I thank you for your kind words and warm welcome. Being a resident of the country’s financial capital, I have seen the change that bankers and banking can bring to a place. Some of the faces in the crowd were part of that revolution and I am pleased to see them here today.
The banking industry has always been a steadfast engine of development in the country. Whenever our people need steam to power their ventures, it is the banks that work with market forces to finance enterprises of varying scales. Within this realm, thrift banks play a seminal role in fueling economic activity in the daily lives of ordinary Filipinos. Especially in areas far from our urban hubs, the lending and financing activities of your members are able to give flight to modest dreams and bring brighter hopes to our hardworking brethren.
As chairman of the Housing and Urban Development Coordinating Council (HUDCC), I have had the distinct privilege of seeing how your efforts have contributed to the changing landscape of our countryside. It is therefore my distinct pleasure and honor to keynote this convention of the Chamber of Thrift Banks (CTB).
During this convention, there will be several opportunities to exchange ideas that promote the well-being of the thrift banking sector. There will be dialogues to discover added avenues to contribute to the country’s social and economic goals. In pursuing all these, I humbly ask that all efforts remain rooted in the trust that your clients repose in you.
The past years have not been the most sterling moments in the history of international banking and finance. The global financial crisis has made the citizens of many countries doubt the ethics, or lack thereof, of the entire industry. In recent weeks, an article from the New York Times shared an insider’s view regarding the alarming change in leadership culture of Goldman Sachs, and how this may have caused the decline of a 143-year old institution. These insights may have shocked casual readers, but to those who were left homeless by a misguided bank’s lack of conscience, none of this came as a surprise. Fortunately, this moral crisis has not claimed us victim, but we must nevertheless remain faithful and vigilant.
Against the darker tides of world developments, the Philippine banking industry glows with sound health and for this we are thankful. The CTB is to be commended for skillfully navigating the waters it has chosen to sail. As of September last year, the combined real estate loans (residential and commercial) of universal, commercial and thrift banks increased by 2.6 percent – from the previous quarter’s P459.87 billion to P471.78 billion. This was 16.8 percent higher compared to the P403.84 billion exposure in September 2010.
Of the total real estate loans as of September 2011, 44 percent was for residential purposes. Commercial banks and universal banks appear to be the main driver, but Bangko Sentral ng Pilipinas (BSP) data reveals that more and more thrift banks are quickly joining the fray. More importantly, the non-performing loans of thrift banks amount to only P4.08 billion or 4 percent of this exposure. This is an encouraging sign of our thrift banks’ growing strength and for this, I congratulate all of you.
In the housing sector, our vision is to provide a holistic framework of a home within a harmonious community through the provision of housing infrastructure, integration of basic services, and implementation of appropriate housing/construction standards.
To forge timely resolution to the nation’s pressing housing problems, we formed strong and cohesive partnerships among the HUDCC and the key shelter agencies, the Local Government Units (LGUs), Non-Government Organizations (NGOs), and the private sector. Furthermore, we ensured that each housing program achieves the twin goals of sustainable communities and urban development.
As a result, from July 2010 when I assumed Chairmanship of HUDCC up to the end of 2011, the housing sector was able to provide security of tenure to nearly 160,000 households, of which 63 percent or about 100,850 went to housing for the poor and other low-income beneficiaries. The consolidated housing production of the shelter agencies has also generated job opportunities for 1.2 million urban and rural workers, addressing another goal within our national development agenda.
In our effort to expand the program further, inclusive housing programs, activities and initiatives are being constantly pursued. We have already prepared a comprehensive shelter plan, especially for informal settler families in Metro Manila, to ensure the provision of basic social services and livelihood opportunities in resettlement sites. To support these measures, His Excellency President Benigno S. Aquino III recently approved a P50 billion budget to address within five years the housing need of about 104,000 informal settler families living in danger zones. We have also cemented a partnership with the Cities Alliance for the development of a National Slum Upgrading Strategy (NSUS) for the Philippines.
The implementation of decent and affordable housing projects for different sectors such as members of the Armed Forces of the Philippines and the Philippine National Police is currently in full and vigorous swing. As of March 15 this year, the program’s first phase has built 31,200 housing units. Phase II of the program is set to target more than 30,000 units for our police and military personnel in Northern Luzon, Visayas and Mindanao.
We also expanded the membership base of the Pag-Ibig Fund to include domestic workers, public utility drivers and operators and OFWs or our Global Filipinos. Moreover, for the first time, Indigenous Peoples (IPs) are now eligible beneficiaries of the government’s housing programs. The National Housing Authority has approved the housing project for an initial 350 Aeta families in Pampanga. This will be implemented within the year.
The Filipino poor’s access to financial services is, for lack of a better word, poor at best. A 2007 study by the Asian Development Bank showed that only 20 to 22 percent of the potential market has such access. The current efforts of the BSP address this issue precisely and the present market penetration rate shall be improved through the involvement of all players. In fact, as of the end of last year, regular banks have increased their physical reach through the creation of micro-banking offices.
Micro-enterprise finance programs have evolved in their sophistication over the past decade. These models have deepened the reach of many microfinance institutions and attained impressive sustainability and viability. While some nations have encountered growing pains in microfinance, the overall results have been most inspiring and worthy of our prudent emulation and perhaps, innovation.
Further evidence suggests that the success of housing microfinance comes from its demand-driven approach. The clients’ ability to pay for the services is the starting point of all efforts to design and implement housing microfinance products and services. This being the case, housing microfinance also favors construction of houses on an incremental basis or building the houses of the clients in a progressive manner over a period of time. Given the increasing maturity of this vehicle, we seek to provide much needed housing opportunities to our less fortunate kababayans through micro-financing.
Our firm commitment to making Housing Micro-finance a cornerstone of our socially responsible housing agenda is seen in its standing as a policy direction and pivotal strategy for hitting our shelter targets. Concretely, a Housing Microfinance Product Manual was developed jointly by HUDCC and the Development Bank of the Philippines, was approved by the BSP in 2008.
The manual outlined how banking MFIs can access funds from DBP’s facility under the ADB-assisted Development of Poor Urban Communities Sector Project (DPUCSP). This enabled institutions to service the housing needs of those unable to access more traditional channels. The progress gained within the first two years was most encouraging so much so that in 2010, the BSP opened housing microfinance to non-DPUCSP banks and MFIs as well. By 2011, around 24 banks were engaged in HMF activities and we expect that soon more will follow suit.
This framework was not the product of government efforts alone. It was made possible and relevant by the contributions of various organizations, including the Chamber of Thrift Banks. This collaboration is merely one of a string of victories that we can reap, if we continue to build on the synergies that we have boldly formed. Along these lines, this convention once again provides solid ground for building bridges between micro-enterprise finance and socialized, pro-poor housing finance, and distilling how housing microfinance can be used to increase economic benefits of poor families.
You possess the unique expertise and creativity needed to help piece this intricate puzzle. It is your professionals and organizations that are intimately familiar with the circumstances and considerations of the towns and areas that can most benefit from novel micro-financing measures. Consolidating this with the findings of our own agencies in the field, our roadmaps can gain even more refinement and impact.
I wish you all a productive convention and I eagerly look forward to your inputs and recommendations so that together, we can reach more beneficiaries and uplift more lives.
Thank you very much and good morning.
Mabuhay kayong lahat!