(This is a speech given by Mr. Bernardo before the Bankers Institute of the Philippines, Inc. or BAIPHIL, on Aug. 19 at the Dusit Thani Hotel, Makati City. The theme of the event was “Continuing Partnership to R.I.S.E. in Banking — Resilience. Inclusivity. Sustainability. Engagement.” It has been edited for length and clarity.)
Let me ask: What does it mean to rise when the ground beneath us keeps shifting?
Let me highlight a few key developments that are shaping our path ahead.
• First, inflation is easing. Over the past five months, inflation has come down to less than 2%, thanks to moderating rice and energy prices and actions by the Bangko Sentral ng Pilipinas (BSP).1 We expect the full-year average this year to settle near the lower end of our target range. But what matters even more is how people see inflation one year from now. Based on our surveys, expectations remain anchored — people believe inflation will stay low over the next year. 2
• Second, our economy is growing steadily. GDP expanded by 5.5% in the second quarter, placing the Philippines as the second fastest-growing economy in the region.3 This momentum is supported by a healthy banking sector. Lending continues to grow, and digital financial channels are helping households and firms to continue to invest and spend.
• Third, our banking system remains strong and resilient. We continue to exceed international standards in capital buffers, liquidity coverage, and asset quality. Our non-performing loan ratio is steady at 3.4%, and capital adequacy stands at 16.5%. Key regulatory reforms — such as the new Capital Markets Efficiency Promotion Act — are expected to deepen our domestic financial markets, facilitating more efficient funding for infrastructure, innovation, and national priorities.
• Of course, we face headwinds. Global trade tensions and lingering geopolitical risks have introduced uncertainty, affecting both emerging and advanced economies. For small, open economies like ours, remaining insulated is difficult — especially with rising US protectionism expected to impact not only trade in goods but also services and remittances. In addition to imposing higher tariffs on its trade partners, the US has introduced a tax on remittances and is now considering measures to curb offshoring. So far, the overall impact on our external balance has been limited, supported by steady remittance inflows — which have reached nearly $14 billion as of May this year. Service exports from our IT-BPM industry remain robust and are expected to overtake remittance receipts for the first time this year.
• Finally, we have solid buffers despite these external shocks. Our gross international reserves (or GIR) stand at $105.7 billion, enough to cover 7.2 months of imports4 and 3.4 times the country’s short-term external debt.
These aren’t just good numbers — they show we’re learning to navigate the storms. Let us now break down what R.I.S.E. means in practice.
‘R’ FOR ‘RESILIENCE’
Resilience today goes beyond capital buffers and spreadsheets. In a digital world, it means standing firm against cyberattacks, fraud, outages, and even economic sabotage. Operational disruptions in the financial system are escalating.
The BSP’s cybersurveillance activities show a continued trend in cybercrime-related losses for the first half of 2025. Prevalent threats target the human element, which includes phishing, card-not-present fraud, and unauthorized access. This indicates attempts by threat actors to continually exploit vulnerabilities of digital financial consumers. Nonetheless, net losses declined notably, driven by improved loss-recovery mechanisms and cooperation among financial institutions.
That is why the BSP has taken decisive actions:
1. We rolled out the 2024-2029 Financial Services Cyber Resilience Plan (or FSCRP) on Aug. 6, 2024. The plan is a sector-wide roadmap and strategic framework to strengthen the cyber resilience and maturity of the financial services sector.5
2. We created the Financial Cyber Resilience Governance Council on Feb. 11 to oversee the FSCRP and facilitate coordination, collective decision-making, and guiding efforts toward a unified and proactive cybersecurity posture.
3. We updated IT and risk management rules6 to help banks respond faster.
4. We issued guidelines on operational resilience to ensure the continual delivery of critical operations to customers through disruptions. Operational resilience is a critical defense of BSP-supervised financial institutions against cyber threats and climate-related shocks.
