Tax exemption loss slashes time deposits

Long-term time deposits in the Philippine banking industry plummeted 95 percent in recent months, as Filipino depositors may have withdrawn or opted not to renew their placements following the removal of a key tax exemption.

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"So the five-years-plus-one-day time deposit product of our member banks, we've seen a 95-percent drop in that product. It's quite dramatic," veteran banker Michael Angelo Kho Samson, who chairs the Bankers Association of the Philippines' (BAP) capital markets development committee, said during the Philippine Tax Academy (PTA) Convention on Wednesday, Sept. 24.

"It's too early to tell where that movement is," he said, referring to the destination of funds such as shorter-term instruments, equities, or offshore investments. He told reporters that funds withdrawn from time deposits could also be shifted to other investments, such as equities or cryptocurrencies, but their movement is difficult to track.