I ARRIVED in the Philippines in 1994. Immediately, I encountered the good side of Philippine banking where the “Customer First” ideology of PCIBank was in full swing. I have been the fortunate recipient of friendliness and professionalism ever since.
Even when things go awry, safety nets help with the assurance that potentially difficult situations are avoided. A year or so ago a family member purchased goods from Toys ‘R Us. Our debit card withdrew funds from our account but unfortunately the Toys ‘R Us account did not receive our money. Whatever happened? We did not know but fortunately BPI’s Customer Care Officer, Ms. Luna, quickly rectified the situation and ensured that the missing funds were credited to our account.
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The impact of COVID on the banking sector has, of course, been severe.
Philippine Banks’ profits have fallen from a record high of P230 billion in 2019 to P155 billion in 2020. I thought, at the time, that the 2019 profit was too high and was due to the excessive gap between the derisory rates given to depositors and the high rates charged to borrowers.
Anyhow, the banking sector’s non-performing loans (NPL) rose to 3.6 percent in 2020 and may well reach 6 percent this year. Ideally, customers experiencing difficulties should engage in ‘good faith’ discussions with their banks and, if appropriate, make proposals to have their loans restructured.
It is possible that the loan repayment difficulties experienced by customers will soon reach the political environment. In the US, Democratic Senator Elizabeth Warren (censured by former President Trump as being representative of the “Radical Left”) is already having a combative dialogue with financier Jamie Dimon about how financial institutions should react to bank customers who are having difficulties.
US President Joe Biden has put forward proposals that government spending should be significantly increased in order to offset the adverse economic environment due to the pandemic. Biden’s proposals are estimated to cause the US debt to GDP ratio to reach 117 percent by 2025. Heated debates in the US Congress will surely ensue.
I, too, believe that governments should increase expenditures since these would be used to combat poverty and unemployment. Nevertheless, to increase Philippine indebtedness to the level proposed for the US by President Biden would be difficult to justify.
Nevertheless, it is disappointing that some Departments, for example DepEd, are slow to allocate Bayanihan 2 funding to teachers who have already made financial sacrifices to ensure that distance learning programs are being properly implemented.
More than 300,000 workers in Region 6 are currently unemployed. We desperately need Bayanihan programs to generate jobs so that the adverse economic effects of COVID are mitigated./PN
