 (OFW) remittances and foreign direct investments (FDIs), and the continued implementation of structural reforms are expected to support the markets.
\nLatest BSP data showed that cash remittances reached $3.38 billion in December bring the full year 2024 level to $34.49 billion.
\nMeanwhile, FDI net inflows fell $901 million in November, its lowest in two months or since the $368 million in September, latest data from BSP showed.
\nAdditionally, latest government statistical data showed that trade deficit in December narrowed to $4.14 billion, the smallest trade gap in nine months since the $3.35 billion posted in March 2024.
\nExports for December 2024 declined 2.2% to $5.66 billion while imports likewise, fell by 1.7% to $9.79 billion.
\nThe aggressive move on tariffs by the US administration will discourage investors from investing in riskier markets and opt for safer investment as central banks brace for the potential rise in inflation, Mr. Erece cautioned.
\nLOOKING AHEAD IN 2025
\nFewer rate cuts this year would mean attracting more investments in the stock market plus encouraging companies to increase capital expenditure to strengthen business operations, Mr. Erece said.
He explained that lower interest rates incentivize business and consumers to spend or invest their money in capital markets instead of putting them in lower yielding government bonds. Moreover, in the long term, this will also help boost activity in the stock market.
\nFor Mr. Taguchi, though the country is somehow insulated from risks looming over global trade, it may still be vulnerable to the Fed repricing and the greenback\u2019s strength.
\n\u201cThe Philippine economy, due to its ongoing infrastructure agenda, is operating in a current account deficit, making it susceptible to risks in foreign exchange volatility,\u201d he said.
\nAdditionally, he noted that the US Federal Reserve puts a floor under how much the BSP can cut rates. If the BSP lowers rates more than the Fed, it could weaken the local unit.
\nThis, in turn, will lead to inflation which is fueled by currency depreciation and will complicate BSP\u2019s easing cycle.
\n\u201cSo, if inflation in the US turns out to be stickier due to tariffs, the BSP\u2019s easing cycle might consequently be shallower, which, in turn, could limit the extent of how much Philippine equities and bonds could rally,\u201d he explained.
\nFIXED-INCOME MARKET
\nBSP: The central bank\u2019s shift to a less restrictive monetary policy, driven by easing inflation, is expected to influence bond yields. The BSP\u2019s forward guidance will also impact on the fixed-income market.
Mr. Taguchi: Local bond yields are likely to remain around current levels, as US bond yields are expected to continue affecting local bond yields.
\nMr. Mapa: Domestic liquidity and subdued inflation could keep a lid on interest rates in the coming months although supply risk and the direction of global rates could also mean rates could still be pressured higher during bouts of increased supply or uncertainty.
\nMr. Erece: Bond yields can see a slow decline as inflation expectations continue to stabilize within targets. Other similar investment instruments will see the same movement for this year.
\nMr. Ricafort: Market risk could be managed if the bonds/fixed income securities are held until maturity, or at least to have that flexibility, if market conditions become less favorable, such as if bond yields go up or remain elevated during the investment horizon, with the investor enjoying the effective yields or coupon payments every quarter or year (depending on how often coupon payments are made) that are more predictable (avoiding the risk of losses by not selling when market yields become higher than the yield during the bond\u2019s purchase).
\nEQUITIES MARKET
\nBSP: Factors such as the proposed reduction in stock transaction taxes under the Capital Markets Efficiency Promotion Act, improved credit outlook, and higher domestic consumption, could boost trading activity.
Mr. Ella: [It] is cheap and could remain so until a good news\u00a0story\u00a0[lifts] prices.
\nMr. Erece: As interest rate goes down, the risk-free rate usually goes along with it. Along with the expectation of higher business activity this year, the market risk premium is expected to increase, making stocks a more attractive instrument due to their relatively higher expected returns.
\nMr. Ricafort: \u2026 Better corporate sales and income reports of the largest local companies and mostly better economic data recently to support investment valuations\u2026. After no more large lockdowns since 2022, and no more lockdowns as a policy priority, going forward, thereby, improving sales or revenues, earnings or net income, employment or jobs, more business or economic opportunities; all of which would help support better investment valuations, though offset by still relatively higher prices and higher borrowing costs.
\nFOREIGN EXCHANGE MARKET
\nBSP: \u2026 Steady inflows from OFWs remittances, BPO revenues, tourism, and foreign direct investments are expected to support the peso. Additionally, ample gross international reserves will help cushion against global economic uncertainties and exchange rate volatility.
Mr. Taguchi: [We] expect the peso to remain above P58/US$ considering the likelihood of a policy rate cut by the BSP and the lack of change to the Fed\u2019s policy rate.
\nMr. Mapa: Taking its cue from the dollar and the direction of Fed policy.
\nMr. Ella: [It] could trade sideways.
\nMr. Erece: As the BSP is expected to deviate from the Fed\u2019s movement, the peso is seen to depreciate slightly as the US [remains] in a relatively tighter interest rate environment. This will cause the exchange rate to hover around P58-P59 against the dollar.
\nMr. Ricafort: Going forward, the performance of the US dollar/peso exchange rate would still be partly a function of intervention or defense as consistently seen for more than two years already amid the need to better manage inflation and inflation expectations to fulfill the price stability mandate that would also require stability in the peso exchange rate, which affects import prices/costs and overall inflation. \u2014 Abigail Marie P. Yraola
\n", "content_text": "US ECONOMIC POLICY uncertainties coupled with peso depreciation and policy rate cuts by both the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP) drove the local financial market in the last quarter of 2024.\nThese developments, analysts said, were likely to persist this quarter and throughout 2025.\nIn the fourth quarter, the Philippine Stock Exchange index (PSEi) \u2014 the barometer for the country\u2019s stock market \u2014 closed at 6,528.79. This was lower by 10.2% from 7,272.65 in the July to September period last year.\n\r\n \r\n\r\n \r\n \r\n \r\n \r\n\r\n \r\n 1 of 4\r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n\r\n \r\n \nA year earlier, the local bourse went up by 1.2% from 6,450.04.\nMeanwhile, data from the Bankers Association of the Philippines showed the peso closed at P57.85 to the dollar in the October to December period, weakening by 3.2% and 4.5% from a quarter earlier and a year earlier, respectively.\nYields on government securities rose by 49.90 basis points (bps) on average quarter on quarter based on the PHP Bloomberg Valuation (BVAL) Service Reference Rates published on the Philippine Dealing System\u2019s website.\nOn an annual basis, yields also grew by 21.81 bps.\nDuring the period, domestic markets were influenced primarily by the reduction of interest rates set by the BSP and economic policies of US President Donald J. Trump, analysts said.\nHarumi Taguchi, principal economist at S&P Global Market Intelligence, said that market sentiment has been influenced by uncertainties over US economic policy and expectations for fewer and slower policy rate cuts by the US Federal Reserve in the last quarter of 2024 which is still likely to persist this year.\nFor Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co. (Metrobank), these projected economic policies set by Mr. Trump could have repercussions for global trade, global economic growth, and the direction of US Fed policy rates on the mind of investors.\n\u201cThe new US administration is set to raise tariffs over the next four years. However, there remains a degree of uncertainty over the pace and magnitude of such tariffs, and whether other trading economies would retaliate by raising their own tariffs,\u201d HSBC ASEAN economist Aris D. Dacanay said in an e-mail.\nHe added that market players will monitor how protectionism will develop, considering the inflationary risks of tariffs affecting how monetary policy in the US will take effect.\nMeanwhile, for Sun Life Investment Management and Trust Corp. economist Patrick M. Ella, optimism surrounding the new US government was a big driver during the period.\nAdditionally, he said that the Philippine peso weakened alongside other Asian currencies following the win of Mr. Trump in November.\n\u201cFixed income\u00a0markets were elevated as the prospect of slightly elevated domestic inflation due to the weather-related disruptions to food supply and the seasonal demand,\u201d he said in an e-mail.\nHe also added that the US Federal Reserve\u2019s signaling a lowered rate cut this year helped keep both foreign and domestic interest rates higher.\nReinielle Matt M. Erece, economist at Oikonomia Advisory and Research, Inc. on the other hand, said that the BSP\u2019s reduction of rates had a significant impact on the financial markets last quarter.\nThis suggests that further monetary policy easing measures are likely to happen.\nHowever, he noted that uncertainties by Mr. Trump and his campaigns steered a great deal of uncertainty in our capital markets, causing foreign investors to sell and reposition themselves.\nDue to this, the local bourse was not able to recover back to its October levels, he said, noting that the stock market rose to above 7,300 levels after the first rate cut of the BSP since the pandemic.\n\u201cThis level of the PSEi was the highest since the first half of 2022 when the economy started to reopen,\u201d he said.\nLooking ahead, he said that interest rates and other economic indicators will fuel market movements this year.\nAdditionally, he said that economic uncertainty by Mr. Trump\u2019s aggressive raise of tariffs on China and Mexico are still the reason why the stock market has a relatively weaker performance.\nEarlier this year, he imposed tariffs on US\u2019 key trade partners namely Canada, China, and Mexico which may have consequences in global trade.\nBased on a weekly report by Capital Economics published in February, Mr. Trump has abandoned the idea to impose a flat universal tariff of 10%-20% on all imports to the US and instead favors for a new reciprocal tariff that will be imposed on a country-by-country basis.\nA reciprocal tariff is a tax or trade restriction that one country places on another in response to similar actions taken by that country and the idea for this is to create a balance in trade between nations.\nIf one country raises tariffs on goods from another, the affected country might respond by imposing its own tariffs on imports from the first country.\nTo explain, governments impose tariffs to increase revenues and protect local industries from foreign competition.\nOn the other hand, locally, the central bank slashed its key rate by 25 bps to 5.75% in their Monetary Board meeting last December.\nSince its easing cycle in August, the BSP has reduced rate by a total of 75 bps.\nCENTRAL BANK HOLDS OFF RATE CUTS\nBut at its first policy meeting this year, the BSP maintained its policy settings, surprising market expectations and at the same time signaled fewer rate cuts this year.\nMichael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said that lower local interest rates would lead to decreased borrowing and financing costs.\nThis would then lead to an increase in the demand for loans and credit, and in turn, would result in more investments in new and expansion projects, improve trade, create more jobs, and boost business and economic activities.\nFor Mr. Taguchi, he also pointed out that policy rate cuts are likely to boost the economy and attract foreign direct investments in the country.\n\u201cThis could limit further depreciation and support financial\u00a0markets,\u201d he added.