research bdo
TRANSCRIPT
Chapter 1
THE PROBLEM AND ITS BACKGROUND
This chapter provides an understanding of what the problem is its context,
the scope and limitations of the study as well as its significance.
Background of the Study
Loan services played a big role in the success of banking industry due to
increasing demand for funds. It opens a great competition within the industry that
result to a better banking performance. It is designed to attract more customers
which have a greater contribution to its profitability.
Obtaining a loan is not that easy due to some economical factors.
Perhaps, it is because of strict qualifications, limited transactions or long time
processes. So, by making the services easy to access with, innovations are
necessary. This might result to a high level of customer satisfaction and
consistent growth rate.
The group has decide to study the BDO loan service innovation to have a
clear idea of what and how do their innovations affect the bank’s performance,
relationship with the customers, profitability, and standing within the industry
since they are the most prestigious bank here in the Philippines so far.
The researchers want to provide valid informations on how BDO loan
services can provide finds to the ordinary customers as a source of investment
and to continue to run their businesses without sacrificing their needs and to offer
the appropriate loan base on their status in life that not only large company can
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avail loan in BDO. The researchers also want to show the difference of interest
rates of loan in BDO between to other lending institutions, which one is more
convenient.
Statement of the Problem
This study aims to focus on the loan services offered by the bank.
Specifically, it sought to answer the following question:
1. What are the different loan service innovations made by the BDO Unibank?
2. Is there clear evidence that there is an increase in profitability within the
bank?
3. How do the above mentioned innovations affect the following performance
indicators;
3.1 Profitability;
3.2 Growth rate;
3.3 Return of asset; and
3.4 Return of equity
4. How does it contribute to the development of the BDO Loan Service?
5. How does it affect the increase in customer’s satisfaction and patronage?
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Hypothesis
There is no significant relationship between the loan service and the
market share and profitability.
Significance of the Study
This study aims to identify the services made by the bank.
The study will benefit the following:
Bankers, through this research these may help them to create a new
idea for them to improve their banking services which they offer to their
customers that may contribute to increase their funds.
Borrowers, these will give them information on what are the new services
that they may be used and influence their borrowing decision.
Businesses, this will serve as their sources as one of their concerns for
them to have reliable source of fund that will be a life blood of every business.
Investors, this will give them an idea which will help them as their basis
on when and where to invest considering that investing is very risky thing to do.
Students, it will serve as their basis to be equipped about the knowledge
that may be use for employment and will serve as there guide for their future
research work.
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Scope and Limitations
The research study will be focusing on the loan services of BDO Unibank
for the past four years (2007-2010). The researchers used the secondary data
which are the financial statements and news sites in analyzing the flow of its loan
progression.
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Chapter 2
REVIEW OF RELATED LITERATURE AND STUDIES
This chapter deals with the review of related literature and studies which
served as anchorage of the present study.
Foreign
Lending networks on the Web give SMALL BUSINESSES more places to
borrow money with fewer hassles. One is the latest technology in loan services is
the Fast Credit Online - innovations on banking services. LiveCapital and
several other online companies have built networks of lenders that small
businesses can tap into quickly and easily. In the case of LiveCapital, 70 financial
institutions belong to the network, among them American Express, Citibank, First
Union, G.E.Capital and Wells Fargo. Mike Grossman, LiveCapital's co-founder
and CEO, says its customers value convenience and anonymity as opposed to
"going from bank to bank and getting grilled by a loan officer." Real-time credit
approval doesn't always replace the intangible value of personal banking.
( Wilcox, Melynda Dovel, March, 2001 )
HK Bldg & Loan Expands into China's Energy Management Industry.
HK BLDG & LOAN's engagement in the energy saving industry not only
represents significant prospects for the Company, but also guarantees a new,
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recurring and steady income stream. Commenting on the acquisition, Mr. Au Tin
Fung, Executive Director of The Hong Kong Building and Loan Agency Limited
said, "The Board is most pleased with the opportunity to acquire Weldtech
Technology which is known for its proprietary UPPC system, and a reputable
industry player with industry expertise, strong research and development ability
and prospects for growth. Enabled by the Chinese government's commitment to
reduce carbon emission, we are confident that the diversification into the energy
management industry will yield long-term returns to our shareholders." (Japan
Corporate News,2011)
Hagens Berman Files Class-Action Suit Against Aurora Loan Services,
LLC.
A group of homeowners filed a class-action lawsuit against Aurora Loan
Services, LLC, claiming the mortgage company duped them into paying tens of
thousands of dollars each to have troubled mortgages reviewed by the company
with promises of loan modifications, only to have their property foreclosed with
little or no notice. IThe suit contends that, after a period of months, Aurora
foreclosed on the homes without giving the borrowers any notice that their
requests for loan modification were denied and without allowing borrowers
access to any method for ending their loan deficiency, despite the provisions of
the workout agreements. (Thrifts and Mortgage Finance,2010)
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Local
As Asians become wealthier, businesses turn to innovation to boost growth.The
growing middle class in Asia presents huge opportunity for businesses and is
fueling product and service innovations in the region, the latest study from
foreign donor Asian Development Bank. In a special chapter of Key Indicators
for Asia and the Pacific 2010, the flagship annual statistical publication of the
Manila-based lender, found that Asia's consumers spent an estimated $4.3 trillion
(in 2005 purchasing power parity dollars), or about one-third of the world’s
developed countries’ consumption expenditure, in 2008 and by 2030 will likely
spend $32 trillion, comprising about 43 percent of the worldwide consumption.
