Why Naga has the most number of banks in Bicol

By Jose B. Perez, Editor-in-Chief That Albay, and for that matter, Legazpi City have more bank deposits than anywhere in Bicol should not be a surprise, considering that Legazpi City is the administrative center of the Bicol Region. According to Distribution of Domestic Deposits in the Philippine Banking System, as released by the Philippine Deposit Insurance Corporation (PDIC), Albay had a grand total of P45.98B bank deposits, P32.20B of which are in banks in Legazpi City, while Camarines Sur had only P43.81B, where P30.99B of which are deposited in banks in Naga City, all of which are reported as of December 31, 2016. But those are only half of the whole story. Being the regional center of Bicol, Albay, or more specifically Legazpi City, has its perks and built-in advantages, especially with regards to government transactions, programs and projects. But before we -- especially those coming from Albay and Legazpi City-- get excited, let’s delve first on the following facts: Both Legazpi and Naga are first-class cities, according to classifications made by the Department of Finance based on Philippine Cities’ incomes and other related financial and socio-economic indicators. In terms of size of area and population, Legazpi is bigger. The regional center had a population of 182,201 people as of 2010 in an area of 153.7 sq. kilometers while Naga has a population of 174,931 people in an area of 84.48 sq. kilometers. Naga’s population density, however, at 2,070.68 people/sq. kilometer is higher than Legazpi’s 1,185.43 people/sq. kilometer. Population density is the number of people living per unit of an area (e.g. per square kilometer), or the number of people relative to the space actually occupied by them. This indicator is vital to government policy makers and urban planners to address increasing needs for utilities and facilities (such as more access roads, better waste disposal system, and other public services) and to investors, as well, who need such data to measure a place’s economic dynamism, or their downside, such as peace and order situation and traffic problem. Other relative facts will come along as we proceed with my articulation, pre-empted in a way (my apologies) by the mere title of this article. Yes, there are more banks (private and government combined) in Naga than in Legazpi: 63 for Naga, 47 for Legazpi as of December 31, 2016, as confirmed by the PDIC report. A new bank, Sterling Bank of Asia, was only recently opened in Naga (it will open another Bicol branch in Legazpi sooner), while more new banking offices will be unveiled this year with the opening soon of Robinsons Place Naga not later than in September’s celebration of the Penafrancia Festival. No less than two branches will also follow suit in Legazpi once its SM City Legazpi is completed sometime next year. For clearer comparative picture, the number of BDO banking offices in Naga alone has reached 9 branches, including its regional office here, while Legazpi has only 4, while there are one each in Tabaco City, Daraga, and Polangui. The BDO branches in Naga likewise do not include those in Pili, Nabua, and Iriga (and soon to be opened branch in Calabanga, also in Camarines Sur). A few years ago, there was not a single bank along Magsaysay Avenue, Naga’s entertainment and food strip. Now it has 6 from the rotunda to the corner of Balatas leading to the Basilica. Another new player to come out will just be a matter of time. Indeed, why are there more banks in Naga despite the relatively bigger amount of total domestic deposits reported in Legazpi? A cursory look at the PDIC report on the distribution of domestic deposits will lead us to more revealing facts. Naga beats Legazpi in non-check deposits Naga outranks Legazpi in terms of 1) savings deposits, 2) time deposits, and 3) foreign currency deposits while Legazpi overshadows Naga only in terms of Demand/Now Deposits. To a private banker, the three kinds of deposits that accrue most to Naga banks are what matter best for a dynamic banking industry. It means that trade and business are more alive and vibrant in this city that is awash with higher disposable income from among its residents, hence the more number of banks. It also makes no surprise why the country’s leading banks locate their regional offices in Naga, such as Banco de Oro, PNB, DBP and Metrobank, to name a few. As a result of this, the country’s leading car brands have set up their regional sales and service centers in dizzying speed here in Naga and in nearby Pili town, which is merely 13 kilometers away from the nearest bank in Naga. With more banks, buying brand-new cars on installment basis becomes easy. In terms of savings deposits, Naga had P16.36B in 2016 while Legazpi had P14.13B during the same period. All numerical data to follow will cover the period “as of December 31, 2016” as reported by PDIC. On time deposits, Naga had P3.08B while Legazpi had P2.72B; on Foreign Currency Deposit Unit (FCDU), Naga had P2.19B while Legazpi had P1.92B. Cumulatively, Naga had total deposit (covering