felipe m medalla : the philippine thrift banking industry - a picture of resilience speech by mr felipe m medalla, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the chamber of thrift banks general membership meeting, manila, 23 march 2023. * * * magandang tanghali sa inyong lahat. by the way, in the details [ of my introduction, it said ] i started teaching in 1991, but, in reality, i started much earlier. i think i joined the up [ university of the philippines ] faculty in 1976, but, then, i was not really considered a full - fledged member of the faculty because i was an instructor. i went to northwestern in 1978 and came home in 1983. so, there is no other place where i have stayed longer than up, but there is no other place outside up where i have stayed longer than in the bsp [ bangko sentral ng pilipinas ]. and as they say, sometimes, you love your latest girlfriend more than the previous ones. of course, another institution - i was there for a long time - was la salle, because i came from la salle lipa and eventually moved to la salle taft. so, i guess, in terms of length of residence : up, bsp, and la salle. but if you weigh it where recent years have twice the weight of older [ previous ] years, then the longest place where i have stayed is bsp. so let me thank the chamber for inviting me to be your guest speaker. last october you invited me to your annual convention and i think i gave a video message. i'm glad that my schedule allowed me to come [ in person ] today. as i always say, we in the bsp always welcome the opportunity to engage the public and engage the very institutions that we regulate, which we proudly say are a source of strength of our economy, a source of strength and stability, as you will see later. three pillars of central banking of course, i always start with our three pillars : price stability, financial stability, and a safe, secure, and efficient payments and settlements system. the last one [ pillar ] used to be the most boring because it's largely - a big part of it - is the physical payment system. because of digital technologies, it's now the most dynamic [ among the three pillars ] where the

it's not growing very fast, in fact, it's probably declining now ; and the last one would be electricity, gas, steam, and air - conditioning supply. despite lending more, banks have maintained asset quality on top of that, banks have very high npl coverage. their coverage of provisions is very high, npl coverage relative to loans. low npl [ at 3. 3 percent ], high coverage at 106. 3 percent. 7 / 9 bis - central bankers'speeches spillovers appear limited so far, we are not seeing much spillovers. for instance, if you look at credit spreads, it has not increased. by the way, i always remember, this one will never be outside of my mind. when i was in neda, the spread [ between the philippine and us rates on ten - year dollar government bonds ] was 600 bps for the sovereign. can you imagine what the spread was for everyone else? not only do banks not have any material exposure to the failed institutions [ in the us and europe ], the balance sheets of our banks are quite strong and their losses from the rising policy rate are not as high as in the united states where the starting yields were much lower and the maturity structure much longer. so, again, i would say that the philippine banking system is safe and sound. we have shown resilience through the pandemic and we continue to be strong in the face of the ongoing turbulence in the global markets. digitalization puts third pillar on overdrive finally, on the last pillar. [ the automated clearing houses ] pesonet and instapay are improving everything. of course, our dream is even [ with ] the tricycle driver, you can use your phone to pay. of course, the most extreme case, i have never seen this but my friends who have been to china tell me that even the beggar has a qr code. we don't have to go that far. in addition, the bsp has put up other projects that make this [ payments digitalization ] even better, like person - to - merchant ( p2m ) payments and qr payments that are person - to - person ( p2p ). we are working with the banking industry to make fees on small payments zero. kasi magbabayad ka lang ng trenta pesos, ang fee mo p15. hindi pwede, no? we're still figuring out how to