8 in 10 Pinoy households don't have bank accounts

MANILA - Philippines - Eight in 10 Filipino households (78.5%) do not have deposit accounts, according to the first Consumer Finance Survey (CFS) conducted by the Bangko Sentral ng Pilipinas.

Around 92% of those with no deposit accounts said they did not have enough money for bank deposits. Other respondents said they do not need a bank account; cannot manage an account; the minimum balance is too high; or do not like to deal with banks and financial institutions.

Of those who have bank accounts, only 6 in 10 of these deposit accounts are earning interest. "This indicated that a significant number of deposit accounts have an average daily balance below the required amount to earn interest or had earned a negligible amount of interest," the survey said.

There are still not many Filipinos who have credit cards. The survey showed only 4% of households have credit cards. Of those who have credit cards, around 63.6% have only one credit card.

Only 4 in 10 (39%) paid their credit card monthly bills in full, while nearly 40% said they paid only the minimum amount.

Majority of the respondents appeared willing to save money, if they had extra cash. Asked where they will place their extra money, respondents said they would save in banks (39.4%) and save cash at home (38.8%).

The BSP's first Consumer Finance Survey provides a look into the financial conditions of Filipino households, including their financial and non-financial assets, income, credit, spending and insurance coverage.

The survey had a sample size of 10,520 households consisting of 3,872 households from the National Capital Region and 6,648 from Regions 1, 7 and 11. Households were interviewed within November 2009 to January 2010, while the data on work, income and expenditures of households was from 2008.

Based on the CFS, the average and median total income of households in 2008 were P188,350 and P108,000 repectively.

Homes, cars

The CFS showed there is a high rate of home ownership among Filipinos. Seven in 10 households (68.8%) own their homes, mostly acquired through cash payment or inheritance. Only 6.7% borrowed money to finance the purchase of the house.

One in six households own other real property, aside from their house. However, they usually finance these real property acquisitions through loans from money lenders.

Wages and salaries are the main source of income for majority of households. The survey also showed one-fifth of households receive financial assistance from abroad, in the form of cash and gifts. The average amount received is P48,988 a year.

One in every four households owns a motor vehicle. Among those who own vehicles, 55% own motorcycles, followed by cars, utility vehicles and vans (32%) and tricycles (19%).

The survey also showed 43% of respondents have 1 or more retirement plans, either from the government or private companies. Nearly 94% were covered solely by government insurance such as Social Security System and Government Service Insurance System. A small percentage (4.5%) were covered by both government and private insurance.

There were not a lot of households were covered by health insurance. Three in 10 (29%) household members had health insurance, mostly under Philhealth.

One-fifth of the households surveyed have availed of other types of loans, such as personal, salary, multipurpose and business loans. The loans were mostly from money lenders, cooperatives, financing institutions, SSS and Pag-Ibig.

Most of the respondents in the survey were not risk takers, when it comes to investments. Seven in 10 respondents said they would stick to their current level of guaranteed income of P1,500 a week, rather than invest in a new product with a 50-50 chance of getting three times their current income or suffer a loss of P1,500.

"More inclusive system needed"

Based on the results of the survey, the BSP said it should work towards a "more inclusive" financial system that would include those who are "unbanked." The BSP has already been promoting and establishing a policy and regulatory environment to increase Filipinos' access to financial services.

The BSP said the survey also showed there is a need to continue educating Filipino households on the advantages of saving in financial institutions and investing in various forms of financial instruments.

"There is a need to look into 'shadow banking' transactions and related regulatory and supervisory approaches to monitor system-wide risk exposure to particular sectors without reducing credit opportunities for consumers," it said.

The BSP should also work with government pension systems to encourage more Filipinos to become members.

"The survey results also attest to the importance of the BSP's advocacy for inclusive and proactive economic and financial education among its stakeholders," the BSP said.