“Developing Asia’s middle class is rapidly increasing its size and purchasing
power, and will be an increasingly important force in global economic
rebalancing,” said ADB Chief Economist Jong-Wha Lee. “Even though the Asian
middle class has significantly lower income and spending relative to the Western
middle class, its growth in expenditures has been remarkable and its absolute
levels are commanding.” (Entrepreneur.com.ph,2010)
MANILA, Philippines - Carmen Copper Corporation (CCC), a subsidiary of Atlas
Consolidated Mining and Development Corporation, has obtained loans
amounting to $150 million to refinance debt and fund working capital
requirements. In a disclosure to the Philippine Stock Exchange, Atlas said the
board of directors CCC has approved and accepted the terms of the $140 million
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Offtake Loan Facility to be provided by Banco de Oro Unibank, Inc. (BDO). The
Atlas board of directors has also approved and accepted the terms of the $10
million Convertible Loan Facility to be provided by BDO. (Manila Bulletin, Dec 2,
2010)
In December 1986, the Center for Agriculture and Rural Development (CARD)
Inc. was organized as a social development foundation to address the growing
poverty incidence in depressed communities in Regions IV and V. Over the
years, in adapting traditional microfinance to the context of the Philippines, I
believe CARD made specific differences as to credit products. Group lending is
not practiced now in favor of individual loans by CARD MRI.While the small
loan amount provide some risk protection by spreading risks over many
borrowers, the MFIs still needed to develop unique approaches to minimize the
cost of servicing, manage risk given the collateral-free credit. ( Kiva
Microfinance,2010)
The USAID-supported Microenterprise Access to Banking Services (MABS)
program is an initiative of the Rural Bankers Association of the Philippines
(RBAP). In partnership with the Philippine rural banking industry, the program
aims to significantly expand access to financial services for micro-
entrepreneurs. This highlight discusses one of the MABS Program's most
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innovative projects; using mobile phone banking to reach rural micro-
entrepreneurs.GCASH creates virtual mobile wallets. The services use GCash,
the mobile money platform of Philippine telecommunications company Globe
Telecom. Launched in 2004, GCASH turns mobile phones into “virtual mobile
wallets.” With GCASH, users can buy or “cash in” GCASH credits (converting
cash to GCASH), or they can “cash out” their GCASH credits (converting GCASH
to cash). GCASH can be converted not only to cash, but also to call or text
credits, transferred to other people’s mobile wallets phone-to-phone, used to pay
for goods, services, and bills, and sent as remittances. (Owens, J. & Balingit,
C., 2007)
DOLE pushes Nego-Kart as loan project innovation under PGMA's poverty
alleviation program. Tacloban City (November 14) -- In line with President Gloria
Macapagal Arroyo's poverty alleviation program, the DOLE, in its sustained effort
to protect the welfare of workers, recently launched a financial assistance
program to help the ambulant vendors. Nego-Kart or Negosyo sa Kariton is a
project for ambulant vendors on major cities of the country. The Negosyo sa
Kariton or Nego Kart program aims to give vendors and street hawkers loans
so that they would not have to patronize loan sharks. (PIA Press Release,
March 2011)
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A. Theoretical Framework
As Finance Innovations Director Jennifer Wagg says, “It’s not just about
finding the loan with the best interest rate. There are a lot of options available
from lenders that can provide flexibility, particularly for those who have financial
discipline.” The trick is to match the right lender, loan and options to you. It’s vital
to personalize a loan structure to suit your needs. Finance Innovations takes the
time to listen to you to assess your needs, for now and into the future, so that we
can match you with the best finance for your situation. We then help you to
complete the loan process to ensure the finances you require to live your dreams
are established quickly and easily. Finance Innovations are the finance brokers
who can help you reach your financial dreams, while saving you time, money and
hassles.
B. CONCEPTUAL FRAMEWORK
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BDO Loan Service Innovations:
Personal LoanHouse LoanCar Loan
Impact on bank’s:
ProfitabilityGrowth RateReturn on AssetReturn on Equity
Development of BDO Loan Service
Increase on:
Customer’s SatisfactionPatronage
Figure 1
Figure 1 shows the conceptual framework used by the researchers in the study.
The researchers should be able to identify the different kind of loan services
offered by the bank which are the personal loan, house loan and car loan.
Through the use of interview and analysis, the researchers should be able to
evaluate the data gathered to know its internal and external effects in the bank.
Successful assessment on the loan services will lead to the increase in
profitability of the bank and will heighten up its standing in the Philippine banking
industry
Definition of Terms
To make the study clearer and more meaningful to the reader, the
researchers defined the following terms:
Commercial bank is a type of financial intermediary and a type of bank
which is also known as business banking that provides checking accounts,
savings accounts, and money market accounts and that accepts time deposits
Creditor is a party (e.g. person, organization, company, or government)
that has a claim to the services of a second party.
