Philippines Retail Deposit Market Outlook to 2027

Market Overview:

A moderately fragmented market with immense growth potential Philippines’s Retail Deposit Market has a high growth potential. The retail deposit industry is in its growth stage and is projected to expand in future. The market has been growing steadily at a CAGR of ~10% with digital penetration and convenience banking being major growth drivers.

Number of Depositors in the Philippines Banking System has been growing steadily as the financial inclusion rises and the penetration of direct accounts sharply rose. No. of depositors in 2020 had a slow growth due to the lack of income, multiple accounts were closed down as individuals were unable to maintain the deposit requirements of the account but the market started registering a decent growth rate afterwards & is expected to continue doing so during the forecasted period.

Philippines Retail Deposit Market Analysis

• Philippine retail deposit market has been growing steadily at a CAGR of ~10% with digital penetration and convenience banking being major growth drivers
• Number of Depositors in the Philippines Banking System has been growing steadily as the financial inclusion rises and the penetration of direct accounts sharply rose.
•  Retail deposits account for ~45% of the total value of Deposits in the Philippine Banking System; Wholesale Deposits encompass a varied type of depositors with different purposes.
• NCR accounts for the highest penetration for the total deposit Market although only 12.4% of the population resides in this region.

Key Trends by Market Segment:

By Banks: Commercial banks captured the largest part of the segment & are expected to grow at a fast pace during the forecasted period. Thrift Banks had a major decline in terms of accounts as well as amount deposited till 2019. But after covid-19, Even during the crisis, the industry continued to provide financing, mostly catered to individuals for household consumption, real estate, and wholesale and retail trade.

By Product: In Retail Deposits, Savings Deposit Accounts are the most widely used type of accounts and account for ~66% of the total deposit value. ~80% of all deposits by value are not insured, and insured/ partially insured deposits have a very low penetration as of now. There are 76 banks that were granted FCDU authority by the central bank as of May 2021, and are expected to adopt a risk management framework that will be commensurate to the scope and risk profile of their foreign exchange activities.

Competitive Landscape:

• BDO and LandBank are the market leaders in terms of total deposits as well as retail deposits whereas the market is moderately fragmented as there are >400 players in the market.
• BDO Union & BDO Network Bark has the largest share in commercial deposits & rural deposits respectively.
• CASA is a cheaper source of funds for banks and Banks like BDO, PNB & Landbank has share more than the market average ratio.
• Landbank is the market leader in terms of demand & saving deposits whereas, it doesn’t focus much on Time Deposits.

Recent Developments:

• Raffle promotion for the Upcoming FIFA Women's World Cup in 2023 to encourage people to spend to increase their chances of winning.
• LBP has a tie-up with popular food chain Jolibee which provides customers free food on minimum spends with their debit cards.
• Philippine government has been actively promoting the use of digital payments and e-wallets as part of its efforts to promote financial inclusion. This includes the launch of the national ID system (PhilSys), which is expected to facilitate easier and more secure financial transactions. The government has also encouraged the adoption of cashless payments in various government transactions, including tax payments; all these efforts are expected to increase deposits.

Future Outlook:

• The Philippines Banking System as well as the retail deposits segment are both expected to grow steadily in the upcoming years, with projects suggesting it will reach double digit PHP Tr.
• Philippines retail deposit Market will grow largely due to saving deposits and rural banks within Mindanao & Visayas.
• Both the total deposits, as well as the retail deposits are projected to rise steadily with financial awareness and literacy increasing in the Philippines due to Financial Inclusion methods and initiatives adopted by the Government.
• BSP will accept the digital banks application again in the near future and this can allow banks to penetrate in the market.
• Local private lenders RCBC and PNB were also eyeing a license.