\n\u201cDespite the hawkish stance from the [US Fed], I still see BSP to continue its easing cycle to encourage consumption and investments in the country amid the disappointing GDP growth report for 2024,\u201d Mr. Erece said.\nHe added that while this may lead to the depreciation of the local unit, stable inflation coupled with weak growth will suffice to continue monetary policy easing.\n\u201cThe BSP\u2019s accommodative stance aims to ease financial conditions, supporting credit growth and economic activity while maintaining a target-consistent inflation outlook,\u201d the central bank said in an e-mail.\nBSP also said that following these rate cuts, credit activity has increased, and demand for government securities has been strong, with interest rates generally trending downward.\nAdditionally, the BSP highlighted that it remains in easing mode to support growth as well as continue gradual rate reductions.\nThis, alongside monitoring the impact of previous policy changes on the economy. It added that the future decisions on monetary policy will be data dependent.\nWHAT TO CONSIDER IN 2025\nAnalysts highlighted significant developments that market participants should consider this quarter, and for the entire year, what trends will persist and how the market should take caution\nFor Mr. Taguchi, rising protectionism as well as geopolitical tensions are what market players should consider in 2025.\nFor Metrobank\u2019s Mr. Mapa, the influence of Mr. Trump as he sat office will affect global trade, inflation, and geopolitical concerns.\n\u201cThe full new tariff schedules that the US will impose, and the conditions attached will be a key source of attention for the\u00a0market,\u201d Sun Life\u2019s Mr. Ella said.\nOn the other hand, Mr. Ricafort said that increased government spending on infrastructure and election-related expenditures for the May 2025 midterm elections could benefit manufacturers involved in supply chains for various infrastructure projects in which they may also gain from the campaign spending by candidates and their donors or sponsors.\nInterest rates, coupled with energy prices and world politics, are factors that should be taken into account this year, Mr. Erece said.\nHe further explained that as the central bank continues its easing cycle, companies will invest in growth expansion which in turn will increase their capital expenditure.\nAdditionally, energy prices are seen to stabilize as world oil prices are forecasted to be on a decline.\nMoreover, world politics may cause speculation and hesitation in capital markets.\n\u201cThe ongoing imposition of tariffs by the US and the retaliatory tariffs set by other countries such as Canada will cause inflation expectations to rise,\u201d Mr. Erece said.\nLikewise, for the BSP, these external factors will impact domestic financial markets this year.\n\u201cIn particular, markets will likely continue to be influenced by the protectionist trade policies and fiscal measures of the US, and the resulting policy uncertainty,\u201d BSP said.\nThese factors, it added could put pressure on foreign exchange, equities, and bond markets, potentially delaying the US Federal Reserve\u2019s easing cycle and affecting global output and inflation.\nAdditionally, the BSP noted that macroeconomic factors by goods exports, inflows from overseas Filipino workers\u2019 (OFW) remittances and foreign direct investments (FDIs), and the continued implementation of structural reforms are expected to support the markets.\nLatest BSP data showed that cash remittances reached $3.38 billion in December bring the full year 2024 level to $34.49 billion.\nMeanwhile, FDI net inflows fell $901 million in November, its lowest in two months or since the $368 million in September, latest data from BSP showed.\nAdditionally, latest government statistical data showed that trade deficit in December narrowed to $4.14 billion, the smallest trade gap in nine months since the $3.35 billion posted in March 2024.\nExports for December 2024 declined 2.2% to $5.66 billion while imports likewise, fell by 1.7% to $9.79 billion.\nThe aggressive move on tariffs by the US administration will discourage investors from investing in riskier markets and opt for safer investment as central banks brace for the potential rise in inflation, Mr. Erece cautioned.\nLOOKING AHEAD IN 2025\nFewer rate cuts this year would mean attracting more investments in the stock market plus encouraging companies to increase capital expenditure to strengthen business operations, Mr. Erece said.\nHe explained that lower interest rates incentivize business and consumers to spend or invest their money in capital markets instead of putting them in lower yielding government bonds. Moreover, in the long term, this will also help boost activity in the stock market.\nFor Mr. Taguchi, though the country is somehow insulated from risks looming over global trade, it may still be vulnerable to the Fed repricing and the greenback\u2019s strength.\n\u201cThe Philippine economy, due to its ongoing infrastructure agenda, is operating in a current account deficit, making it susceptible to risks in foreign exchange volatility,\u201d he said.\nAdditionally, he noted that the US Federal Reserve puts a floor under how much the BSP can cut rates. If the BSP lowers rates more than the Fed, it could weaken the local unit.\nThis, in turn, will lead to inflation which is fueled by currency depreciation and will complicate BSP\u2019s easing cycle.\n\u201cSo, if inflation in the US turns out to be stickier due to tariffs, the BSP\u2019s easing cycle might consequently be shallower, which, in turn, could limit the extent of how much Philippine equities and bonds could rally,\u201d he explained.\nFIXED-INCOME MARKET\nBSP: The central bank\u2019s shift to a less restrictive monetary policy, driven by easing inflation, is expected to influence bond yields. The BSP\u2019s forward guidance will also impact on the fixed-income market.\nMr. Taguchi: Local bond yields are likely to remain around current levels, as US bond yields are expected to continue affecting local bond yields.\nMr. Mapa: Domestic liquidity and subdued inflation could keep a lid on interest rates in the coming months although supply risk and the direction of global rates could also mean rates could still be pressured higher during bouts of increased supply or uncertainty.\nMr. Erece: Bond yields can see a slow decline as inflation expectations continue to stabilize within targets. Other similar investment instruments will see the same movement for this year.\nMr. Ricafort: Market risk could be managed if the bonds/fixed income securities are held until maturity, or at least to have that flexibility, if market conditions become less favorable, such as if bond yields go up or remain elevated during the investment horizon, with the investor enjoying the effective yields or coupon payments every quarter or year (depending on how often coupon payments are made) that are more predictable (avoiding the risk of losses by not selling when market yields become higher than the yield during the bond\u2019s purchase).\nEQUITIES MARKET\nBSP: Factors such as the proposed reduction in stock transaction taxes under the Capital Markets Efficiency Promotion Act, improved credit outlook, and higher domestic consumption, could boost trading activity.\nMr. Ella: [It] is cheap and could remain so until a good news\u00a0story\u00a0[lifts] prices.\nMr. Erece: As interest rate goes down, the risk-free rate usually goes along with it. Along with the expectation of higher business activity this year, the market risk premium is expected to increase, making stocks a more attractive instrument due to their relatively higher expected returns.\nMr. Ricafort: \u2026 Better corporate sales and income reports of the largest local companies and mostly better economic data recently to support investment valuations\u2026. After no more large lockdowns since 2022, and no more lockdowns as a policy priority, going forward, thereby, improving sales or revenues, earnings or net income, employment or jobs, more business or economic opportunities; all of which would help support better investment valuations, though offset by still relatively higher prices and higher borrowing costs.\nFOREIGN EXCHANGE MARKET\nBSP: \u2026 Steady inflows from OFWs remittances, BPO revenues, tourism, and foreign direct investments are expected to support the peso. Additionally, ample gross international reserves will help cushion against global economic uncertainties and exchange rate volatility.\nMr. Taguchi: [We] expect the peso to remain above P58/US$ considering the likelihood of a policy rate cut by the BSP and the lack of change to the Fed\u2019s policy rate.\nMr. Mapa: Taking its cue from the dollar and the direction of Fed policy.\nMr. Ella: [It] could trade sideways.\nMr. Erece: As the BSP is expected to deviate from the Fed\u2019s movement, the peso is seen to depreciate slightly as the US [remains] in a relatively tighter interest rate environment. This will cause the exchange rate to hover around P58-P59 against the dollar.\nMr. Ricafort: Going forward, the performance of the US dollar/peso exchange rate would still be partly a function of intervention or defense as consistently seen for more than two years already amid the need to better manage inflation and inflation expectations to fulfill the price stability mandate that would also require stability in the peso exchange rate, which affects import prices/costs and overall inflation. \u2014 Abigail Marie P. Yraola", "date_published": "2025-03-10T00:02:53+08:00", "date_modified": "2025-03-13T17:49:25+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2023/09/SF_F1_professional-discussing-with-client-through-mobile-phone-trading.jpg", "tags": [ "Abigail Marie P. Yraola", "Banking Report Q4 2024", "Banking Report", "Research" ] }, { "id": "/?p=658086", "url": "/research/2025/03/10/658086/listed-banks-share-prices-fall-in-fourth-quarter/", "title": "Listed banks\u2019 share prices fall in fourth quarter", "content_html": "![\"\"](\"/wp-content/uploads/2025/03/250310Bank_Share.jpg\")
By Abigail Marie P. Yraola, Deputy Research Head
BANK STOCKS struggled in the fourth quarter of 2024 as rate cuts coupled with rising inflation and developments abroad affect profit margins, analysts said.
\nThe Philippine Stock Exchange index (PSEi) declined by 10.2% in the last three months, a reversal from the 13.4% growth a quarter earlier.
\nHowever, year on year, the local bourse inched up by 1.2%.
\nThe financials subindex, which includes the banks, fell by 6.1% in the October to December period. Year on year, the subindex rose by 24.1%.
\nDuring the period, 10 out of 15 listed banks fell on a quarterly basis. Bank of Commerce loed the decliners with a 23.3% drop, followed by Philippine Bank of Communications (-11.1%) and Bank of the Philippine Islands (BPI, -9.7%),
\nOn an annual basis, 12 out of 15 banks posted growth in their share prices at the end of fourth quarter. China Banking Corp. (Chinabank) led with 105.8% year-on-year surge. It was followed by Asia United Bank Corp. (AUB, 88.1%) and Philippine National Bank (PNB, 49.7%).
\nDespite the unfavorable sentiment of the stock market for the period, aggregate net income of universal and commercial banks grew by 9.7% to P366.02 billion as of end-December from P333.76 billion in 2023, data from the Bangko Sentral ng Pilipinas (BSP) showed.
\nGross total loan portfolio of these big lenders rose by 10.5% to P14.20 trillion as of end-December from P12.85 trillion a year ago.
\nThe big banks\u2019 gross nonperforming loans (NPLs) ratio slightly inched up to 2.99% as of end-December from 2.96% in December 2023.
\nMeanwhile, the big banks\u2019 net interest margin (NIM) \u2014 a ratio that measures banks\u2019 efficiency in investing their funds by dividing annualized net interest income to average earning asset \u2014 rose to 4.04% in the fourth quarter from 3.84% recorded in the same period a year earlier.
\n![\"\"](\"/wp-content/uploads/2025/03/Income-4QBR24-scaled.jpg\")
Provision for credit losses by these big banks reached P101.15 billion, up by 29.5% from P79.10 billion in December 2023.
\nRalph Jonathan B. Fausto, research associate at China Bank Securities Corp., said that macroeconomic factors affecting the market primarily influenced the stock performance of listed banks in the fourth quarter.
\n\u201cInvestors digested the possible impact of potential changes to US policy on the economic and growth outlook,\u201d Mr. Fausto said in an e-mail.