time, savings and FCDU deposits) of P21.63B vs Legazpi’s P18.77B, or a difference of P2.86B. Equally revealing is the fact that Naga City has a total of 306,066 accounts, compared to Legazpi’s 276,524 as of December 31, 2017, according to PDIC’s summary of distribution of domestic deposits. Legazpi City’s grand total (P32,20B) versus Naga’s (P30.99B) is primarily credited, per PDIC’s report, to its higher Demand/Now Accounts (Legazpi’s P13.42B vs Naga’s P9.34B, or a difference of almost P4B). This may be explained, according to a retired private banker, to Legazpi City’s position as the regional administrative center of Bicol, where most of the government funds intended for Bicol from their national offices (such as DPWH, DepEd, DBM) are downloaded to the regional offices based in Legazpi City through their depository banks based in the same city. This also explains why the regional office of Landbank, a government depository bank, is based in that city. But these monies (Demand/Now Accounts) stay only for limited periods in the banks where they were originally deposited because they are after all intended for the other provinces, cities and municipalities, as well as other government offices and agencies throughout the Bicol region. A demand deposit account is just a another term for a checking account. The difference between a demand deposit account (or checking account) and a negotiable order of withdrawal (NOW) account is the amount of notice you need to give to the bank or credit union before making a withdrawal. Most government accounts fall under this category. NOW accounts, for instance, are fund transactions from the national office, say DPWH, that are downloaded to their regional offices for specific obligations down to the district engineering offices, or DepEd accounts that are downloaded through the regional offices and released through depository banks that may in some cases include choice private banks, to reach the respective DepEd Division Offices for which they are intended. These accounts have specific purposes (such as payroll and administrative and operating expenses) and may less significantly contribute to the money in circulation for commercial transactions, unlike, say, the personal or businessman’s savings accounts that make the marketplace go round. Further, not all accounts that give you checks are “checking accounts.” Other deposit products, such as money market accounts, or notice of allotment may allow you to write checks, but they are not generally suited for day-to-day business, given the restrictions on their use. In addition, a lender may give you checks to access credit, such as a personal loan, home equity loan, or other lines of credit being provided by a private group or the government. Strictly speaking, these are not part of the disposable income that consumers use to fuel local trade and commerce, unlike the savings, time, and foreign currency deposits that Naga banks are teeming with. CamSur vs Albay Partly because of its territorial size, Camarines Sur, including Naga, has a total of 157 banking offices compared to Albay’s (including Legazpi City) 113 bank branches as of the aforementioned PDIC reporting period. Camarines Sur’s total number of accounts reached 672,935 vs Albay’s 493,856 during the same period. Following similar pattern with Naga’s domestic deposits, Camarines Sur has lower Demand/Now Deposits at P13.08B compared to Albay’s P17.88B. But Camarines Sur beats Albay in Savings, Time and Foreign Currency deposits. Under savings deposits, Camarines Sur had P24.28B vs Albay’s P22.25B. Camarines Sur had a total P3.68B in time deposits while Albay had P3.20B. Under Foreign Currency deposits, Camarines Sur had P2.75B, slightly higher than Albay’s P2.65B. Morale of the story What is the morale of this article? That we have two emerging dynamic cities that fuel our regional economy, each one having their distinct strengths and trying to pull away so that we may compete with other regions of the country? Incidentally, Naga City for two years now was hailed as the country’s most competitive component city while Legazpi ranked third last year under the same category. But the dynamics used in the selection practically have nothing to do with bank deposits, or material wealth alone. In fact, when reality sets in, we have so much to catch up to come within eyesight of the other wealthier regions of the country, such as Central Luzon, Calabarzon, and Central Visayas, to name a few. To give us a picture of how far more we have to go before we can march shoulder to shoulder with the other regions, let us try to see Bicol’s financial wealth along with the other nearby regions of the country. The Bicol Region (with its 6 provinces and 7 cities) had a total number of 423 bank branches and P124B in total deposits. Now, compare that with Central Luzon’s (Region 3’s) 1,133 bank branches and P533B in total deposits. Or Region 4-A’s (Calabarzon’s) 1,656 bank branches and a grand total of P735B bank deposits. We, compared to other regions, are peanuts, aren’t we? That’s the morale of this story.