5. We strengthened KYC and AML standards, including electronic due diligence.7,8,9
6. We issued enhanced rules for e-money and digital banks.10,11
7. We introduced a regulatory sandbox for testing innovations under the BSP’s oversight.12
8. We rolled out guidelines for the Anti-Financial Account Scamming Act, or AFASA, in May to crack down on mule accounts and phishing scams.13
9. And we conducted cyber education and awareness initiatives to build the capacity of small- and medium-sized financial institutions.
We are not plugging leaks — we’re reinforcing the entire system for greater resilience.
‘I’ FOR ‘INCLUSIVITY’
One of the most inspiring stories in Philippine banking is our progress in financial inclusion.
People who once dealt only in cash — vendors, tricycle drivers, sari-sari store owners — are now part of the digital economy. Thanks to Paleng-QR Ph Plus, now active in 180 LGUs.14 Even MRT-3 commuters can now tap or scan their way through turnstiles.15
In 2019, only 29% of Filipinos had bank accounts. By 2021, that jumped to 56%.16
But opening an account is just the beginning. MSMEs make up 99% of businesses,17 yet receive less than 3.9% of total bank loans.18 Why? No credit score. No formal income. No paperwork. So, the BSP responded:
• We promoted the Basic Deposit Account to bring more people into the formal financial system.19
• We launched the Credit Surety Fund and Credit Risk Database to help banks lend with confidence.20
• We supported Supply Chain Finance to reach underserved markets.21
• And we introduced the Standard Business Loan Application Form to cut red tape for MSMEs.22
Having worked in government, in multilateral institutions, and on private boards, I have seen that the best lending decisions aren’t always the obvious ones.
Inclusion isn’t charity. It’s smart, long-term banking.
‘S’ FOR ‘SUSTAINABILITY’
We can’t talk about resilience without addressing climate and environmental risks.
Floods, typhoons, and droughts don’t just damage property — they disrupt business models, strain credit quality, and challenge long-term economic growth.
Here is what the BSP is doing:
• Since 2020, we have issued a series of regulations to equip banks to effectively manage climate, environmental, and social risks. We have shifted our focus from reducing the Philippines’ already negligible carbon footprint (just 0.3% of the global total) to adapting to climate change-driven disasters, such as typhoons and flooding, to which our country is among the most vulnerable. Banks should integrate these risk factors into their corporate and risk governance.
• We also released Circular No. 118523 to incentivize sustainable financing. For instance: a 15% increase in the single borrower’s limit for sustainable projects; and a zero-reserve requirement for sustainable bonds. These incentives will run for two years until January 2026 — and we’ve already surveyed banks to gather feedback supporting the policy review.
• We introduced the Philippine Sustainable Finance Taxonomy Guidelines,24aligned with national climate goals, emphasizing adaptation as the priority action, and ASEAN Taxonomy, to give banks and investors a common language. Following this, a series of supplementary guidance is being issued to ensure consistent interpretation and implementation of the local taxonomy.25
• We are developing an Adaptation and Resilience Catalogue to guide banks in identifying and classifying adaptation-aligned projects. Through stakeholder input, pilot projects, and innovative financing, we aim to show their viability and build confidence in adaptation investments.
So, the question isn’t just, “Are you compliant?” It’s “Is your balance sheet future-ready?” Sustainability is not just a reporting line. It is a survival strategy and a leadership opportunity.
FINALLY, ‘E’ FOR ‘ENGAGEMENT’
Good regulation is not one-way. The BSP does not regulate from a tower. We engage, listen, and adapt.
We issue exposure drafts, hold policy dialogues, monitor feedback, and co-develop with the industry. We are active on major social media platforms to stay connected with the public. We even have a chatbot to assist financial consumers 24/7 and a mobile app for the most convenient access to BSP resources.
BAIPHIL has long played a role in this. My challenge to you: play an even bigger one. Don’t just learn the rules. Help shape them. To the new Board: you step into leadership at a defining moment. My wish for you is simple: rise not just to meet the future, but to shape it.
