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The 754 Filipino 'Provincial Banks' have failed to achieve their mandate - few people have bank accounts, credit provision in rural areas is low, many banks are on the verge of collapse

The next 10 years will be a period rapid change. Capital requirements, improved economics of larger banks and generation change will result in the emergence of 15-20 regional or national champions - 3-4 in each of the major areas of the Philippines. In this environment, "scale" will be 60-100 branches and $300m-$600m (PhP13bn-27bn) in assets. Bridge's contacts with these banks prove that there are many that want to partner - especially to increase their Capabilities and to receive Central Services
Philippines has considerably less consumer
banking than expected.

Consumer banking penetration correlation to GDP/Capita
. and considerably less lending to SMEs:
Source of funds for Small Enterprises
Lifting the level people with a bank account to 'trend' would bring approx 7m people into the banking system
Source: : Bridge Advisory Services analysis,
World Bank, CGAP
Lifting the % of externally funded capital in Filipino SMEs to 50% (from 14% today) would generate ~7m additional jobs
Source: Bridge Advisory Services analysis,
World Bank Enterprise Surveys, World Bank data on capital formation,
estimates of depreciation and capital intensity in SMEs


Other countries will follow

Drivers of opportunity Low banking penetration Sub-scale banks wanting consolidation Poorly utilized existing infrastructure Technology change opportunities

Philippines: 15% pts below banking penetration trend; 6% of small enterprise capital funded by banks Philippines: ~800 banks; 10 banks/million adults (India: 0.2); $5.4m assets/ Rural Bank Philippines: ~8000 branches; 1,200 banked people / branch; $1.6m assets/ Rural Bank branch Philippines: ~60% of adults have mobile but no bank account

Pakistan: 18% pts below trend; 4% of business funding

China: Below trend, especially in Rural Areas
Indonesia: 2,400 banks; ~11 banks/million adults; $2m assets / rural bank

Sri Lanka: Many cooperatives & MFIs
Pakistan: 930 banked people/branch

Indonesia: $1m assets/ Rural Bank branch

Cambodia: 1,400 banked people / branch
Pakistan & Vietnam: Have similar proportions

Indonesia, China, Thailand, India are emerging opportunities
Click here for more details on the Filipino Provincial banking market


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