Debtor is a person who owes a debt.
Financial Statement is the records that outline the financial activities of a
business, an individual or any other entity which meant to present the financial
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information of the entity in question as clearly and concisely as possible for both
the entity and for readers. For businesses usually include: income statements,
balance sheet, statements of retained earnings and cash flows, as well as other
possible statements.
Financial system is a network of various institutions which generates,
circulates, and controls money and credit.
Growth rate is the amount of increase that a specific variable has
gained within a specific period and context. For investors, this typically
represents the compounded annualized rate of growth of a company's revenues,
earnings, dividends and even macro concepts - such as the economy as a
whole.
Innovation is can be seen as the process that renews.
Investor is any party that makes an investment, something that exists and
not, as is commonly assumed, the introduction of something new.
Loan is a sum of money borrowed at a particular interest rate.
Loan Service is the process by which a mortgage bank or subservicing
firm collects the timely payment of interest and principal from borrowers. The
level of service varies depending on the type of loan and the terms negotiated
between the firm and the investor seeking their services.
Market share is the percentage or proportion of the total available market
or market segment that is being serviced by a company.
Profitability is the ability of a firm to generate net income on a consistent
basis. It is often measured by price to earnings ratio.
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Return on Asset is an indicator of how profitable a company is relative to
its total assets. ROA gives an idea as to how efficient management is at using its
assets to generate earnings. Calculated by dividing a company's annual earnings
by its total assets, ROA is displayed as a percentage. Sometimes this is referred
to as "return on investment".
Return on Equity is the amount of net income returned as a
percentage of shareholders equity. Return on equity measures a corporation's
profitability by revealing how much profit a company generates with the money
shareholders have invested.
Universal bank participates in many kinds of banking activities and is
both a Commercial bank and an Investment bank.
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Chapter 3
METHODOLOGY
This chapter presents the research method used, the instrumentation and
the procedures in gathering the data.
Research Design
The documentary method of research was employed in this study.
Documentary research is the use of outside sources to support the
viewpoint or argument of an academic work. The process of documentary
research often involves some or all of conceptualizing, using and assessing
documents. The analysis of the documents in documentary research would be
either quantitative or qualitative analysis (or both).
Research Instrument
The researcher used secondary data. The secondary data are through the
use of information gathered from the outside sources of the company and
financial statements of the Bank for documentary analysis of their profitability,
market share, growth rate, return on asset and return on equity
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Validation
The researcher presented the draft to the professor for further review,
amendment and revisions. Feedback from other people who has the proficiency
of making good interview questions has been considered for its improvement.
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Chapter 4
PRESENTATION, INTERPRETATION AND ANALYSIS
This chapter aims to present all the data gathered. Interpret and analyze each
findings.
1. Personal Loans
Personal Loans
Enjoy low interest rates, easy payment terms on your financing needs
such as:
Home Renovation / Upgrades
Tuition / Education
Furniture
Appliances / Electronic Gadgets
Vacation / Travel
Balance Transfer / Debt Consolidation
Special Events
Health and Wellness
Medical Emergencies
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See sample computation for a P50,000 cash loan payable in 24 equal
monthly installments:
The computation above will serve as your guide. BDO at its sole
discretion, shall determine the final amount and term to be approved.
The computed fixed monthly amortization using the factor rates
indicated below may differ from the monthly amortization computed
and generated by the BDO system due to the rounding-off of the factor
rate, which is automated in BDO's system.
Desired
Amountx
Factor Rate
(of chosen tenor)=
Fixed Monthly
Amortization
P50,000 0.054166667 P2,708.33
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Interest Rate Table
Tenor Factor Rate Monthly Add-on Rate Effective Rate/Annum
6 0.179666667 1.30% 26.27%
12 0.095833333 1.25% 26.62%
18 0.068055556 1.25% 26.75%
24 0.054166667 1.25% 26.58%
36 0.040277778 1.25% 25.98%
· *Rates are valid beginning April 27, 2009. Interest rates may
be subject to change by Banco de Oro ("BDO") in accordance with
the prevailing market rates for similar transactions and terms.
Product Features
Flexible Loan Amounts
Minimum of P10,000
Maximum of P500,000
Easy Payments Terms
Choice of payments in either 6, 12, 18, 24 or 36 months
Fixed Monthly Payments
Pay the same amount every month
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Various Payment Options
Convenient Application
Submit your application at any of BDO 668 Branches
Top-Up Loan Feature
Secure and additional Personal Loan equal to or greater (subject to
submission of new income documents) than the original Personal Loan
Subject to at least 50% paid up from the original loan term
Minimum application Requirements
Filipino citizen or foreigner residing in the Philippines for more than two (2)
years
Must be 21 years old at time of application but no more than 70 years old
upon maturity
Minimum Gross Annual Income
P120,000 for SALARIED EMPLOYEES
P400,000 for SELF-EMPLOYED/PROFESSIONALS
Must have at least one (1) landline at either residence or office
Residence or office must be within BDO serviceable area.
