Philippine Banking Industry 101
In understanding an industry, one must take note of the following important details:
- How the industry generate revenues?
- What are the regulatory risk surrounding the industry?
How does the banking industry generate revenues?
It is common knowledge that the banking industry profits by extending the cash deposited by the depositors to willing borrowers. To illustrate:
However, it was least known that bank profits more through rediscounting loans extended to borrowers. It is in this picture that the Bangko Sentral ng Pilipinas (BSP) plays a major role in a bank’s profit. Rediscounting loans is like borrowing money from the BSP with the loans receivable from the borrower as collateral. To illustrate:
What are the regulatory risk surrounding the industry?
The regulatory body that greatly affects the banking industry is the Bangko Sentral ng Pilipinas (BSP). Every time news comes out like BSP maintains key interest at record lows, what was…
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