Bankable banks of Mindanao

this story was taken from www.inq7money.net
URL: http://money.inq7.net/topstories/view_topstories.php?yyyy=2006&mon=06&dd=15&file=14

MINDANAWORLD
Posted: 2:16 AM | Jun. 15, 2006
Joji Ilagan Bian
Inquirer

WHEN WE assess the economic performance of Mindanao, the health of its banking sector is one of the best indicators of growth.

Put simply, more banks means more business.

Over the last three years, the Mindanao banking sector has displayed a significant increase in the number of banking offices.

From the report generated by the Mindanao Economic Development Council (Medco), there was a 2-percent increase in the number of banks operating in Mindanao, from 877 in 2003 to 896 in 2004.

Data as of 2004 showed that Region 13 or Caraga posted the biggest increase in the number of offices, with seven more bank branches put up. Region 11 had four, and Regions 9 and 12 had three new banks. Region 10 had two additional banks, while the Autonomous Region of Muslim Mindanao is still waiting for its first.

From 2003 to 2004, the number of quasi-banks in Mindanao, mainly pawnshops, increased by 8.5 percent with 1,713 institutions registered with Bangko Sentral ng Pilipinas (BSP) as against 1,578 in 2003.

Pawnshops provide an alternative source of funds for the farmers and the small businessmen.

In the 2004 regional distribution report released by the BSP, Region 11, which is the center of trade and services in Mindanao, has the most number of quasi-banks with 486 financial institutions, comprised mostly of pawnshops.

With the increase in the number of banks, the consolidated loan portfolio of Mindanao banks also increased to P61.645 billion in 2004 from P60.817 billion in 2003. Northern Mindanao or Region 10, accounted for P19.632 billion, followed by Southern Mindanao or Region 11 at P16.904 billion and the lowest at P3.4 billion at Caraga.

Most of the loans were provided by commercial banks, accounting for 71 percent. But the rural banks' portfolio more than doubled from 2003 and 2004, as the majority of the farmers in Mindanao rely on rural banks for their capital needs.

The increase in the rural banks' loan portfolio could also be attributed to the growing microfinance services given to small and medium scale entrepreneurs.

Based on 2005 reports from the Rural Bankers Association of the Philippines, out of the 428 towns and cities in Mindanao, there are 286 RB offices servicing the island.

Savings deposits in commercial, thrift and rural banks increased from P337.46 billion in 2003 to P354.26 billion, which is good news for us because savings again indicates that the agriculture sector is doing well.

The top savers were Region 10 with a P4.48-billion increase, closely followed by Region 11 with a P4.46 billion, and lastly Region 9 with P2.47 billion.

The increase in deposits may also be due to the increased awareness of the market on the importance of saving for the future and also the robust economic activities in the communities where the banks operate.

Microfinance has helped many banks grow their assets and loan portfolio. This indicates the micro-entrepreneurs' growing confidence in getting access to microfinance programs as a means to start a small business or expand their operations.

There are now over 15,000 SMEs present in Mindanao who get capital from banks.

To give you a better picture, let's take a look at how rural banks are strengthening their operations and are likewise strengthening the financial condition of the SMEs through micro-credit systems.

From the August 2003 report filed by the USAID-funded project Microenterprise Access to Banking Services or MABS, micro-loan portfolio of 37 MABS participating banks nationwide "surged to P291.65 million in August 2003, up from P282 million in the previous month. The number of micro-borrowers also swelled from 32,306 in September 2002 to 43,226 at the end of August. Micro-savings deposits also rose from P205.4 million in July to P228.98 million in August."

The microfinance systems of banks and other financial institutions are developing new Filipino entrepreneurs and are helping marginalized sectors in the community shape their financial future. This is largely benefiting the poverty-stricken Mindanao regions.

(Joji Ilagan Bian is an advocate for Mindanao; chair, Mindanaworld Foundation Inc.; ConCom and Charter Change Advocacy Commission Member; chair of the Mindanao TVET; Mindanao Rep., Export Development Council; chair, Joji Ilagan Foundation; former chair of the Mindanao Business Council. E-mail comments to jojibian2@yahoo.com)