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Additional application requirement for SALARIED EMPLOYEES
Must be a permanent employee or at least 1 year tenure with a company.
Additional application requirements for SELF-EMPLOYED
Must be a sole proprietor or majority part-owner of a company operating
for at least 2 years.
Additional application requirements for PROFESSIONALS
Must be in private practice for at least 1 year.
Document Requirements
Proof of Income for SALARIED EMPLOYEES
Photocopy of the latest BIR Form 2316 or W2 signed by employer's
authorized representative (MANDATORY) AND
Submit ANY ONE of the following:
Original copy of Certificate of Employment and Income (COEI) issued in
the last three (3) months indicating status, length of service and
breakdown of compensation
Photocopy of last full month pay slip
Proof of Income for SELF-EMPLOYED/ PROFESSIONALS
Photocopy of Registration of Business Name
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For Single Proprietorship issued by the DTI (Department of Trade and
Industry)
For Partnerships issued by the SEC (Securities and Exchange
Commission)
Photocopy of latest ITR and W4 with BIR/ Bank Stamp (MANDATORY)
Photocopy of lasted Audited Financial Statements for the last two (2)
years
Photocopy of Bank Statements for the last six (6) months (OPTIONAL)
Proof of Identification
Photocopy of at least two (2) valid photo-bearing identification documents,
front and back, issued and signed by an official authority such as:
Passport
Driver's License
Professional Regulations Commission (PRC) ID
National Bureau of Investigation (NBI) Clearance
Police Clearance
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Postal ID
Voters ID
Barangay Certification
Government Service Insurance System (GSIS) e-card
Social Security System (SSS) Card
Senior Citizen Card
Overseas Workers Welfare Administration (OWWA) ID
OFW ID
Seaman's Book
Alien Certification of Registration/Immigrant Certificate of Registration
Government Office and GOCC ID, e.g. Armed Forces of the Philippines
(AFP ID), Home Development Mutual Fund (HDMF ID).
Certification from the National Council for the Welfare of Disabled
Persons (NCWDP)
Department of Social Welfare and Development Certification (DSWDC)
Integrated BAR of the Philippines ID
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Company ID's issued by private entities or institutions registered with or
supervised or regulated either by the BSP, SEC, or IC.
For Resident Foreigners only
Copy of Employment Contract or Certificate of Employment
Letter from the Embassy (if Embassy Official)
Submit photocopy of ANY ONE of the following:
Valid Passport with Resident Visa; OR
Work Permit and valid Visa; OR
Special Investor's Resident Visa and Visas Philippine
Economic Zone Authority or Visa with EO226; OR
ACR or ICR or ACR1
Application Instructions
Secure BDO Personal Loan application form from any BDO Branch.
Completely fill-out and sign on the Personal Loan application form.
Submit completely filled-out and signed application form together with
complete document requirements (please refer to document requirements
indicated above) to any BDO Branch or Direct Sales Agent of BDO
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Fees and Charges
Processing Fee P1,300
Late Payment Fee 5% of the unpaid installment due or P300, whichever is
higher
Installment Acceleration Fee 5% of the outstanding principal balance or
P300, whichever is higher
Returned Check Fee P500 per returned check
Credit Card Annual Fee WAIVED
Lost Billing Reminder Card Replacement P250 per card replacement
SOA Reprinting P100 for every SOA request
1.1.1 BDO Asenso Kabayan Personal Loan Secured
Product Description
CLG Personal Loan for OFW is offered against hold-out on Joint or Individual
account deposits maintained with BDO as security.
The following are the type of deposits allowed for this facility
Peso or Dollar Savings Account
Peso or Dollar Time Deposit - at least co-terminus with the loan tenor
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Minimum deposit requirement is PHP 15,000 or its dollar equivalent.
Though, loan proceeds will be in PHP.
Applicant shall be the OFW only. However, if the deposit collateral is a
joint account, beneficiary may apply as a principal borrower of the loan
The following cannot be allowed to be held as collateral:
"In Trust For" accounts
Accounts with existing/ongoing hold-out arrangements
Product Features
Multipurpose - use it for various purposes such as:
Tuition/ Education
Health and Wellness
Emergencies (medical, memorial, etc.)
Appliances/Furniture/Electronic Gadgets
Vacation/Travel
Special Events (weddings, anniversaries, etc.)
Balance Transfer/Debt Consolidation
Personal Investments (business, insurance, etc.)
Car Repairs/Upgrades
House Renovation/Upgrades
Lot Down Payments
Interest Rates Prevailing upon application
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Fixed Monthly Payments - pay the same amount every month with any of
the following flexible payment terms:
6 months
12 months
18 months
24 months
36 months
Loan proceeds can be released either by Credit to BDO account or
Manager's Check
Term of deposit should be at least co-terminus or longer than the term of
the loan
Re-availment Feature or TOP-UP Loan
Existing personal loans with good credit standing may qualify for re-
availment/top up loan.
The available deposit account on hold is to be used as a basis for the
additional loan limits to be granted.
