ratio ( car ) stood at 16. 7 percent as of end - 2017. this is higher than the bsp standard and the global norm. this is evidence of the industry ’ s commitment to build adequate buffers for risk - taking. net income of p17. 9 billion in 2017 yielded 12. 7 percent return to shareholders. this came about from the steady growth in net interest income ( nii ) and more cost - efficient operations. these performance results should encourage the industry to stay on its healthy course. fostering stronger partnership for sustainable growth at this juncture, i would like to express gratitude to ctb for its exemplary dedication and commitment in supporting bsp ’ s mandate and advocacies. notable is ctb ’ s pivotal role in the industry ’ s adoption of the ulama and the lendr platform. for this, ctb was chosen as the outstanding strategic industry partner in the 2017 awards for bsp stakeholders. we reaffirm our continued partnership with ctb in the pursuit of prudential reforms, particularly risk and corporate governance standards. we recently issued the minimum prudential liquidity requirements for stand - alone tbs and other small banks. the minimum liquidity ratio ( mlr ) will promote resilience to liquidity shocks. to differentiate risks among bank borrowers, we are currently studying adoption of the risk - based pricing framework for bank loans. this will encourage good borrowers to avail of more loans because of the lower interest on account of their good credit standing. moreover, the proposal aims to reduce potential systemic risk from competitive pressures that may result in lower interest rates even for customers with poor credit quality. 2 / 4 bis central bankers'speeches parallel to this, the bsp fervently hopes to on - board all filipinos into the financial system. to make banking services more accessible, we issued the framework for basic deposit accounts. we trust that thrift banks will be at the forefront of opening basic deposit accounts. we trust that thrift banks will be at the forefront of opening basic deposit accounts. part of our strategy is the deepening of financial education and consumer protection initiatives, as well as leveraging on available digital technology to have greater scale in banking. charting the course towards digitalization a fintq inclusive digital finance report for 2017 – 2018 highlighted the huge opportunities for financial service providers to innovate financial products and services that offer the greatest potential in transforming the country ’ s financial landscape. thrift banks can take advantage of

these opportunities. smaller institutions can leverage on cloud technology and shared services to lower operational costs. a rural bank has already launched a pilot project on cloud - based core banking solution. thrift banks can certainly leverage on similar solutions. the opportunities are huge. however, the risks have to be carefully considered and managed. on a grander scale, the bsp has set its sights on the digitalization of the financial system. we are working closely with the industry in implementing the national retail payment system ( nrps ) to establish a safe, reliable and affordable retail payments system. the goal is to enable businesses and consumers to make payments and transfer funds electronically from one account to any other account using any digital device. the envisioned inter - operable payment ecosystem is going to be a platform for fintech innovations. thrift banks should be part of this! the launch of instapay, the country ’ s second retail payments clearing house after the pesonet, is scheduled on 23 april 2018. industry players are already signing up to provide real time electronic payments to clients. the bsp remains committed to establishing a regulatory environment that allows innovations to flourish. our ‘ test and learn ’ approach or regulatory sandbox remains useful in dealing with increasing digital financial innovations in the market. while the bsp is embracing growth opportunities from fintech innovations and related digital transformation for the banking system, we are mindful of attendant risks and any unintended consequences. thus, we have regulations aimed at mitigating effects of technology - related risks, to promote financial integrity, transparency in financial transactions and consumer protection. some of these are : an enhanced regulatory framework for pawnshops and money service business ( msbs ) to ensure that even non - banks are properly supervised for effective compliance with aml and internal control rules and guidelines. circular 950 allows covered institutions to implement reduced know - your - customer ( kyc ) rules for certain low - risk accounts and use technology to facilitate frictionless customer onboarding. circular 940 allows banks to use third party cash agents as a cost - efficient service delivery channel. with cash agents, banks will be able to leverage on innovative digital banking solutions to on - board clients even in hard - to - serve areas. under circular 944, the bsp regulates entities that use virtual currency ( vc ) as the underlying instrument for remittance. circular no. 949 provides guidelines to ensure that risks resulting from social media use are adequately assessed and managed. 3 / 4 bis central