\nHe also pointed out that the US administration\u2019s policy priorities, including the prospect of trade tariffs, led investors to anticipate a more cautious approach to policy easing by both the US Federal Reserve and the BSP.
\n\u201cFor banks, a more restrained path to policy easing and macro uncertainties could lead to tempered loan demand from businesses and consumers,\u201d he added.
\nWendy B. Estacio-Cruz, head of research at Unicapital Securities, Inc., said that some listed banks recorded double-digit growth in their net income mainly due to high net interest margins as interest rates remain elevated.
\n\u201cIn terms of share price movement, majority of banks declined due to negative market sentiment. However, do note that most of the listed banks, especially the top banks, continue to show strong earnings growth and high Return on Equity (RoE),\u201d Maybank Securities, Inc. Research said in an e-mail.
\nFavorable macroeconomic and regulatory developments have supported bank earnings during the period with stabilizing inflation and interest rates lifting loan demand coupled with the reduction in reserve requirements supporting lending margins, Abigail Kathryn L. Chiw, first vice-president and head of research at BDO Securities Corp., said in an e-mail.
\nMaybank Securities also said that most banks during the quarter have the same trend share price movement.
\n\u201cFor the exception of Chinabank, note that it continues to do well in terms of loan growth, profitability and RoE. But what made CBC resilient versus other banks share pricewise is due to its high probability in being added in the PSE index,\u201d Maybank Securities said.
\nFor Arielle Anne D. Santos, an equity analyst at Regina Capital Development Corp., some banks, like BPI and UBP, saw strong performances due to consumer loan growth, fee income, digital initiatives, and effective risk management strategies.
\n\u201cBPI benefited from consumer loans and fee income, while UBP gained from its acquisition of Citi\u2019s retail business and its digital initiatives,\u201d Ms. Santos said.
\nOther reasons for banks that have reported their earnings result include expanding NIM and improving NPL ratios (as in the case for BPI) as well as achieving positive returns and expanding consumer loan portfolio during the quarter.
\n\u201c[The] strong performance was driven by substantial growth in noninterest income and a significant reduction in provisions, complementing solid expansion in core lending revenues,\u201d Mr. Fausto said.
\nThe central bank slashed its key rate by 25 basis points (bps) to 5.75% in their Monetary Board meeting last December.\u00a0 Since its easing cycle in August, the BSP has reduced rate by a total of 75 bps.
\nHowever, during their first policy meeting this year, the BSP held rate cuts, surprising market expectations and at the same time signaled fewer rate cuts.
\n\u201cIn the near term, investors need to watch out for the movements of the BSP in terms of policy rate cuts and reserve requirement ratios (RRR) cuts,\u201d Maybank Securities said.
\nIn September 2024, the central bank decided to reduce RRR by 250 bps to 7% from 9.5% for banks and nonbank financial institutions with quasi-banking functions which took effect on Oct. 25.
\nIn February, the central bank announced they will cut RRR by 200 bps to 5% from 7% for universal and commercial banks (U/KBs) and nonbank financial institutions which will take effect on March 28.
\nThe jumbo cut came after the central bank kept rates steady.
\nIt also added that large banks may be negatively affected in terms of their NIMs with additional policy rate cuts but since the central bank held its rate cut in its recent policy meeting, banks can be expected to maintain high NIMs in the near term.
\nFor Regina Capital\u2019s Ms. Santos and BDO\u2019s Ms. Chiw, it would be wise if the market will continue to monitor further BSP rate moves and impacts of inflation on loan quality and profit margins.
\n\u201cNPL trends, capital adequacy, and fintech-driven cost efficiencies will be key, additionally peso-dollar volatility remains a risk,\u201d Ms. Santos added.
\nAdditionally, for Ms. Chiw, concerns right now are Trump policy uncertainties which are affecting financial markets with renewed interest rate and exchange rate volatility potentially hurting consumption and investment appetite.
\n\u201cRisks of reaccelerating inflation and interest rates remaining high and restrictive, could also have knock-on effects to the ability of borrowers to repay their debts,\u201d she said.
\nShe cautioned that these risks may require banks to incur more loan loss provisions to buffer against the potential rise in loan delinquencies.
\nAccording to RCBC Securities, Inc., investors should keep an eye on the loan portfolio and growth, as well as whether NIMs continue to expand. \u201cA potential 200-basis-point increase could positively impact loan growth and NIM,\u201d RCBC noted.
\nUnicapital\u2019s Ms. Estacio-Cruz remains optimistic about the banking sector\u2019s prospects in 2025, anticipating that strong asset quality and improved loan growth will help offset the impact of rate cuts, thereby supporting RoE.
\nFor Chinabank\u2019s Mr. Fausto, the market will monitor changes to US policies and its potential impact on inflation and interest rates both locally and abroad.
\n\u201cAdditionally, full-year earnings reports of listed banks (including management teams\u2019 guidance against the backdrop of the changing global and local macroeconomic landscape), prospective RRR cut and policy rate cuts from the BSP could serve as near-term catalysts,\u201d he said.
\nWHAT TO CONSIDER IN 2025 AND OUTLOOK
\nFor Mr. Fausto, outlook remains supportive for the central bank to implement further rate cuts which in turn could help support loan growth prospects.
Additionally, he said that banks that have built up comfortable coverage levels are expected to remain relatively resilient even as NIM compression may be relatively subdued.
\n\u201cThis comes as risks of a more tempered pace of loan growth could be partially offset by a more moderate decline in lending margins amid prospects of less policy rate cuts,\u201d he said.
\nMs. Estacio-Cruz said that NIMs are expected to remain stable as the downward repricing of loans should be partly offset by faster credit growth, driven by consumer loans.
\n\u201cWe see net interest margins stable for this year as banks manage to lower cost of funds while keeping asset yields steady,\u201d Ms. Estacio-Cruz added.
\nMeanwhile, while these rate cuts may spur loan growth, rising inflation could put a strain to funding costs and repayment capacity, Ms. Santos of\u00a0 Regina\u00a0 Capital said.
\nShe added that profit margins may tighten, but diversified banks, with strong liquidity and operational efficiency, will fare better.
\n\u201cLoan growth may be modest, with margin pressures ongoing. Fee income from digital services should help offset declines. Big banks like BDO and BPI are expected to outperform due to scale, while UBP benefits from digital expansion,\u201d she noted.
\nCharmaine Co, a research analyst at COL Financial Group, Inc., also projected continued loan growth momentum for banks, supported by favorable conditions such as monetary easing, stable economic growth, and subdued inflation.
\n\u201cWe also expect NIM to come under pressure from rate cuts. NIM compression may be on the modest side as the impact of rate cuts are moderated by balance sheet adjustments and tailwinds from the reduction in the banks\u2019 reserve requirement ratio,\u201d Ms. Co said in an e-mail.
\nFor Maybank Securities, the rate cuts should put downward pressure on NIMs but the central bank\u2019s RRR cut partially offset the potential impact on NIMs since an RRR cut is generally favorable for banks\u2019 margins.
\nAdditionally, they said that banks continue to expand their consumer loan portfolios, which typically have higher margins and yields compared to institutional loans.
\n\u201cThe banking sector is our top sector pick for the first half of 2025. With less rate cuts, we expect the banks to continue to enjoy high NIMs, high RoEs and strong profitability,\u201d Maybank Securities said.
\nMoreover, Maybank Securities noted that with gross domestic product growth projected to be close to 6%, this could imply that industry loan growth to be around 10%-12% level.
\nLikewise, for RCBC Securities, banks will continue to perform strongly, backed by sustained double-digit loan growth due to the RRR cut.
\nFor Ms. Chiw, inflation settling within the 2%-4% target of the central bank for the year will sustain further monetary policy easing.
\n\u201cWe believe there is room for two interest rate cuts, especially after the slower-than-expected 2.1% inflation print for February, which should help sustain loan demand,\u201d she said.
\nHowever, she noted that the detrimental effect of rate cuts to profit margins, will be offset by favorable impact of RRR reductions in which banks can expect NIMs to remain stable.
\n\u201cThere will also be opportunities for banks to realize trading gains from their bond portfolios as interest rates shift lower,\u201d she added.
\nIn December, inflation accelerated to 2.9% which brought the full-year 2024 headline inflation to 3.2%, still settling within the BSP\u2019s forecast.
\nMeanwhile, latest inflation data from the government\u2019s statistics agency showed that in February, inflation eased to 2.1%, its slowest pace in five months or since the 1.9% posted in September 2024.
\nFor the first two months of the year, inflation averaged 2.5%, still within the BSP target.
