Financial Highlights

According to World Bank, “the Philippines will continue to have robust growth and will be the fastest-growing economy in the Association of Southeast Asian Nations (ASEAN) for 2018-2020”.

On the banking side, the Philippine banking system remains sound and stable. This is supported by the report of Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. stating that the Philippine banking system capped 2017 with sustained growth in assets, deposits and capital and this was accompanied by improved asset quality, firm liquidity position and strong capitalization. The quality of earnings was also noted to have improved with greater reliance on core lending activities; and these progressive developments are expected by BSP to continue.

While the system is in a position of strength the BSP remains proactive in its tools to monitor bank’s exposures to various sectors including real estate and household. Banks are closely monitored on their compliance to credit risk management (CRM) guidelines and stress testing. To check on the overall effectiveness of bank’s credit risk management system of banks, the BSP revised the definition of past due loans and non-performing loans (NPL). They adopted a stringent definition of past due loans to encourage banks to further build up their buffer through the increased provisioning requirement. The BSP is continually enhancing existing risk management and corporate governance standards. For the year 2017, BSP has issued 52 circulars, 1 circular letter and 1 memorandum which affect almost all the banks.

Here are some challenges for cooperative banks:

  • Amending various manuals (i.e. Risk Management, Credit Risk Management, IT and Audit Manuals) to conform with the new requirement of the BSP.
  • Shift of client focus on loan accounts from non-coop to 60% coop.
  • Effectivity of Circular 941 where total outstanding balance of a loan account will be considered past due when any principal and/or interest or installment due are not paid at their contractual due date.
  • Impact on loan provisioning of Circular 941.
  • PFRS 9 which addresses the classification, measurement and recognition of financial assets and financial liabilities which is based on the business model of an entity.

Even as we faced many challenges in 2017, Metro South Cooperative Bank (MSCB) continued to focus on serving and meeting the financial needs of its members and customers:

  • MSCB launched the Ownership Pledge Program with the objective of introducing ownership banking based on the solid commitment of members as owners, and on a systematic relationship building approach to sustain the engagement of all bank stakeholders. This will envision to promote cooperative principles and practices grounded on self help and mutual responsibility. Similarly, it aims to resonate the spirit of cooperation.
  • MSCB revisited the charter of every committee to ensure that its objectives are being met, that there is no duplication of function, and that they are performing within their boundaries.
  • MSCB hired additional personnel to address manpower concerns of Account Management, Loans Servicing Credit and Collection, Internal Audit, Compliance Office, Finance and Accounts Review Offices. This also seeks to address the observation of BSP that the bank’s expansion is not commensurate to it’s lean organization.
  • MSCB conducted an operational planning to resolve the various requirements and developments mandated by the BSP. The session focused on four areas: financial, customer/stakeholders, internal processes and learning/ growth of staff.