Loan Amount
For Peso Account maximum of 90% of the deposit account balance
For Dollar Account maximum of 80% of the deposit account balance; the
prevailing buying rate shall be used to determine the peso equivalent
For our Kabayans working abroad, please use the Asenso Kabayan
application forms by clicking on the following links "For Personal Loans
Secured":
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1. Application Form
2. Deed of Assignment Form
3. Special Power of Attorney Form
4. Auto-Debit Arrangement Form
1.1.1.1 BDO Asenso Kabayan Personal Loan Unsecured
Product Description
CLG Personal Loan for OFW is a multi-purpose, non-collateral loan for
individuals with fixed income and paid through monthly amortization at a
fixed interest rate and period.
2. BDO Unibank Financial Statements
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3. Effect of the loan service innovations to the following performance indicators.
3.1 Profitability;
3.2 Growth rate;
3.3 Return of asset; and
3.4 Return of equity
3.1 Profitability
(In Millions of Philippine pesos)
Gross Profit Margin =
2007 - 33350/34176 = 97.6%
2008 - 30780/31563 = 97.5%
2009 - 39502/40140 = 98.4%
Operating Profit Margin =
2007 - 9417/34176 = 27.5%
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Gross ProfitsTotal Revenues
Operating ProfitsTotal Revenues
2008 - 3683/31563 = 11.66%
2009 - 7760/40140 = 19.33%
Net Profit Margin =
2007 - 6518/34176 = 19.07%
2008 - 2182/31563 = 6.91%
2009 - 5951/40140 = 14.82%
EPS =
2007 - Basic = Php 3.36
2008 - Basic = Php 0.64
2009 - Basic = Php 2.71
3.2 Growth rate =
2007 - 6518-3969.6/3969.6 = 64.19%
2008 - 2182-6518/6518 = -66.52%
2009 - 5951-2182/2182 = 172.7%
3.3 Return of asset =
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Net Profit after TaxTotal Revenues
Earnings Available for Common Stockholders Number of Shares of Common Stock Outstanding
Net Income (final)-Net Income (Initial) Net Income (Initial)
Net Profit after TaxTotal Assets
2007 - 6 518/617 208 = 0.0105
2008 - 2182/802 032 = 0.00272
2009 - 5951/862 049 = 0.0069
3.4 Return of equity =
2007 - 6 518/62 486.3 = 10.43%
2008 - 2182/57 774 = 3.78 %
2009 - 5951/67 887 = 8.77 %
*2010 Financial Statements of BDO Unibank is not yet available.
4. The contribution of new loan services of BDO Unibank to its
profitability.
BDOLF’s loan portfolio surges 28% in 2010
March 3, 2011
BDO Leasing and Finance, Inc. (BDOLF) ended 2010 with a 28-percent
growth in loan portfolio to P14.58 billion from P11.39 billion the previous
year.
The company, which is a subsidiary of BDO Unibank, Inc., said the increase
was largely attributed to management's renewed focus on corporate
accounts.
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Net Profit after TaxTotal Equity
As a result, BDOLF’s net income last year improved to P308.7 million from
P300.0 million in 2009. Gross income, meanwhile, amounted to P2.04 billion.
The company also managed to reduce by 7 percent last year its past due
accounts to P665.0 million from P715.3 million in 2009.
BDOLF provides leasing and financing products to commercial clients. Its
leasing products include direct leases, sale-leaseback arrangements and
operating leases. Financing products, on the other hand, include commercial
and retail loans, installment paper purchase and factoring of receivables.
Loan availments of clients are used to finance the purchase of automobiles,
trucks, office equipment, industrial, agricultural and office machinery, and
real property, and financial assets such as receivables.
BDO posts audited 2010 net income of P8.8 billion
February 28, 2011
BANCO De Oro Unibank, Inc. (BDO) ended 2010 with an audited net income
of P8.8 billion, up 46 percent from the P6 billion it earned a year before, and
exceeding its initial earnings guidance of P8.1 billion.
The Bank, prior to the income release, has reported that its consolidated
resources hit the P1-trillion mark at the end of 2010, making it the first
Philippine bank to achieve that milestone.
BDO’s strong performance was a result of a more diversified and sustainable
earnings stream from its core lending, deposit-taking and service
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businesses. Gross customer loans expanded 15 percent to P541.5 billion
with firm growth across all business segments. Total deposits, meanwhile,
rose 13 percent to P782.6 billion. A larger earning asset base coupled with
lower funding costs resulted in the 12-percent increase in net interest income
to P34.2 billion. The Bank’s fee-based service income likewise grew to P10.4
billion on strong contributions from trust, private banking, remittance,
transaction banking, insurance, investment banking, and credit cards.
BDO continued efforts to prudently manage the balance sheet to protect it
through economic cycles. It boosted provisions to P6.7 billion and raised
non-performing loan (NPL) coverage to 92 percent from 80 percent a year
ago, despite the decline in the gross NPL ratio to 4.7 percent from the
previous year’s level of 5 percent. Capital Adequacy Ratio (CAR) remained
sound at 14 percent, well above the current regulatory minimum of 10
percent.