\n", "content_text": "By Abigail Marie P. Yraola, Deputy Research Head\nBANK STOCKS struggled in the fourth quarter of 2024 as rate cuts coupled with rising inflation and developments abroad affect profit margins, analysts said. \nThe Philippine Stock Exchange index (PSEi) declined by 10.2% in the last three months, a reversal from the 13.4% growth a quarter earlier.\nHowever, year on year, the local bourse inched up by 1.2%.\nThe financials subindex, which includes the banks, fell by 6.1% in the October to December period. Year on year, the subindex rose by 24.1%.\nDuring the period, 10 out of 15 listed banks fell on a quarterly basis. Bank of Commerce loed the decliners with a 23.3% drop, followed by Philippine Bank of Communications (-11.1%) and Bank of the Philippine Islands (BPI, -9.7%),\nOn an annual basis, 12 out of 15 banks posted growth in their share prices at the end of fourth quarter. China Banking Corp. (Chinabank) led with 105.8% year-on-year surge. It was followed by Asia United Bank Corp. (AUB, 88.1%) and Philippine National Bank (PNB, 49.7%).\nDespite the unfavorable sentiment of the stock market for the period, aggregate net income of universal and commercial banks grew by 9.7% to P366.02 billion as of end-December from P333.76 billion in 2023, data from the Bangko Sentral ng Pilipinas (BSP) showed.\nGross total loan portfolio of these big lenders rose by 10.5% to P14.20 trillion as of end-December from P12.85 trillion a year ago.\nThe big banks\u2019 gross nonperforming loans (NPLs) ratio slightly inched up to 2.99% as of end-December from 2.96% in December 2023.\nMeanwhile, the big banks\u2019 net interest margin (NIM) \u2014 a ratio that measures banks\u2019 efficiency in investing their funds by dividing annualized net interest income to average earning asset \u2014 rose to 4.04% in the fourth quarter from 3.84% recorded in the same period a year earlier.\n\nProvision for credit losses by these big banks reached P101.15 billion, up by 29.5% from P79.10 billion in December 2023.\nRalph Jonathan B. Fausto, research associate at China Bank Securities Corp., said that macroeconomic factors affecting the market primarily influenced the stock performance of listed banks in the fourth quarter.\n\u201cInvestors digested the possible impact of potential changes to US policy on the economic and growth outlook,\u201d Mr. Fausto said in an e-mail.\nHe also pointed out that the US administration\u2019s policy priorities, including the prospect of trade tariffs, led investors to anticipate a more cautious approach to policy easing by both the US Federal Reserve and the BSP.\n\u201cFor banks, a more restrained path to policy easing and macro uncertainties could lead to tempered loan demand from businesses and consumers,\u201d he added.\nWendy B. Estacio-Cruz, head of research at Unicapital Securities, Inc., said that some listed banks recorded double-digit growth in their net income mainly due to high net interest margins as interest rates remain elevated.\n\u201cIn terms of share price movement, majority of banks declined due to negative market sentiment. However, do note that most of the listed banks, especially the top banks, continue to show strong earnings growth and high Return on Equity (RoE),\u201d Maybank Securities, Inc. Research said in an e-mail.\nFavorable macroeconomic and regulatory developments have supported bank earnings during the period with stabilizing inflation and interest rates lifting loan demand coupled with the reduction in reserve requirements supporting lending margins, Abigail Kathryn L. Chiw, first vice-president and head of research at BDO Securities Corp., said in an e-mail.\nMaybank Securities also said that most banks during the quarter have the same trend share price movement.\n\u201cFor the exception of Chinabank, note that it continues to do well in terms of loan growth, profitability and RoE. But what made CBC resilient versus other banks share pricewise is due to its high probability in being added in the PSE index,\u201d Maybank Securities said.\nFor Arielle Anne D. Santos, an equity analyst at Regina Capital Development Corp., some banks, like BPI and UBP, saw strong performances due to consumer loan growth, fee income, digital initiatives, and effective risk management strategies.\n\u201cBPI benefited from consumer loans and fee income, while UBP gained from its acquisition of Citi\u2019s retail business and its digital initiatives,\u201d Ms. Santos said.\nOther reasons for banks that have reported their earnings result include expanding NIM and improving NPL ratios (as in the case for BPI) as well as achieving positive returns and expanding consumer loan portfolio during the quarter.\n\u201c[The] strong performance was driven by substantial growth in noninterest income and a significant reduction in provisions, complementing solid expansion in core lending revenues,\u201d Mr. Fausto said.\nThe central bank slashed its key rate by 25 basis points (bps) to 5.75% in their Monetary Board meeting last December.\u00a0 Since its easing cycle in August, the BSP has reduced rate by a total of 75 bps.\nHowever, during their first policy meeting this year, the BSP held rate cuts, surprising market expectations and at the same time signaled fewer rate cuts.\n\u201cIn the near term, investors need to watch out for the movements of the BSP in terms of policy rate cuts and reserve requirement ratios (RRR) cuts,\u201d Maybank Securities said.\nIn September 2024, the central bank decided to reduce RRR by 250 bps to 7% from 9.5% for banks and nonbank financial institutions with quasi-banking functions which took effect on Oct. 25.\nIn February, the central bank announced they will cut RRR by 200 bps to 5% from 7% for universal and commercial banks (U/KBs) and nonbank financial institutions which will take effect on March 28.\nThe jumbo cut came after the central bank kept rates steady.\nIt also added that large banks may be negatively affected in terms of their NIMs with additional policy rate cuts but since the central bank held its rate cut in its recent policy meeting, banks can be expected to maintain high NIMs in the near term.\nFor Regina Capital\u2019s Ms. Santos and BDO\u2019s Ms. Chiw, it would be wise if the market will continue to monitor further BSP rate moves and impacts of inflation on loan quality and profit margins.\n\u201cNPL trends, capital adequacy, and fintech-driven cost efficiencies will be key, additionally peso-dollar volatility remains a risk,\u201d Ms. Santos added.\nAdditionally, for Ms. Chiw, concerns right now are Trump policy uncertainties which are affecting financial markets with renewed interest rate and exchange rate volatility potentially hurting consumption and investment appetite.\n\u201cRisks of reaccelerating inflation and interest rates remaining high and restrictive, could also have knock-on effects to the ability of borrowers to repay their debts,\u201d she said.\nShe cautioned that these risks may require banks to incur more loan loss provisions to buffer against the potential rise in loan delinquencies.\nAccording to RCBC Securities, Inc., investors should keep an eye on the loan portfolio and growth, as well as whether NIMs continue to expand. \u201cA potential 200-basis-point increase could positively impact loan growth and NIM,\u201d RCBC noted.\nUnicapital\u2019s Ms. Estacio-Cruz remains optimistic about the banking sector\u2019s prospects in 2025, anticipating that strong asset quality and improved loan growth will help offset the impact of rate cuts, thereby supporting RoE.\nFor Chinabank\u2019s Mr. Fausto, the market will monitor changes to US policies and its potential impact on inflation and interest rates both locally and abroad.\n\u201cAdditionally, full-year earnings reports of listed banks (including management teams\u2019 guidance against the backdrop of the changing global and local macroeconomic landscape), prospective RRR cut and policy rate cuts from the BSP could serve as near-term catalysts,\u201d he said.\nWHAT TO CONSIDER IN 2025 AND OUTLOOK\nFor Mr. Fausto, outlook remains supportive for the central bank to implement further rate cuts which in turn could help support loan growth prospects.\nAdditionally, he said that banks that have built up comfortable coverage levels are expected to remain relatively resilient even as NIM compression may be relatively subdued.\n\u201cThis comes as risks of a more tempered pace of loan growth could be partially offset by a more moderate decline in lending margins amid prospects of less policy rate cuts,\u201d he said.\nMs. Estacio-Cruz said that NIMs are expected to remain stable as the downward repricing of loans should be partly offset by faster credit growth, driven by consumer loans.\n\u201cWe see net interest margins stable for this year as banks manage to lower cost of funds while keeping asset yields steady,\u201d Ms. Estacio-Cruz added.\nMeanwhile, while these rate cuts may spur loan growth, rising inflation could put a strain to funding costs and repayment capacity, Ms. Santos of\u00a0 Regina\u00a0 Capital said.\nShe added that profit margins may tighten, but diversified banks, with strong liquidity and operational efficiency, will fare better.\n\u201cLoan growth may be modest, with margin pressures ongoing. Fee income from digital services should help offset declines. Big banks like BDO and BPI are expected to outperform due to scale, while UBP benefits from digital expansion,\u201d she noted.\nCharmaine Co, a research analyst at COL Financial Group, Inc., also projected continued loan growth momentum for banks, supported by favorable conditions such as monetary easing, stable economic growth, and subdued inflation.\n\u201cWe also expect NIM to come under pressure from rate cuts. NIM compression may be on the modest side as the impact of rate cuts are moderated by balance sheet adjustments and tailwinds from the reduction in the banks\u2019 reserve requirement ratio,\u201d Ms. Co said in an e-mail.\nFor Maybank Securities, the rate cuts should put downward pressure on NIMs but the central bank\u2019s RRR cut partially offset the potential impact on NIMs since an RRR cut is generally favorable for banks\u2019 margins.\nAdditionally, they said that banks continue to expand their consumer loan portfolios, which typically have higher margins and yields compared to institutional loans.\n\u201cThe banking sector is our top sector pick for the first half of 2025. With less rate cuts, we expect the banks to continue to enjoy high NIMs, high RoEs and strong profitability,\u201d Maybank Securities said.\nMoreover, Maybank Securities noted that with gross domestic product growth projected to be close to 6%, this could imply that industry loan growth to be around 10%-12% level.\nLikewise, for RCBC Securities, banks will continue to perform strongly, backed by sustained double-digit loan growth due to the RRR cut.\nFor Ms. Chiw, inflation settling within the 2%-4% target of the central bank for the year will sustain further monetary policy easing.\n\u201cWe believe there is room for two interest rate cuts, especially after the slower-than-expected 2.1% inflation print for February, which should help sustain loan demand,\u201d she said.\nHowever, she noted that the detrimental effect of rate cuts to profit margins, will be offset by favorable impact of RRR reductions in which banks can expect NIMs to remain stable.\n\u201cThere will also be opportunities for banks to realize trading gains from their bond portfolios as interest rates shift lower,\u201d she added.\nIn December, inflation accelerated to 2.9% which brought the full-year 2024 headline inflation to 3.2%, still settling within the BSP\u2019s forecast. \nMeanwhile, latest inflation data from the government\u2019s statistics agency showed that in February, inflation eased to 2.1%, its slowest pace in five months or since the 1.9% posted in September 2024.\nFor the first two months of the year, inflation averaged 2.5%, still within the BSP target.", "date_published": "2025-03-10T00:01:53+08:00", "date_modified": "2025-03-09T18:54:57+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2025/03/250310Bank_Share-thumb.jpg", "tags": [ "Abigail Marie P. Yraola", "Banking Report Q4 2024", "Banking Report", "Research" ], "summary": "BANK STOCKS struggled in the fourth quarter of 2024 as rate cuts coupled with rising inflation and developments abroad affect profit margins, analysts said." }, { "id": "/?p=639914", "url": "/research/2024/12/09/639914/ai-in-philippine-banking-embracing-innovation-amid-challenges/", "title": "AI in Philippine banking: Embracing innovation amid challenges", "content_html": "By Abigail Marie P. Yraola, Deputy Research Head
\nAS THE COUNTRY embraces the digital revolution, the use of artificial intelligence (AI) in its banking operations shows significant advancements for the country.
\nAI, particularly generative AI (GenAI), redefines the operational and strategic landscapes of the banking sector and thus, has become a crucial factor in transformative change, Ernst & Young said in a report titled \u201cHow artificial intelligence is reshaping the financial services industry.\u201d
\nThe report highlighted that utilizing AI is driving a significant transformation in financial services by fostering innovation and streamlining operations.
\nAdditionally, with its broad applications, AI enhances customer service, improves risk management, and reshapes capital markets.
\nThe banking sector is adapting to a landscape sculpted by the six major trends: emerging technologies, ecosystem models, sustainability, digital assets, talent acquisition, and regulatory adjustments, Ernst & Young said in their report noting that these factors are driving the industry to move beyond traditional boundaries, impacting not only consumer banking but also transforming investment, corporate banking, and capital markets.
\n\u201cBy integrating AI technologies, banks are setting new benchmarks for operational efficiency, client engagement and sustainable growth,\u201d it said.
\nThe Bangko Sentral ng Pilipinas (BSP) recognizes that AI is continually evolving.
\n\u201cAI has been identified as one of the crucial components of the fourth industrial revolution,\u201d the BSP said in an e-mail.
\nThe central bank added that AI can bridge the gap in financial inclusion through innovative solutions.
\nHowever, it also pointed out barriers that hinder financial inclusion which include (a) a lack of documentation required to open an account, (b) low awareness of the digital products and services available in the market, and (c) the high costs associated with the infrastructure needed for digitalization.
