ILOILO CITY – The Bangko Sentral ng Pilipinas (BSP) reported that bank deposits in Western Visayas have soared to PHP533 billion as of June this year. This significant increase in savings reflects a region that may prioritize saving over borrowing, according to Gregorio Baccay III, head of the BSP Visayas Regional Office Economic Affairs Staff.
Baccay highlighted that the loan-to-deposit ratio (LDR) in Western Visayas stands at a mere 27 percent, with loans amounting to PHP146 billion. This low LDR indicates that a large portion of the deposits remains unused for lending, suggesting a savings-oriented public. Baccay explained that these savings are considered deposit liabilities, as banks must pay interest on them, necessitating the conversion of these deposits into loans to generate income.
Universal and commercial banks hold the majority of these deposits, with a portfolio of PHP495 billion, and also have the largest loan portfolio at PHP103 billion. Baccay suggested that to better utilize these deposits within the region, policymakers and local government units should enhance policies to improve the investment climate. This would encourage more micro, small, and medium entrepreneurs, as well as larger businesses, to take advantage of the loan products offered by banks.
Baccay warned that if these deposits are not utilized locally, they might flow out of Western Visayas’ economy, potentially hindering regional growth.