by Lovely A. Carillo
Mindanao’s economy for the past year was very good, at least from the point of view of One Network Bank. And if the Aquino administration delivers the reforms it has promised on the campaign trail, even the whole country’s economy will be better this year.
“If the government is strong interest rates will even be lower than 3.9 percent, maybe lower by 10 percent,” ONB president Alex Buenaventura said. The key to improving the economy, he added, lies in more jobs through foreign investments.
Based on how things are going, the Filipino people will be able to see the results a few months from now.
Indicators
One indicator of Mindanao’s continued growth is the consistent growth of ONB, which is considered Mindanao’s biggest banking network with 75 branches (going 81), 240,000 cardholders and 96 automated teller machines all over the island.
“Despite the Arroyo government, we’ve been growing by 5 to 6 percent over the last few years,” Buenaventura said. The Philippines is a very resilient country, he added, and this is positive for the banking sector despite the corruption and bad governance of the past.
ONB’s income reached P136 million during the first half of 2010, a 32 percent increase compared to the P103 million net income last year.
There are over 700 rural banks in the country, but ONB accounts for 6% of the rural banking system’s deposits, total resources, capital and net income as well as loans. ONB’s stronghold in Mindanao’s economy, even the whole country’s rural banking system, is evident with the “P14.3 billion cash transferred” through its network, which is higher by 24 percent compared to the first semester of last year.
“This represents an average of P2.4 billion cash moved per month all over Mindanao,” Buenaventura said. ONB makes use of two channels to move cash all over its network, specifically by way of Interbranch Remittance Transactions through the bank’s branches and by way of cash withdrawals through its ATMs.
Remittances through one of the ONB’s product lines, the ONB PeraDala, are also up by 23 percent, or a total of P7.6 billion as of June 2010. ONB withdrawals are also up, from P5.6 billion during the first semester last year to P6.7 billion during the same period of 2010.
“The 20 percent growth is mainly contributed by the tremendous increase in ONB’s ATM cardholder base which now averages about 4,000 cardholders per month,” he said. This has been attributed to the “very affordable opening and maintaining balance of only P100” for the PeraAgad ATM Pinoy Card.
Buenaventura said the volume of deposits increased by 26 percent, from P5.9 billion during the first half of last year to P7.4 billion during the same period this year. Time deposits worth P.6 billion contributed to the increase in deposits. This is also attributed to the wide small depositor base of 590,000 accounts as of June this year, as well as the accessibility of ONB branches.
A total of five more branches have been approved by the Bangko Sentral ng Pilipinas in different locations, including Matina Crossing in Davao City, Babak in the Island Garden City of Samal, Oroquieta City in Misamis Occidental, Molave in Zamboanga del Sur and Ayala in Zamboanga City.
“Our outlook for the second half of this year is much better than actual performance during the first half,” Buenaventura said. ONB is banking on the more aggressive lending the bank will undertake when it comes to the Department of Education Salary Loan Program and the One Business Loan Program.
NEDA Report
ONB’s growth is just a reflection of the overall growth of the Davao region last year as reported by the National Economic Development Authority 11. The region’s gross regional domestic product (GRDP), which was pegged at P67.4 billion for 2009, is a measurement of the region’s economic performance based on the region’s output in the areas of agriculture, industry and services, among others.
NEDA’s report shows that the services sector was the main growth driver of the regional economy last year, as it made up 41.1 percent or P27.7 billion of the total output of the region. This is followed by the P23.2 billion from the industry sector and P16.4 billion from the agriculture, fishery and forestry sector.
However, it is the industry sector which showed up last year, with an almost twofold growth of 10.2 percent in 2009 compared to the 5.4 percent growth during the previous year. NEDA attributed this growth to the construction boom in the region, with P8.8 billion total investments in the private sector, for commercial and residential purposes. Investments for commercial purposes amounted to P4.9 billion to include warehouses, IT parks and shopping malls.
On the other hand, government infrastructure expenditures also contributed to the growth in the sector. This claim was bolstered by Holcim Philippines, Inc, one of the top cement producers in the country.
“Mindanao is a driver of demand for government infrastructure projects and because there were too many government projects during the previous year, we can say that total cement consumption for the period (May 2009 to May 2010) has gone down by almost 18 percent,” Holcim regional head for Mindanao William Sumalinog said.
He said there is very little increase in construction this year, compared to the construction projects in 2008 and 2009.
ONB’s Buenaventura is, however, confident that a lot of investors will be coming to Mindanao this year, particularly in the agri-processing sector. “And we’re not only talking about banana but also the other high value crops, ethanol processing and lots of rubber investments,” he said.
“If the new administration succeeds in eliminating red tape and corruption then Mindanao stands to benefit from a lot of foreign investors coming in provided it can improve its peace and order situation,” he said.
The low interest rates may be perceived as healthy for the economy but the lack of borrowers is still a challenge that the banking sector has to contend with. In the same manner, Mindanaoans have to admit that if it is to attract lots of foreign investments to the countryside, both the government and the private sectors are still faced with the challenge of improving Mindanao’s reputation in the international market.