\nADOPTING AI IN BANKING OPERATIONS
\nCurrently, the central bank is guided by the definition provided by the Organisation for Economic Co-operation and Development (OECD), which describes an AI system as a \u201cmachine-based system that, for explicit or implicit objectives, infers how to generate outputs based on the input it receives.
These outputs, it said, can influence physical or virtual environments. Different AI systems vary in their levels of autonomy and adaptability after deployment.
\nThis definition, the BSP said, aligns with the central bank\u2019s goal of promoting the responsible use of technology to assist in inference and output generation that enhances decision-making processes.
\n\u201cThere has been a notable increase in the adoption and integration of AI solutions within the financial sector, particularly in enhancing decision-making, automating processes, and personalizing services,\u201d BSP said.
\nIt also added that recent advancements in technology have had a significant impact across various industries, particularly in BSP-supervised financial institutions (BSFIs) but noted that BSFIs can choose not to adopt AI if their existing processes are working efficiently.
\nThe central bank further explained that when considering the adoption of AI systems, BSFIs should ensure that these technologies are integrated into their overall business plans, highlighting that it should align with its digital transformation goals.
\n\u201cAs with any emerging technology, there are benefits and risks associated in adopting AI,\u201d the central bank said, acknowledging that there is \u201cno one-size-fits-all approach for AI systems.\u201d
\nHowever, it suggested that financial institutions can establish a policy statement outlining their approach towards AI adoption which could help prime the organization on its use.
\nFintech Alliance.PH Founding Chairman and Rizal Commercial Banking Corp. Executive Vice-President and Chief Innovation and Inclusion Officer Angelito \u201cLito\u201d M. Villanueva said that AI has played a crucial role in democratizing financial access, allowing for more efficient, secure, and personalized banking experiences.
\nHe cautioned that alongside these advances, AI also brings complex challenges that demand careful attention to regulation and ethical boundaries before widespread adoption.
\nHe further explained that AI is crucial for automating processes, enhancing predictive analytics, and enabling targeted decision-making, which helps banks accomplish data-driven tasks more efficiently and accurately.
\n\u201cCentral banks can leverage AI for regulatory compliance and fraud detection. In commercial banking, AI can personalize customer interactions, credit risk analysis, and cybersecurity measures,\u201d Mr. Villanueva said in an e-mail interview.
\nHe added that as AI evolves, concerns about job displacement, especially within low-skilled sectors, are growing. Under Philippine labor law, employers are permitted to terminate employees if labor-saving technologies, such as AI, lead to redundancies, provided that legal standards are followed.
\n\u201cThis presents a need for the government to focus not only on AI regulations but also on creating alternative job opportunities for displaced workers,\u201d he said.
\nCONSIDERATIONS AND IMPLEMENTATION
\nWhen considering the adoption of AI or any emerging technology, financial institutions should start by evaluating their risk appetite.
\u201cDepending on the risk-reward analysis, BSFIs could integrate AI into their systems with proper controls,\u201d the BSP said.
\nThe central bank expects that risk management measures for consumer protection, cybersecurity, and anti-money laundering/combating the financing of terrorism (AML/CFT) are established whenever an AI system is implemented.
\n\u201cAt the minimum, financial institutions should adhere to the principle of \u201cDo no harm\u201d regarding the use of AI, whether internally or externally,\u201d BSP said.
\nFor Mr. Villanueva, phased and purpose-driven AI implementation should be given priority to areas that improve customer experience, risk management, and boost cybersecurity.
\nCustomer-facing applications, such as AI chatbots and virtual assistants, should be deployed initially to streamline basic customer interactions and make banking more accessible.
\n\u201cAt RCBC, we\u2019re focusing on how AI could improve the accuracy of customer risk profiles and improve cybersecurity protocols. Through Fintech Alliance.Ph, we work to advocate for AI policies that promote both innovation and customer protection, a balance that helps financial institutions adopt AI responsibly,\u201d he said.
\nMr. Villanueva highlighted that traditional AI, such as predictive analytics and machine learning, can reinforce the foundational framework of Philippine banks, while GenAI can enhance customer engagement efforts.
\nEMERGING CHALLENGES
\nA report by McKinsey & Co. titled \u201cScaling Gen AI in banking: Choosing the best operating model\u201d highlighted that banks and other financial institutions rapidly use AI technology, and challenges are emerging.
It further explained that AI, specifically Gen AI is transforming the banking industry as financial institutions leverage this technology to enhance customer-facing chatbots, detect fraud, and accelerate time-consuming tasks such as code development, creating pitch book drafts, and summarizing regulatory reports.
\nThey suggested that banks and financial institutions can adopt varying approaches to structuring their GenAI operating models, ranging from highly centralized to highly decentralized.
\nThe BSP is cognizant of its crucial role in promoting an enabling regulatory environment that promotes innovation and risk resilient financial systems.
\nWhen an institution intends to adopt artificial intelligence (AI), it should conduct risk-based assessments before development. These assessments should focus on key risk areas, including consumer protection, cybersecurity, and anti-money laundering (AML) and counter-terrorism financing (CFT). Additionally, continuous monitoring is essential to validate the AI system\u2019s outputs over time.
\nFor Mr. Villanueva, institutions can maximize the value of AI by prioritizing transparency, ethical practices, and strong data governance policies.
\nThe proactive measures taken by the BSP in developing regulatory frameworks for AI are essential for establishing these standards, he highlighted.
\n\u201cWe need that distinction between goal-oriented AI and ethically guided AI. AI\u2019s capabilities for automation and problem-solving raise questions about maintaining a balance between efficiency and ethics,\u201d Mr. Villanueva emphasized.
\n\u201cWe must ensure that human judgment remains central, especially as AI advances to more autonomous roles, how AI systems are designed and used ultimately defines their impact, whether good or bad.\u201d
\nFor John Paolo R. Rivera, senior research fellow at Philippine Institute for Development Studies, he said that AI can be used by banks to detect fraud in transactions and forecast financial risks.
\n\u201cAs an advantage, generative AI can create customer outreach campaigns or designs tailored financial advice scripts using natural language generation,\u201d he said in a Viber message.
\nHe further explained that traditional and GenAI are complementary technologies that financial institutions can utilize to enhance operations, boost customer satisfaction, and ensure regulatory compliance.
\n\u201cBanks should focus on adopting hybrid solutions \u2014 using traditional AI for precision and security, while exploring generative AI for innovation and customization.\u201d
\nRISKS AND BENEFITS
\nMr. Villanueva listed that harnessing AI offers numerous life-changing benefits, including improved decision-making, cost reduction, and more personalized customer experiences.
\u201cIn fraud prevention, AI systems can monitor transactions in real time, which is critical in addressing the Philippines\u2019 higher-than-global fraud rates. There is promise in reducing fraudulent transactions and boosting security.\u201d
\nHowever, he also cautioned that integrating AI posts risks such as data privacy concerns, potential biases, and high implementation costs.
\nFor example, he said that if not carefully monitored, AI systems can inadvertently introduce biases into decision-making processes.
\nThe central bank emphasized that financial institutions should also develop a workforce training plan to prepare employees for the adoption of AI technologies.
\n\u201cSimilarly, with the rise of AI-powered cyber-attacks, institutions should continuously monitor and strengthen their cybersecurity defenses,\u201d the central bank said.
\nMr. Villanueva emphasized that they are focused on implementing ethical AI adoption by working with regulators to establish standards that protect consumer data and mitigate bias risks.
\nHe noted that reports from McKinsey and Goldman Sachs predict that AI will impact millions of jobs in industries such as manufacturing and marketing.
\n\u201cThis shift will require flexible regulatory frameworks that protect consumers without stifling innovation,\u201d Mr. Villanueva said.
\nUtilizing AI in banking operations, he said, is not just black or white. It has dual sides benefits and risks, wins and losses.
\nIt is undoubtedly a powerful tool that can either help us create a more inclusive and prosperous future or exacerbate the existing class and digital divide.