Return on average Common Equity improved to 11.7 percent in 2010
compared to 10.4 percent in 2009. Following its solid financial performance
in 2010, the Bank hopes to build on its gains to pursue further growth
opportunities to enhance shareholder value.
Source: http://www.bdo.com.ph/news-archive.asp
BDO sees lending slowdown in ‘09INQUIRER.net
First Posted 17:42:00 12/10/2008
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Filed Under: Banking, Economy and Business and Finance ,world financial crisis
MANILA, Philippines—Banco de Oro, the country’s largest bank, expects lending
to slowdown in 2009 as companies defer major capital expenditures due to the
global financial crisis.
BPO president Nestor Tan said he believed the crisis would be hardest on the
export and industrials sectors and these would show the most slowdown in loan
demand.
“We still expect borrowers across the board, but you might see some deferment
in major capital expenditures and that will have an effect on slowing down on
loan activity,” Tan said.
The global squeeze will not cause Philippine companies to close shop, he said,
but more corporate defaults are a big possibility.
“We just don’t know the extent. That is why we are continuously reviewing our
portfolio and doing stress tests. We are looking at vulnerable industries and
looking at our exposures,” he said.The bank is also prepared to do refinancing
and loan restructuring for clients.
BDO still has around 40 to 50 “undeployed” branch licenses, but Tan said these
might not all open in 2009.
Consumer and housing loans have already shown a marked deceleration this
year, but Tan said he would still look closely at the first and second quarters next
year to see if these two are hit by the crisis.
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“One month may not tell the story… You have to look at the trend over time. We
are only two months after the meltdown. We will probably look at it in the first and
second quarter next year. When the crisis hit, the natural inclination is for
everybody to fall back and that has created a substantial decline. But that doesn’t
mean everybody is stopping. That only means they are assessing situation,” Tan
said.
BDO sees P7-B profit in ’07, eyes capital hike
By Daxim Lucas
Inquirer
Posted date: July 28, 2007
MANILA, Philippines -- Banco de Oro Unibank Inc. (BDO) -- the new corporate
name of the mall magnate Henry Sy’s financial giant -- expects to post double-
digit profit growth this year despite the added costs associated with its acquisition
of Equitable PCI Bank.
In a press briefing, BDO president and CEO Nestor Tan said he expected the
bank to post a P7.05-billion net income in 2007, marking a 10-percent increase
over the combined P6.39 billion in pro forma net income reported by the former
Banco de Oro Univeral Bank and Equitable PCI Bank before their formal merger.
BDO announced Friday the appointment of Henry Sy’s daughter Teresita as
chairperson of BDO.
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Tan said higher profits would be achieved through the bank’s continued loan
expansion and the improved mix of its loans business, higher consumer lending,
as well as lower cost of funds with the increase in low-cost deposits.
Tan pointed out that the bank would likely continue to outpace the rest of the
banking industry in terms of earnings growth, continuing a trend that started in
2001.
Over the past five years, BDO’s profitability combined with that of Equitable-PCI
has grown by a compounded annual growth rate of 58.8 percent, compared with
the industry average of 32.6 percent.
BDO received approval for its merger with Equitable PCI last May and is in the
process of integrating its operations with the Equitable PCI, which was the
country’s third-largest bank in assets.
The merged entity will be the second-biggest bank in assets, with P608 billion,
and the largest in capitalization, with P73 billion.
Tan said the merged entity would have to further boost its capitalization after
cleaning up the books of Equitable PCI. He said BDO would raise $150-$200
million in capital from international investors later this year or in early 2008 to its
equity position. He said the new funds might come in the form of “tier 2” capital --
long-term debt convertible into equity, which is considered as compliance with
capital adequacy ratio requirements.
BDO’s capital adequacy ratio -- the ratio of equity to risk assets -- is between
12.5 percent and 13.0 percent, compared with the industry average of 18
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percent. Tan said BDO’s the ratio fell because of the risks it had to absorb due to
the merger. Tan also said BDO would spend P1 billion this year and another P1
billion next year for integration costs with Equitable PCI. These would be aside
from provisions BDO had to make for soured loans and assets to buttress its
books from the risks in Equitable PCI’s portfolio. BDO also wrote off P15.7 billion
worth of goodwill in Equitable PCI’s books, Tan said.
Bank lending seen to slow down in second half
By Michelle Remo
Philippine Daily Inquirer
MANILA, Philippines—Banco De Oro expects bank lending to slow down to a
single-digit level this year, brought on by a moderate increase in interest rates in
the second half of the year.
But lending activities will still be sufficient to help the economy post decent
growth this year, said BDO, the country’s largest bank in terms of assets. In the
first 11 months of 2010, data from the Bangko Sentral ng Pilipinas showed that
outstanding loans extended by universal and commercial banks, including
overnight deposits with the BSP, reached P2.5 trillion—up by 10.3 percent year
on year. Overnight deposits parked with the BSP effectively serve as loans to the
central bank.
In its 2011 outlook, BDO said lending activities would continue to be strong, but
the growth rate might not match that of 2010. Also, economic growth may range
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from 5 to 6 percent this year, BDO said. Such a growth rate may be considered
respectable, according to BDO. It said that a repeat of the 7-percent growth seen
last year would not likely occur in 2011 due to base effects.
