amando m tetangco, jr : thrift banks – moving forward through responsive, responsible banking speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the annual convention of the chamber of thrift banks, makati city, 13 march 2009. * * * ambassador alfredo yao, immediate past president, mr. pascual garcia iii, incoming president of the chamber of thrift banks, distinguished officers and members of the chamber, colleagues from the bsp, members of the media, special guest, ladies and gentlemen, good morning. it is always a pleasure to keynote the chamber ’ s annual convention. this year, you have certainly chosen a very appropriate and constructive theme – “ thrift banks : moving forward through responsive, responsible banking ”. i see being responsive and responsible as two sides of the same coin – one side balances and completes the other. to illustrate, if you were only reactive to changes around you but not mindful of the impact of your actions on those around you, that could lead to discord. if, on the other hand, you are fully aware only of your own obligation, without being sensitive to changes in your surroundings, that could lead to stagnation. you have to be both – responsive and responsible – to be able to push forward. a convention ’ s theme is only as good as the actions that will spring forth from it. so i ask the question, what can the public expect from a responsible and responsive thrift banking industry? the thrift banking industry should be able to make the convention theme come to fruition, despite the distractions of the current crisis. ladies and gentlemen, you have a gem of an opportunity to build upon a stable foundation. through the difficult reforms that together we had put in place over the last few years, our banking system has remained sound, considering the scope and enormity of the current global financial crisis. in particular, • the banking industry ’ s balance sheet grew in 2008, despite stressed global conditions, while both npl and npa ratios remained relatively stable. this is critical when one recalls what it was like in the early months of the asian financial crisis when comparable ratios were rising in large discrete increments. • while profitability has and could be under further pressure, the capital of the banking system as a whole is considerably well above international norms and our own prudential standards

it ’ s not simply a matter of having access to as many product types, but how one maximizes that privilege to serve his public best. in the context of our financial infrastructure, we have commercial banks, thrift banks, rural banks, and cooperative banks. we have do - it - all institutions like universal banks. in terms of products, we have created curious concoctions like a “ quasi - bank ” which in the vernacular translates to “ parang bangko ” and “ deposit substitutes ” which some have described as “ deposito na rin ”. clearly, thrift banks share many of the facilities and services that your commercial bank brethren can employ. in fact all of the recently - bsp approved functions and products that you could enter into are similarly possible for your counterparts in the commercial and universal banking industry. thrift banks are also like rural banks, in that thrift banks remain positioned for the financing requirements of the general public across the archipelago. now, however, with commercial banks positioned at the corporate high end and the rural banks addressing the needs of the countryside, that leaves the “ viable middle ” as your natural market. ladies and gentlemen, you are well - positioned to take the cudgels for the msme sector, including the microfinance sector. i urge you to appreciate that you are much closer to smes which represent the backbone of the philippine economy. instead of seeing a disadvantage in allowed and disallowed activities, i encourage you to see the advantage of your target market. this is not to be taken as a response to the on - going crisis. it goes beyond the challenges of the current environment. it is to clearly define your target market, and towards that be responsive and responsible. where does this leave you from a strategic and tactical stand point? one easy option is to continue what you are already doing. as of september 2008, about 59 percent of the industry ’ s loan portfolio was in real estate, business activity and loans to individuals. another option, is for you to increase your loan portfolio for manufacturing and construction, two vital industry segments that could help ensure that our domestic economy continues to grow above long - term trend. what is really critical for thrift banks at this juncture is to determine how to incorporate the new facilities and offer new services to your public. with newer tools and more opportunities, i expect that beyond improving your loan industry mix, the thrift banking industry would expand its balance sheet and continue the improvement in your