\n", "content_text": "By Abigail Marie P. Yraola, Deputy Research Head\nAS THE COUNTRY embraces the digital revolution, the use of artificial intelligence (AI) in its banking operations shows significant advancements for the country.\nAI, particularly generative AI (GenAI), redefines the operational and strategic landscapes of the banking sector and thus, has become a crucial factor in transformative change, Ernst & Young said in a report titled \u201cHow artificial intelligence is reshaping the financial services industry.\u201d\nThe report highlighted that utilizing AI is driving a significant transformation in financial services by fostering innovation and streamlining operations.\nAdditionally, with its broad applications, AI enhances customer service, improves risk management, and reshapes capital markets.\nThe banking sector is adapting to a landscape sculpted by the six major trends: emerging technologies, ecosystem models, sustainability, digital assets, talent acquisition, and regulatory adjustments, Ernst & Young said in their report noting that these factors are driving the industry to move beyond traditional boundaries, impacting not only consumer banking but also transforming investment, corporate banking, and capital markets.\n\u201cBy integrating AI technologies, banks are setting new benchmarks for operational efficiency, client engagement and sustainable growth,\u201d it said.\nThe Bangko Sentral ng Pilipinas (BSP) recognizes that AI is continually evolving.\n\u201cAI has been identified as one of the crucial components of the fourth industrial revolution,\u201d the BSP said in an e-mail.\nThe central bank added that AI can bridge the gap in financial inclusion through innovative solutions.\nHowever, it also pointed out barriers that hinder financial inclusion which include (a) a lack of documentation required to open an account, (b) low awareness of the digital products and services available in the market, and (c) the high costs associated with the infrastructure needed for digitalization.\nADOPTING AI IN BANKING OPERATIONS\nCurrently, the central bank is guided by the definition provided by the Organisation for Economic Co-operation and Development (OECD), which describes an AI system as a \u201cmachine-based system that, for explicit or implicit objectives, infers how to generate outputs based on the input it receives.\nThese outputs, it said, can influence physical or virtual environments. Different AI systems vary in their levels of autonomy and adaptability after deployment.\nThis definition, the BSP said, aligns with the central bank\u2019s goal of promoting the responsible use of technology to assist in inference and output generation that enhances decision-making processes.\n\u201cThere has been a notable increase in the adoption and integration of AI solutions within the financial sector, particularly in enhancing decision-making, automating processes, and personalizing services,\u201d BSP said.\nIt also added that recent advancements in technology have had a significant impact across various industries, particularly in BSP-supervised financial institutions (BSFIs) but noted that BSFIs can choose not to adopt AI if their existing processes are working efficiently.\nThe central bank further explained that when considering the adoption of AI systems, BSFIs should ensure that these technologies are integrated into their overall business plans, highlighting that it should align with its digital transformation goals.\n\u201cAs with any emerging technology, there are benefits and risks associated in adopting AI,\u201d the central bank said, acknowledging that there is \u201cno one-size-fits-all approach for AI systems.\u201d\nHowever, it suggested that financial institutions can establish a policy statement outlining their approach towards AI adoption which could help prime the organization on its use.\nFintech Alliance.PH Founding Chairman and Rizal Commercial Banking Corp. Executive Vice-President and Chief Innovation and Inclusion Officer Angelito \u201cLito\u201d M. Villanueva said that AI has played a crucial role in democratizing financial access, allowing for more efficient, secure, and personalized banking experiences.\nHe cautioned that alongside these advances, AI also brings complex challenges that demand careful attention to regulation and ethical boundaries before widespread adoption.\nHe further explained that AI is crucial for automating processes, enhancing predictive analytics, and enabling targeted decision-making, which helps banks accomplish data-driven tasks more efficiently and accurately.\n\u201cCentral banks can leverage AI for regulatory compliance and fraud detection. In commercial banking, AI can personalize customer interactions, credit risk analysis, and cybersecurity measures,\u201d Mr. Villanueva said in an e-mail interview.\nHe added that as AI evolves, concerns about job displacement, especially within low-skilled sectors, are growing. Under Philippine labor law, employers are permitted to terminate employees if labor-saving technologies, such as AI, lead to redundancies, provided that legal standards are followed.\n\u201cThis presents a need for the government to focus not only on AI regulations but also on creating alternative job opportunities for displaced workers,\u201d he said.\nCONSIDERATIONS AND IMPLEMENTATION\nWhen considering the adoption of AI or any emerging technology, financial institutions should start by evaluating their risk appetite.\n\u201cDepending on the risk-reward analysis, BSFIs could integrate AI into their systems with proper controls,\u201d the BSP said.\nThe central bank expects that risk management measures for consumer protection, cybersecurity, and anti-money laundering/combating the financing of terrorism (AML/CFT) are established whenever an AI system is implemented.\n\u201cAt the minimum, financial institutions should adhere to the principle of \u201cDo no harm\u201d regarding the use of AI, whether internally or externally,\u201d BSP said.\nFor Mr. Villanueva, phased and purpose-driven AI implementation should be given priority to areas that improve customer experience, risk management, and boost cybersecurity.\nCustomer-facing applications, such as AI chatbots and virtual assistants, should be deployed initially to streamline basic customer interactions and make banking more accessible.\n\u201cAt RCBC, we\u2019re focusing on how AI could improve the accuracy of customer risk profiles and improve cybersecurity protocols. Through Fintech Alliance.Ph, we work to advocate for AI policies that promote both innovation and customer protection, a balance that helps financial institutions adopt AI responsibly,\u201d he said. \nMr. Villanueva highlighted that traditional AI, such as predictive analytics and machine learning, can reinforce the foundational framework of Philippine banks, while GenAI can enhance customer engagement efforts.\nEMERGING CHALLENGES\nA report by McKinsey & Co. titled \u201cScaling Gen AI in banking: Choosing the best operating model\u201d highlighted that banks and other financial institutions rapidly use AI technology, and challenges are emerging.\nIt further explained that AI, specifically Gen AI is transforming the banking industry as financial institutions leverage this technology to enhance customer-facing chatbots, detect fraud, and accelerate time-consuming tasks such as code development, creating pitch book drafts, and summarizing regulatory reports.\nThey suggested that banks and financial institutions can adopt varying approaches to structuring their GenAI operating models, ranging from highly centralized to highly decentralized.\nThe BSP is cognizant of its crucial role in promoting an enabling regulatory environment that promotes innovation and risk resilient financial systems.\nWhen an institution intends to adopt artificial intelligence (AI), it should conduct risk-based assessments before development. These assessments should focus on key risk areas, including consumer protection, cybersecurity, and anti-money laundering (AML) and counter-terrorism financing (CFT). Additionally, continuous monitoring is essential to validate the AI system\u2019s outputs over time.\nFor Mr. Villanueva, institutions can maximize the value of AI by prioritizing transparency, ethical practices, and strong data governance policies.\nThe proactive measures taken by the BSP in developing regulatory frameworks for AI are essential for establishing these standards, he highlighted.\n\u201cWe need that distinction between goal-oriented AI and ethically guided AI. AI\u2019s capabilities for automation and problem-solving raise questions about maintaining a balance between efficiency and ethics,\u201d Mr. Villanueva emphasized.\n\u201cWe must ensure that human judgment remains central, especially as AI advances to more autonomous roles, how AI systems are designed and used ultimately defines their impact, whether good or bad.\u201d\nFor John Paolo R. Rivera, senior research fellow at Philippine Institute for Development Studies, he said that AI can be used by banks to detect fraud in transactions and forecast financial risks.\n\u201cAs an advantage, generative AI can create customer outreach campaigns or designs tailored financial advice scripts using natural language generation,\u201d he said in a Viber message.\nHe further explained that traditional and GenAI are complementary technologies that financial institutions can utilize to enhance operations, boost customer satisfaction, and ensure regulatory compliance.\n\u201cBanks should focus on adopting hybrid solutions \u2014 using traditional AI for precision and security, while exploring generative AI for innovation and customization.\u201d\nRISKS AND BENEFITS\nMr. Villanueva listed that harnessing AI offers numerous life-changing benefits, including improved decision-making, cost reduction, and more personalized customer experiences.\n\u201cIn fraud prevention, AI systems can monitor transactions in real time, which is critical in addressing the Philippines\u2019 higher-than-global fraud rates. There is promise in reducing fraudulent transactions and boosting security.\u201d\nHowever, he also cautioned that integrating AI posts risks such as data privacy concerns, potential biases, and high implementation costs.\nFor example, he said that if not carefully monitored, AI systems can inadvertently introduce biases into decision-making processes.\nThe central bank emphasized that financial institutions should also develop a workforce training plan to prepare employees for the adoption of AI technologies.\n\u201cSimilarly, with the rise of AI-powered cyber-attacks, institutions should continuously monitor and strengthen their cybersecurity defenses,\u201d the central bank said.\nMr. Villanueva emphasized that they are focused on implementing ethical AI adoption by working with regulators to establish standards that protect consumer data and mitigate bias risks.\nHe noted that reports from McKinsey and Goldman Sachs predict that AI will impact millions of jobs in industries such as manufacturing and marketing.\n\u201cThis shift will require flexible regulatory frameworks that protect consumers without stifling innovation,\u201d Mr. Villanueva said.\nUtilizing AI in banking operations, he said, is not just black or white. It has dual sides benefits and risks, wins and losses.\nIt is undoubtedly a powerful tool that can either help us create a more inclusive and prosperous future or exacerbate the existing class and digital divide.", "date_published": "2024-12-09T00:05:38+08:00", "date_modified": "2024-12-08T16:09:49+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2024/12/atm-operation-bank.jpg", "tags": [ "Abigail Marie P. Yraola", "Banking Report Q3 2024", "Banking Report", "Research" ], "summary": "AS THE COUNTRY embraces the digital revolution, the use of artificial intelligence (AI) in its banking operations shows significant advancements for the country." }, { "id": "/?p=639913", "url": "/research/2024/12/09/639913/afasa-a-milestone-in-cybersecurity-for-philippine-banking/", "title": "AFASA: A milestone in cybersecurity for Philippine banking", "content_html": "By Pierce Oel A. Montalvo
\nIT\u2019S ONE SMALL STEP for the central bank, and one giant leap for the Philippine banking industry.
\nSigned last July, the new Anti-Financial Account Scamming Act (AFASA) signifies the most comprehensive attempt yet to protect Filipino consumers from digital financial crimes.
\nBeyond the short-term, the AFASA serves as a cornerstone for the central bank\u2019s 2024\u20132029 Financial Services Cyber Resilience Plan. The plan outlines a comprehensive roadmap and key framework designed to strengthen the financial services sector\u2019s resilience against cyber threats.
\n\u201cIt will protect our people from falling prey to perpetrators who target their banks and e-wallet accounts,\u201d President Ferdinand R. Marcos, Jr. said during the signing ceremony of the law.
\nThe legislation reflected a shared commitment among government and financial leaders to address the growing threat of cybercrime head-on.
\n\u201cWe express our full support for the new anti-financial account scamming law. This will help us strengthen consumer protection and foster trust and confidence in the Philippine financial system,\u201d said Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr.
\nOnline scams continue to happen just about anywhere, and at unprecedented rates. A study by the nonprofit Global Anti-Scam Alliance revealed that approximately $1.03 trillion was lost by consumers worldwide in scams in 2023.
\nAccording to data from the same study, the Philippines would have lost an estimated P459.98 billion from digital scams during the same year, or 1.9% of its economic output.
\nCybersecurity firm Kaspersky also reported that the Philippines recorded the highest number of financial phishing attempts targeting business devices in Southeast Asia in 2023, with 163,279 incidents detected and blocked throughout the year.
\nThe BSP further reported that 59.48% of cyber fraud losses among BSP-supervised financial institutions (BSFIs) in 2023 were attributed to account takeovers, identity theft, and phishing. Overall, cyberfraud losses surged by 212% compared to 2022.
\n\u201c[T]his is essential in this time as cybercriminals use technology to defraud fellow Filipinos \u2014 causing not only personal economic loss through them but also a loss of trust in financial institutions,\u201d said Mr. Marcos.
\nThese figures underscored an urgency of robust legal and institutional measures to combat digital financial crimes. The specifics of the AFASA reveal how the BSP aims to reinforce financial security in the Philippines.
\nTHE LAW IN BRIEF
\nAFASA seeks to strengthen security measures and boost consumer confidence in the expanding financial technology sector. In an annual report by Fintech News Philippines, e-money accounts grew by 12.9% to 47.6 million as of the second quarter of 2022.
Meanwhile, data from the Bangko Sentral ng Pilipinas (BSP) revealed that the proportion of Filipino adults with bank accounts rose to 65% in 2022, up from 56% in 2021.
\nA key element of the AFASA is its explicit definition of \u201cfinancial account scamming,\u201d which points to a range of illicit activities.
\nThese include traditional money muling operations, where individuals utilize their accounts to facilitate the transfer of illicit funds.
\n\u201c[Money muling operations include] opening accounts using fake names or identity documents belonging to other people and selling or renting out financial accounts,\u201d said Atty. Nicasio A. Conti, chief executive officer of research and intelligence agency Capstone-Intel, in a Messenger chat.
\nThe AFASA also recognizes social engineering schemes as a form of financial account scamming.
\n\u201cExamples of social engineering schemes include impersonating a representative of an institution to obtain sensitive information or using electronic communications to deceive someone and gain access to their information,\u201d said Mr. Conti.
\nThe AFASA also designates money muling or social engineering as \u201ceconomic sabotage\u201d if it involves: (a) conspiracy of three or more people; (b) three or more victims; (c) mass mailers; or (d) human trafficking.
\n\u201cThere is no specific threshold for amount involved or specific pattern to be considered to qualify a money muling activity or a social engineering scheme as economic sabotage,\u201d said the BSP in a statement.