But there are still risks that may affect its economic forecast, BDO said. These
risks include accelerated inflation, given rising prices of oil in the world market
and external factors, such as the debt crisis in Europe and uncertainty of
economic performance of industrialized countries that serve as export markets
for the Philippines. According to the latest government report, the economy,
measured in terms of gross domestic product, grew by 7.5 percent in the first
three quarters of 2010. It was the fastest rate of expansion seen in over three
decades.
“While the country faces a challenge to repeat the economic expansion recorded
in 2010, it is still expected to grow between 5 and 6 percent this 2011 due to solid
macroeconomic fundamentals,” BDO said.
In 2011, power and utilities companies, as well as those involved in
infrastructure, are the ones expected to engage in borrowing, BDO said. Banks
expect companies to secure loans to fund public infrastructure projects under the
government’s Public-Private Partnership (PPP) program. The program is meant
to ease the government’s financial strain while it pursues vital infrastructure
projects with the help of the private sector.
The government has already started inviting private entities to invest in public
infrastructure projects even as it struggles to balance its budget. On consumers,
the bank said that growing income levels could boost their confidence to secure
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loans for big-ticket items, such as real estate and automobiles. “Consumer
lending is expected to continue to grow due to strong consumer confidence,
vibrant consumer demand, currently low penetration rates, higher per capita
income and borrowing capacity,” BDO said. It added that more flexible loan
terms offered by various banks could also entice consumers to borrow more.
Attractive financing schemes boost auto, housing sectors
By Abigail L. Ho
Philippine Daily Inquirer
Posted date: March 15, 2011
MANILA, Philippines—For many Filipinos, having their own home and car is the
ultimate measure of fulfillment. Fortunately for them, owning a home and a
vehicle has become easier to accomplish, thanks in large part to the slew of
financing schemes that banks are now offering.
Auto and housing loans have long been part of banks’ portfolio of services, but it
has not always been easy for consumers to avail themselves of such loans. For
one, not everyone has something to post as collateral. For another, it is not very
easy to come up with all the documents that banks require. And even if one does
cough up the collateral and the documents, having loans approved is not always
a sure thing.
But these days, taking out a loan for a home or a car is easier, and cheaper, than
ever. Banks are scrambling to get consumers on the loan bandwagon, offering
24-hour loan approval and large prompt payment discounts. Interest rates are
relatively low and payment terms are flexible.
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The country’s top banking groups—Banco de Oro, Metropolitan Bank and Trust
Co. and Bank of the Philippine Islands—all offer attractive and easy-to-secure
financing schemes and have long dominated the market. But recently, more
players are battling for the consumer, including HSBC, East West Bank and
Philippine National Bank.
Low rates, 24-hour approvals
Auto loans are relatively easy to secure and finance. Looking at the offerings of
BDO, BPI, Metrobank, Metrobank subsidiary Philippine Savings Bank and
Philippine National Bank, interest rates range from 4.21 percent for 12 monthly
installments with one-month advance to 34.7 percent for 60 monthly payments.
Under its Metrocar loan program, Metrobank offers one of the lowest interest
rates. Minimum loan amount is placed at P250,000, while the minimum
downpayment required is 20 percent of the vehicle’s net selling price. Payment
terms range from 12-60 months and amortization can be made through post-
dated checks or an automatic debit arrangement from the deposit account. The
bank also boasts “fast” approval and even provides assistance in sourcing
vehicles. PSBank, while offering higher rates than its parent bank, lures
consumers with its 24-hour loan approval and prompt-payment discounts.
BDO may not offer the lowest rates in the market, but it charges less than most
commercial banks in the market. Loans can also be approved in as short as 24
hours and terms extend to as long as six years.
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Borrowers will also earn BDO Rewards points, which correspond to various perks
and privileges, throughout the life of the loan.
The Ayalas’ BPI also offers flexible payment terms of up to six years, approval
within 24 hours, and automatic debit arrangements, but restricts eligibility to
individuals with a gross monthly income of P40,000. Its thrift bank unit, BPI
Family Bank, has also been aggressive in its freebies, which can be anything
from free insurance with an Act of God coverage or protection against
externalities such as the Ondoy-induced flooding to global positioning system
(GPS) navigator units. Freebies are given for loans of at least P700,000 with a
minimum term of 36 months for brand-new cars meant for private use.
BPI Family has also been known for regularly holding the “Auto Madness”
campaign, a model that PNB recently adopted with its own “Gear Up!” auto fair at
the PNB Financial Center Parking Lot. Car loans with as low as 4.21-percent
interest rate for a 12-month term are offered, but only to those who will come to
the auto fair.
Nonbank financing
Even auto industry leader Toyota Motor Philippines Corp. is riding on the
financing bandwagon through Toyota Financial Services Philippines (TFS).
According to Toyota first vice president for vehicle operations Rommel Gutierrez,
in-house financing schemes make it even easier for consumers to acquire brand-
new vehicles.
