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BPI open to cut interbank transfer fees

Ayala-led Bank of the Philippine Islands (BPI) is open to reducing its interbank transfer fees, but said that it would be difficult to totally remove them as transactions come with costs.

BPI president Jose Teodoro “TG” Limcaoco said the bank is open to cutting the interbank transfer fees for small value fund transfers, with the central bank looking at ways to remove such fees.

“I agree with (central bank) Governor (Felipe) Medalla that for small amounts, a 15-peso, a 25-peso charge is burdensome because why will you transfer P100 if you have to pay P15, but I think people also have to realize there’s a technology cost,” he told reporters in Makati City.

“We need security systems, we have technology that makes it run, InstaPay which is the backbone charges us… People always look at the BancNet, InstaPay charges but it doesn’t consider the cost that the bank needs to carry on our own cybersecurity, our own technology on our side, all the help sides,” he added.

BancNet is the local interbank network connecting the automated teller machine (ATM) networks of banks, while InstaPay is an electronic fund transfer (EFT) payment system that enables individuals to wire funds across banks in real time.

According to Limcaoco, banks still need to maintain communication channels, along with call centers to address concerns should transactions fail, which add up to the expenses.

“There’s a cost, so the question is, can you make it totally free or should you just reduce it or how do you encourage?” he said.

“It’s something that the BSP is asking the banks to look at and we’re open, but obviously it’s something every bank has to make the decision for themselves. Kami at BPI, we’d be open,” he added.

Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla in February said the central bank is ready to work with the banking industry to incentivize more Filipinos to use digital payments and eliminate fees on small-value fund transfers.

He said that a P15 fee — charged by a number of banks for interbank transfers — for a P200 transaction would be “quite large” relative to the amount being sent.

One of the measures the central bank is looking at is the reduction of the reserve requirement ratio (RRR) or the amount of cash a bank must hold in its reverses against deposits made by customers in the country. It is currently at 12%, said to be among the highest in the region.

Medalla last year said the RRR of big banks could still be cut down to a single digit by the end of his term in July. He is serving the unexpired term of his predecessor, current Finance Secretary Benjamin Diokno, who also took over the rest of the term of the late Governor Nestor Espenilla Jr. who passed away in February 2019.

Espenilla in 2017 said he wanted to see the reserve requirement cut by half under his leadership.

Limcaoco, who also serves as the president of the Bankers Association of the Philippines (BAP), however said that banks will have to decide for themselves regarding the adjustment of interbank transfer fees.

“We took note of Governor Medalla’s speech, but every bank has to decide for themselves and kami, we’re looking at it and how do we make it better for our clients, the experience, especially small transfers,” he said.

BPI on Wednesday also said it expects to beat the record net income of P39.6 billion in 2022, which reflects a 66% climb from the previous year and a 37.5% growth from the pre-pandemic bottom line recorded in 2019.

“The budget is to beat last year, that’s the plan, but there are good tailwinds. We have told people that we expect loan growth this year to be low teens, maybe 10 (percent),” Limcaoco said.

“There’s still demand so far. You have to remember that Philippine businesses have always been used historically to high rates,” he added.

The Monetary Board of the BSP has already hiked key policy rates by 425 basis points since May 2022, with the latest being a 25-basis point increase that took effect on March 23 to bring the benchmark rate to 6.25%.—LDF, GMA Integrated News