\n\u201cAs long as the money muling activity or social engineering scheme is committed in the manner mentioned above, it shall be considered economic sabotage.\u201d
\nPenalties under AFASA are extensive. Money muling carries 6-8 years imprisonment and/or fines from P100,000 to P500,000. Social engineering scams result in 10-12 years (up to 14 if the victim is a senior citizen) and fines up to P1 million (or up to P2 million for senior citizen victims).
\nEconomic sabotage can lead to life imprisonment and fines up to P5 million.
\nBSFIs will also be responsible for reimbursing customers who lose money due to scams if the bank didn\u2019t have proper anti-fraud measures in place or acted negligently. They will also be liable if they fail to freeze funds involved in a disputed transaction as required by the new law.
\n\u201cFor claims not exceeding P10 million, aggrieved account holders may file a formal complaint for adjudication before the Consumer Complaints Resolution Office of the BSP,\u201d the central bank said.
\nThe scope of AFASA extends beyond traditional banking services as well. Mr. Conti said that the AFASA covers all types of financial accounts, including deposit accounts, trust accounts, investment accounts, credit card accounts, and electronic wallets.
\nThis broad coverage ensures comprehensive protection against various forms of financial account scamming across the board.
\nThe AFASA also compels all BSFIs to adopt more rigorous measures to protect consumers. In a memorandum elaborating upon AFASA\u2019s prescribed risk management systems, the BSP reinforces the responsibility of BSFIs to employ proper fraud management systems, infrastructure and security monitoring, multi-factor authentication, and user enrollment and verification processes.
\nAccording to the same memorandum, BSFIs are now expected to keep extensive audit trails for e-service transactions. BSFIs now must also undergo annual Vulnerability and Penetration Testing from independent external parties.
\n\u201cThe degree of sophistication and layers of risk management system and controls depends on the size, nature and complexity of BSFIs\u2019 business models and operations,\u201d said the BSP.
\nAnother highlight of the new law is the heightened power of the BSP in its investigation of financial accounts.
\n\u201cBSP deemed it necessary to obtain new powers to help law enforcement authorities (LEAs) and competent government agencies in preventing and combatting financial account scams,\u201d the BSP added.
\nThrough the AFASA, the BSP gains the power to investigate suspicious transactions and share related information with law enforcement.
\nThe BSP emphasized that financial account investigations would require prior evidence of potential involvement in money muling or social engineering schemes, and that any resulting information would be shared solely with LEAs and relevant government authorities.
\n\u201cAny information that may be shared by BSP should be used solely for the purpose of filing and prosecuting a criminal case for violation of the AFASA,\u201d said the BSP.
\nConsequently, bank secrecy laws do not apply to financial accounts under investigation of the BSP.
\nThese exemptions apply to the Law on Secrecy of Bank Deposits, the Foreign Currency Deposits Act of the Philippines, and the Revised Non-Stock Savings and Loan Association Act of 1997.
\nThis measure modifies the application of said laws, facilitating greater government oversight for investigations made by the BSP.
\n\u201cIt should be understood, however, that the authority to enforce penal provisions of the AFASA, including the powers to investigate and prosecute the prohibited acts defined under the law, make arrests and to file criminal complaints, are still lodged with the LEAs and appropriate authorities,\u201d the BSP said.
\nTHE SENTIMENT
\nBy enhancing security, the AFASA aims to boost consumer confidence and promote wider use of financial services, aligning with the BSP\u2019s goals for a robust digital financial ecosystem.
However, according to the Bankers Association of the Philippines (BAP), the strict measures of the AFASA may leave to unintended outcomes.
\n\u201cFor example, the rapid freeze and verification requirements may introduce operational delays, particularly if the verification process or industry-wide reporting mechanisms lack standardization,\u201d the BAP said in an e-mail interview.
\n\u201cThis could result in temporary inconveniences for legitimate account holders and delays in fund access during verification procedures.\u201d
\nCarlos T. Tengkiat, chief information security officer for Rizal Commercial Banking Corp., said that there should be no unforeseen consequences arising from the new law.
\n\u201cThere are safeguards in place [that] also the penalize those who seek to abuse the information sharing portion of the investigation among various public and private sector personnel,\u201d he said in an e-mail.
\nThe BAP also said that informal sector participants who lack understanding of the legal risks associated with account misuse may initially face challenges.
\nThe BSP\u2019s 2021 financial inclusion survey revealed that only 7% of Filipinos have attended a seminar on financial literacy.
\nFurthermore, only 2% of Filipino respondents answered all six basic financial literacy questions correctly, in the same survey.
\n\u201cThis emphasizes the need for an extensive public awareness campaign to inform the public and SMEs of AFASA\u2019s regulations and discourage them from unknowingly participating in money-muling activities,\u201d said the BAP.
\n\u201cThe informal financial sector would benefit because the law gives avenues for them for investigation as well as restitution for the crimes committed against them,\u201d said Mr. Tengkiat.
\nCapstone-Intel\u2019s Mr. Conti said that balancing strict security protocols with a smooth customer experience will also be a critical concern.
\n\u201cOf course, there still are the provisions of the Data Privacy Act. Overly stringent measures could frustrate users, so banks need to focus on user-friendly yet secure solutions.\u201d
\nMr. Tengkiat also said that be the shifting landscape of technologies as well as the creativity of fraudsters would be a potential challenge.
\n\u201cThese may make controls fluid, to cope with these financial institutions must be able to anticipate new threats, adopt new technologies as well as preserving good customer experience when their services are used,\u201d Mr. Tengkiat said.
\nDespite the new law, trust in financial technology remains compromised among Filipino consumers, amid scams persisting in the country\u2019s financial landscape.\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
\n\u201cI\u2019m usually very careful,\u201d said Nikki Bryce Roque, in his Facebook post, recounting how he lost his entire mobile wallet balance to financial account scammers last November.
\nA seemingly legitimate text message, sent through the wallet\u2019s official SMS number, alerted Mr. Roque to an impending insurance renewal and prompted him to click a link to cancel the charge.
\nThe link led him through a series of supposedly official web pages requesting his one-time password and mobile wallet PIN, resulting in an unauthorized transaction that drained his account dry.
\n\u201cThey can even invade legit sites and incorporate their scamming mechanisms there,\u201d said Mr. Roque in a Messenger chat.
\nA recent survey by mobile operator trade body GSMA reveals that 71.4% of Filipinos perceive growing risks to account security, with financial fraud being a major concern.
\nFurthermore, a 2023 GSMA survey revealed that 67% of Filipinos did not report instances of scams to law enforcement. Reporting was hampered by complexity, perceived ineffectiveness, and uncertainty about where to report.
\nWhen asked if he believed he was adequately informed by his banks, service providers, or even the BSP, Mr. Roque said: \u201cNo, I didn\u2019t even know it exists.\u201d
\nAnother e-wallet user and scam victim, who requests to remain anonymous, also said that he was not aware with the law\u2019s existence.
\nInvestigations by his service provider regarding his case claimed that one-time passwords were sent to only the user\u2019s device, a claim the user says is impossible.\u00a0
\nHe has since contacted both his e-wallet service provider and the BSP through official channels about his incident, albeit hearing no response from the central bank. \u201cIt feels like they didn\u2019t take any action regarding my concern. They didn\u2019t even reach out to me once.\u201d
\nMr. Roque said that the new law has only transferred the responsibility to central banks and not to the institutions who are needing more stringent security features.
\n\u201cIf the bank heavily invests in the investigation phase rather than strengthening its security features, it means they are willing to let their clients get robbed as long as they are not held legally liable.\u201d
\nNonetheless, the BAP remains optimistic.
\n\u201cThe BAP anticipates that AFASA will encourage the sector to expand product offerings focused on account security and fraud prevention, which aligns with the association\u2019s goals of elevating cybersecurity standards in Philippine banking and providing consumers with secure, reliable financial services,\u201d the BAP said.