1 Inflation eased to 0.9% in July, with a year-to-date average of 1.7%, below the government’s target range. https://www.bsp.gov.ph/SitePages/MediaAndResearch/MediaDisp.aspx?ItemId=7614&MType=MediaReleases
2 “Households” mean 12-months-ahead inflation point forecasts eased to 3.7% in Q2 2025, from 3.8% in Q1. Likewise, “firms” mean forecasts decreased to 3%, from 3.4% in the previous quarter. Source: Consumer Expectations Survey (CES), Business Expectations Survey (BES).
3 The Philippines’ Q2 2025 real GDP growth is next only to Vietnam (8%); and higher than China (5.2%); Indonesia (5.1%), Malaysia (4.4%) and Singapore (4.3%).
4 Country’s foreign reserves settle at $105.7 billion in July 2025 Bangko Sentral ng Pilipinas Media and Research Press Releases.
5 BSP Launches the 2024 – 2029 Financial Services Cyber Resilience Plan https://www.bsp.gov.ph/SitePages/MediaAndResearch/MediaDisp.aspx?ItemId=7199
6 Circular No. 808 on IT Risk Management Framework, Circular No. 982 on Information Security Risk Management Framework, Circular No. 1137 on Outsourcing Framework, and Circular No. 1140 on Fraud Management System
7 Circular No. 1170 dated March 30, 2023
https://www.bsp.gov.ph/Regulations/Published%20Issuances/Images/Circular_1170.pdf
8 Circular No. 1182 dated Nov. 10, 2023 https://www.bsp.gov.ph/Regulations/Issuances/2023/1182.pdf
9 Circular No. 1193 dated April 29, 2024 https://www.bsp.gov.ph/Regulations/Issuances/2024/1193.pdf
10Circular No. 1105 dated Dec. 2, 2020, as amended by Circular Nos. 1154 and 1205 dated Sept. 14, 2022 and Dec. 26, 2024, respectively. https://www.bsp.gov.ph/Regulations/Issuances/2020/c1105.pdf
11 Circular No. 1166 dated Feb. 7, 2023 https://www.bsp.gov.ph/Regulations/Issuances/2023/1166.pdf
12Circular No. 1153 dated Sept. 5, 2022. https://www.bsp.gov.ph/Regulations/Issuances/2022/1153.pdf
13https://www.bsp.gov.ph/Regulations/Banking%20Laws/AFASA-Booklet-with-IRRs.pdf
14https://www.bsp.gov.ph/Pages/InclusiveFinance/PalengQR/PalengQRProgram.aspx
15BSP: Tap-to-pay & scan-to-pay in MRT-3 to drive digitalization transformation https://www.bsp.gov.ph/SitePages/MediaAndResearch/MediaDisp.aspx?ItemId=7598&MType=MediaRelease
16https://financialinclusion.gov.ph/wp-content/uploads/2025/07/2024-NSFI-Annual-Report.pdf
17https://www.dti.gov.ph/resources/msme-statistics/
18https://financialinclusion.gov.ph/-dashboard/
19Introduced by the BSP in 2018, the BDA aims to meet the needs of the unbanked and low-income sector for affordable and easy-to-open bank accounts. It has a low opening deposit requirement of P100 or less, simple identification requirements, no maintaining balance requirement, and no dormancy charges.
20https://www.bsp.gov.ph/Inclusive%20Finance/Financial_Inclusion-Advocacies/CSF_Primer.pdf
21Input from FSS
22Circular No. 1156 dated Sept. 30, 2022 https://www.bsp.gov.ph/Regulations/Issuances/2022/1156.pdf
23https://www.bsp.gov.ph/Regulations/Issuances/2023/1185.pdf
24Circular No. 1187 dated Feb. 21, 2024. https://www.bsp.gov.ph/Regulations/Issuances/2024/1187.pdf
25https://www.bsp.gov.ph/Regulations/Issuances/2025/M-2025-025.pdf; https://www.bsp.gov.ph/Regulations/Issuances/2024/M-2024-028.pdf; https://www.bsp.gov.ph/Regulations/Issuances/2024/M-2024-035.pdf
Romeo L. Bernardo is a member of the Philippine central bank’s Monetary Board.