The insurance industry in the Philippines is gearing up for a strong year, as total premium income rose by more than 40% year-on-year (y-o-y) in the second quarter.
Philippines Financial Services
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Maintaining a growth streak for six consecutive years, the Philippines Stock Exchange’s (PSE) momentum is expected to continue into 2015, thanks to projected gains from cheaper oil prices and a strong growth outlook among dimming prospects in the region.
While the final cost of Typhoon Yolanda is still being calculated in the Philippines, the impact that the country’s low insurance take-up could have on the national economy is fast becoming apparent.
Lenders in the Philippines are readying themselves for a further tightening of regulatory oversight, with the requirements of Basel III, as adapted by the Bangko Sentral ng Pilipinas (BSP), the central bank, due to come into effect at the beginning of next year. While the transition is not expected to be overly burdensome, the cost of greater security could be a short-term dip in profits.
Legislative reforms opening up the rural banking segment to wider foreign investment could see an injection of funding into at least some of the almost 600 small lenders. However, it is likely that only a few will attract an overseas partner.
The central bank, Bangko Sentral ng Pilipinas (BSP), has moved to boost banking services in rural regions by lifting restrictions on the number of branches small lenders are allowed to operate, while trying to convince rural banks to merge to strengthen their capital base.