\n", "content_text": "By Pierce Oel A. Montalvo\nIT\u2019S ONE SMALL STEP for the central bank, and one giant leap for the Philippine banking industry.\nSigned last July, the new Anti-Financial Account Scamming Act (AFASA) signifies the most comprehensive attempt yet to protect Filipino consumers from digital financial crimes.\nBeyond the short-term, the AFASA serves as a cornerstone for the central bank\u2019s 2024\u20132029 Financial Services Cyber Resilience Plan. The plan outlines a comprehensive roadmap and key framework designed to strengthen the financial services sector\u2019s resilience against cyber threats.\n\u201cIt will protect our people from falling prey to perpetrators who target their banks and e-wallet accounts,\u201d President Ferdinand R. Marcos, Jr. said during the signing ceremony of the law.\nThe legislation reflected a shared commitment among government and financial leaders to address the growing threat of cybercrime head-on.\n\u201cWe express our full support for the new anti-financial account scamming law. This will help us strengthen consumer protection and foster trust and confidence in the Philippine financial system,\u201d said Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr.\nOnline scams continue to happen just about anywhere, and at unprecedented rates. A study by the nonprofit Global Anti-Scam Alliance revealed that approximately $1.03 trillion was lost by consumers worldwide in scams in 2023.\nAccording to data from the same study, the Philippines would have lost an estimated P459.98 billion from digital scams during the same year, or 1.9% of its economic output.\nCybersecurity firm Kaspersky also reported that the Philippines recorded the highest number of financial phishing attempts targeting business devices in Southeast Asia in 2023, with 163,279 incidents detected and blocked throughout the year.\nThe BSP further reported that 59.48% of cyber fraud losses among BSP-supervised financial institutions (BSFIs) in 2023 were attributed to account takeovers, identity theft, and phishing. Overall, cyberfraud losses surged by 212% compared to 2022.\n\u201c[T]his is essential in this time as cybercriminals use technology to defraud fellow Filipinos \u2014 causing not only personal economic loss through them but also a loss of trust in financial institutions,\u201d said Mr. Marcos.\nThese figures underscored an urgency of robust legal and institutional measures to combat digital financial crimes. The specifics of the AFASA reveal how the BSP aims to reinforce financial security in the Philippines.\nTHE LAW IN BRIEF\nAFASA seeks to strengthen security measures and boost consumer confidence in the expanding financial technology sector. In an annual report by Fintech News Philippines, e-money accounts grew by 12.9% to 47.6 million as of the second quarter of 2022.\nMeanwhile, data from the Bangko Sentral ng Pilipinas (BSP) revealed that the proportion of Filipino adults with bank accounts rose to 65% in 2022, up from 56% in 2021.\nA key element of the AFASA is its explicit definition of \u201cfinancial account scamming,\u201d which points to a range of illicit activities.\nThese include traditional money muling operations, where individuals utilize their accounts to facilitate the transfer of illicit funds.\n\u201c[Money muling operations include] opening accounts using fake names or identity documents belonging to other people and selling or renting out financial accounts,\u201d said Atty. Nicasio A. Conti, chief executive officer of research and intelligence agency Capstone-Intel, in a Messenger chat.\nThe AFASA also recognizes social engineering schemes as a form of financial account scamming.\n\u201cExamples of social engineering schemes include impersonating a representative of an institution to obtain sensitive information or using electronic communications to deceive someone and gain access to their information,\u201d said Mr. Conti.\nThe AFASA also designates money muling or social engineering as \u201ceconomic sabotage\u201d if it involves: (a) conspiracy of three or more people; (b) three or more victims; (c) mass mailers; or (d) human trafficking.\n\u201cThere is no specific threshold for amount involved or specific pattern to be considered to qualify a money muling activity or a social engineering scheme as economic sabotage,\u201d said the BSP in a statement.\n\u201cAs long as the money muling activity or social engineering scheme is committed in the manner mentioned above, it shall be considered economic sabotage.\u201d\nPenalties under AFASA are extensive. Money muling carries 6-8 years imprisonment and/or fines from P100,000 to P500,000. Social engineering scams result in 10-12 years (up to 14 if the victim is a senior citizen) and fines up to P1 million (or up to P2 million for senior citizen victims).\nEconomic sabotage can lead to life imprisonment and fines up to P5 million.\nBSFIs will also be responsible for reimbursing customers who lose money due to scams if the bank didn\u2019t have proper anti-fraud measures in place or acted negligently. They will also be liable if they fail to freeze funds involved in a disputed transaction as required by the new law.\n\u201cFor claims not exceeding P10 million, aggrieved account holders may file a formal complaint for adjudication before the Consumer Complaints Resolution Office of the BSP,\u201d the central bank said.\nThe scope of AFASA extends beyond traditional banking services as well. Mr. Conti said that the AFASA covers all types of financial accounts, including deposit accounts, trust accounts, investment accounts, credit card accounts, and electronic wallets.\nThis broad coverage ensures comprehensive protection against various forms of financial account scamming across the board.\nThe AFASA also compels all BSFIs to adopt more rigorous measures to protect consumers. In a memorandum elaborating upon AFASA\u2019s prescribed risk management systems, the BSP reinforces the responsibility of BSFIs to employ proper fraud management systems, infrastructure and security monitoring, multi-factor authentication, and user enrollment and verification processes.\nAccording to the same memorandum, BSFIs are now expected to keep extensive audit trails for e-service transactions. BSFIs now must also undergo annual Vulnerability and Penetration Testing from independent external parties.\n\u201cThe degree of sophistication and layers of risk management system and controls depends on the size, nature and complexity of BSFIs\u2019 business models and operations,\u201d said the BSP.\nAnother highlight of the new law is the heightened power of the BSP in its investigation of financial accounts.\n\u201cBSP deemed it necessary to obtain new powers to help law enforcement authorities (LEAs) and competent government agencies in preventing and combatting financial account scams,\u201d the BSP added.\nThrough the AFASA, the BSP gains the power to investigate suspicious transactions and share related information with law enforcement.\nThe BSP emphasized that financial account investigations would require prior evidence of potential involvement in money muling or social engineering schemes, and that any resulting information would be shared solely with LEAs and relevant government authorities.\n\u201cAny information that may be shared by BSP should be used solely for the purpose of filing and prosecuting a criminal case for violation of the AFASA,\u201d said the BSP.\nConsequently, bank secrecy laws do not apply to financial accounts under investigation of the BSP.\nThese exemptions apply to the Law on Secrecy of Bank Deposits, the Foreign Currency Deposits Act of the Philippines, and the Revised Non-Stock Savings and Loan Association Act of 1997.\nThis measure modifies the application of said laws, facilitating greater government oversight for investigations made by the BSP.\n\u201cIt should be understood, however, that the authority to enforce penal provisions of the AFASA, including the powers to investigate and prosecute the prohibited acts defined under the law, make arrests and to file criminal complaints, are still lodged with the LEAs and appropriate authorities,\u201d the BSP said.\nTHE SENTIMENT\nBy enhancing security, the AFASA aims to boost consumer confidence and promote wider use of financial services, aligning with the BSP\u2019s goals for a robust digital financial ecosystem.\nHowever, according to the Bankers Association of the Philippines (BAP), the strict measures of the AFASA may leave to unintended outcomes.\n\u201cFor example, the rapid freeze and verification requirements may introduce operational delays, particularly if the verification process or industry-wide reporting mechanisms lack standardization,\u201d the BAP said in an e-mail interview.\n\u201cThis could result in temporary inconveniences for legitimate account holders and delays in fund access during verification procedures.\u201d\nCarlos T. Tengkiat, chief information security officer for Rizal Commercial Banking Corp., said that there should be no unforeseen consequences arising from the new law.\n\u201cThere are safeguards in place [that] also the penalize those who seek to abuse the information sharing portion of the investigation among various public and private sector personnel,\u201d he said in an e-mail.\nThe BAP also said that informal sector participants who lack understanding of the legal risks associated with account misuse may initially face challenges.\nThe BSP\u2019s 2021 financial inclusion survey revealed that only 7% of Filipinos have attended a seminar on financial literacy.\nFurthermore, only 2% of Filipino respondents answered all six basic financial literacy questions correctly, in the same survey.\n\u201cThis emphasizes the need for an extensive public awareness campaign to inform the public and SMEs of AFASA\u2019s regulations and discourage them from unknowingly participating in money-muling activities,\u201d said the BAP.\n\u201cThe informal financial sector would benefit because the law gives avenues for them for investigation as well as restitution for the crimes committed against them,\u201d said Mr. Tengkiat.\nCapstone-Intel\u2019s Mr. Conti said that balancing strict security protocols with a smooth customer experience will also be a critical concern.\n\u201cOf course, there still are the provisions of the Data Privacy Act. Overly stringent measures could frustrate users, so banks need to focus on user-friendly yet secure solutions.\u201d\nMr. Tengkiat also said that be the shifting landscape of technologies as well as the creativity of fraudsters would be a potential challenge.\n\u201cThese may make controls fluid, to cope with these financial institutions must be able to anticipate new threats, adopt new technologies as well as preserving good customer experience when their services are used,\u201d Mr. Tengkiat said.\nDespite the new law, trust in financial technology remains compromised among Filipino consumers, amid scams persisting in the country\u2019s financial landscape.\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\n\u201cI\u2019m usually very careful,\u201d said Nikki Bryce Roque, in his Facebook post, recounting how he lost his entire mobile wallet balance to financial account scammers last November.\nA seemingly legitimate text message, sent through the wallet\u2019s official SMS number, alerted Mr. Roque to an impending insurance renewal and prompted him to click a link to cancel the charge.\nThe link led him through a series of supposedly official web pages requesting his one-time password and mobile wallet PIN, resulting in an unauthorized transaction that drained his account dry.\n\u201cThey can even invade legit sites and incorporate their scamming mechanisms there,\u201d said Mr. Roque in a Messenger chat.\nA recent survey by mobile operator trade body GSMA reveals that 71.4% of Filipinos perceive growing risks to account security, with financial fraud being a major concern.\nFurthermore, a 2023 GSMA survey revealed that 67% of Filipinos did not report instances of scams to law enforcement. Reporting was hampered by complexity, perceived ineffectiveness, and uncertainty about where to report.\nWhen asked if he believed he was adequately informed by his banks, service providers, or even the BSP, Mr. Roque said: \u201cNo, I didn\u2019t even know it exists.\u201d\nAnother e-wallet user and scam victim, who requests to remain anonymous, also said that he was not aware with the law\u2019s existence.\nInvestigations by his service provider regarding his case claimed that one-time passwords were sent to only the user\u2019s device, a claim the user says is impossible.\u00a0\nHe has since contacted both his e-wallet service provider and the BSP through official channels about his incident, albeit hearing no response from the central bank. \u201cIt feels like they didn\u2019t take any action regarding my concern. They didn\u2019t even reach out to me once.\u201d\nMr. Roque said that the new law has only transferred the responsibility to central banks and not to the institutions who are needing more stringent security features.\n\u201cIf the bank heavily invests in the investigation phase rather than strengthening its security features, it means they are willing to let their clients get robbed as long as they are not held legally liable.\u201d\nNonetheless, the BAP remains optimistic.\n\u201cThe BAP anticipates that AFASA will encourage the sector to expand product offerings focused on account security and fraud prevention, which aligns with the association\u2019s goals of elevating cybersecurity standards in Philippine banking and providing consumers with secure, reliable financial services,\u201d the BAP said.", "date_published": "2024-12-09T00:04:38+08:00", "date_modified": "2024-12-08T16:09:36+08:00", "authors": [ { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/cedadiantityclea/", "avatar": "https://secure.gravatar.com/avatar/fc38d2668fdee8f1e2b22df5e72ae6f4ad265ab7814de4aa60060edd377a70ce?s=512&d=mm&r=g" }, "image": "/wp-content/uploads/2024/12/thieves-hold-credit-cards-using-laptop-computer-password-hacking-activities.jpg", "tags": [ "Banking Report Q3 2024", "Pierce Oel A. Montalvo", "Banking Report", "Research" ], "summary": "IT\u2019S ONE SMALL STEP for the central bank, and one giant leap for the Philippine banking industry." } ] }![\"\"](\"/wp-content/uploads/2026/03/4QBR2025-Banking_Infog-01.jpg\")
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\r\n ![\"\"](\"/wp-content/uploads/2025/09/Household-budget-II.jpg\")
\r\n ![\"\"](\"/wp-content/uploads/2025/09/peso-dollar.jpg\")
\r\n ![\"\"](\"/wp-content/uploads/2025/09/yield-curve-graph.jpg\")
\r\n ![\"\"](\"/wp-content/uploads/2025/09/PSEI-perfoemance.jpg\")
\r\n ![\"\"](\"/wp-content/uploads/2025/09/inflation-rates-policy-rates.jpg\")
\r\n ![\"\"](\"/wp-content/uploads/2025/06/2025-1QBR-inflation-rates.jpg\")
\r\n ![\"\"](\"/wp-content/uploads/2025/06/2025-1QBR-psei.jpg\")
\r\n ![\"\"](\"/wp-content/uploads/2025/06/2025-1QBR-peso-dollar.jpg\")
\r\n ![\"\"](\"/wp-content/uploads/2025/06/2025-1QBR-yield-curve-grapth.jpg\")
\r\n ![\"\"](\"/wp-content/uploads/2025/03/4QBR24-Forex.jpg\")
\r\n ![\"\"](\"/wp-content/uploads/2025/03/4QBR24-PSEi.jpg\")
\r\n ![\"\"](\"/wp-content/uploads/2025/03/4QBR24-Inflation.jpg\")
\r\n ![\"\"](\"/wp-content/uploads/2025/03/4QBR24-Yield.jpg\")
\r\n