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Banks, pawnshops pursued expansion amid restrictions

LOCAL banks continued to expand branches in the country in the first half of the year despite movement restrictions and predilection for online transactions; but non-bank institutions like pawnshops posted faster expansion during the period.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that local bank branches hit 13,114 in end-June this year, up 202 branches from the 12,912 branches in end-June 2020.

Broken down, universal and commercial banks still comprise the majority of bank branches in the country with 7,040 branches during the period. This is 45 more branches compared to the 6,995 in the same period last year.

Rural and cooperative banks were also able to expand their physical network during the period to 3,306 branches, up 43 branches from the 3,263 total in end-June 2020.

Thrift bank branches, meanwhile, registered the strongest growth in terms of physical network as it hit 2,768 branches during the period. This is 114 more branches from its level in the same month last year.

While bank branch growth remains intact, non-bank branches continue to dominate financial access in the country.

As of end-June 2021, non-bank financial institutions—which largely comprise of pawnshops—hit 15,238 branches during the period. This is a 2,124 branch gap between the traditional banking system during the period.

Non-bank financial institutions also posted stronger branch expansion during the period, adding 534 branches in June 2021 from the same month last year.

Earlier this year, BSP Governor Benjamin E. Diokno recognized pawn shops as one of the key financial drivers of the country, especially in hard to reach areas.

“Pawnshops play a key role in inclusive finance because of their extensive network that serves as financial access points for low-income individuals, small businesses and social amelioration beneficiaries,” Diokno said.

Because of their ability to reach even the farther areas of the country, Diokno also said that about P6.8 billion in cash aid for 983,505 beneficiaries has been distributed via pawnshops as of end-December 2020, according to reports by banks and e-money issuers to the BSP.

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