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“Toyota dealers and TFS collaborate to make sure Toyota customers get the
best purchasing experience through its quick and convenient one-stop-shop
financing service. Customers only need to talk to a Toyota dealer marketing
professional who can assist them on all their vehicle purchase requirements,” he
related.
Whether from banks or from auto companies themselves, Chamber of
Automotive Manufacturers of the Philippines Inc. president Elizabeth Lee said
these financing schemes provide a huge boost to the local auto sector as these
make purchasing a vehicle easier for consumers.
“Having a healthy financing environment is a key factor that affects vehicle sales.
Note the credit crunch and freeze that happened in the United States, which
stifled car sales. Banks have been, and so far continue to be, aggressive with
relatively low interest rates. Attractive financing packages (from banks and) auto
players make buying a vehicle affordable and easy,” she said.
More affordable housing loans
Housing loans have also become easier to obtain, particularly with the surge in
popularity of condominium buildings that cater to young professionals and upstart
families.
In December 2007, the Bangko Sentral ng Pilipinas relaxed rules on real estate
lending to spur the growth of the property industry. Prior to this move, from 2001
to 2007, outstanding real estate loans for acquisition of residential property grew
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by an average of 14 percent a year, according to real property website Global
Property Guide.
At that time, few banks had housing loans on their roster of services and those
who did imposed highly restrictive lending conditions. Interest rates were very
high and loan approvals took a very long time.
Back then, major commercial banks charged an interest of around 9.5 percent for
a one-year mortgage and as high as 11 percent for loans with rates fixed for at
least five years.
Now, banks like EastWest Bank are offering home loan interest rates as low as
5.88 percent for the first year. HSBC, which created a lot of buzz when it
introduced record-low interest rates last year, has further sweetened its offering
with a housing loan with an interest rate of 5.75 percent for one-year repricing
and 8.99 percent for five-year repricing.
In a study, CLSA Asia Pacific said market leaders BDO, Metrobank and BPI are
cognizant of the moves of HSBC and East West but have no intention of
matching those rates so far.
“Given the limited platform of HSBC (25 branches) and East West (89 branches),
the big three believe that the target market and reach of these two banks may be
limited,” the research said. “They are, however, monitoring things closely and
would re-evaluate things in a couple of months if needed.”—With a report from
Doris C. Dumlao
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BDO posts 159% jump in 9-month net income
By Doris Dumlao
Philippine Daily Inquirer
Posted date: October 27, 2009
TYCOON HENRY SY’S BANCO DE Oro Unibank reported a 159-percent growth
in net profit in the first nine months from a year ago, fueled by higher interest and
fee-based income as well as improved trading gains.
The net profit booked by the country’s biggest bank from January to September
this year amounted to P4 billion, of which P1.9 billion or nearly half was
generated in the third quarter alone. The net profit for July to September stood
70 percent higher than the level in the same quarter last year, the bank said in a
statement.
“In spite of the possible impact of the recent typhoons, the bank is maintaining a
positive outlook for the rest of the year and next, and is optimistic about meeting
its full-year profit target of P5.5 billion,” the BDO disclosure said.
On the asset side, gross lending portfolio expanded 16 percent to P424.5 billion
as of end-September from a year ago, supported by broad-based demand from
all market segments. BDO caters to top-tier corporations, the middle market as
well as consumers.Net interest income for the nine-month period went up 31
percent to P22.3 billion. Gross interest income expanded 21 percent on the back
43
of higher loan volume, while interest expense grew at a slower pace of 7 percent
due to an improved funding mix.
On the funding side, deposits rose 12 percent year-on-year to P643.8 billion with
the redeployment of branch licenses and steady growth in low-cost deposits.
“Building on earlier gains and leveraging on its various competitive advantages,
the bank’s loans, deposits, net interest income and fee-based income sustained
their growth,” the bank said. “Income from trading activities also increased given
a more stable financial environment,” it said.
BDO has grown substantially through a series of mergers and acquisitions,
buying one new bank almost every year this decade. It took over Dao Heng
Philippines in 2001, First e-Bank in 2002, Banco Santander Philippines in 2003,
United Overseas Bank-Philippines
in 2005, Equitable PCI Bank in 2006, American Express Savings Bank in 2007
and GE Money Bank earlier this year. It is also nearing a deal to acquire the 50-
branch Export and Industry Bank.
The purchase will involve up to 100 percent of the shares of stock of Export
Bank. About 90 percent of the bank’s shareholders are represented in the board,
while the remaining 10 percent will have the option to accept a prospective
tender offer by BDO.
But while the buyout could involve almost all of the publicly listed Export Bank’s
shares, certain assets will be carved out such that BDO would take over only the
core commercial banking assets.
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Among the assets that are not included in the deal under consideration are
Export Bank’s subsidiaries involved in property (Urbancorp Realty Holdings Inc.)
securities brokerage (EIB Securities Inc.), insurance brokerage (Urbancorp
Insurance Brokers Inc.), nonlife insurer (Value Gen Financial Insurance T Co.
Inc.) and thrift banking (EIB Savings Bank).
Banco De Oro nets P8.8 B profit in 2010
Cebu Daily News
First Posted 08:13:00 03/01/2011
Filed Under: business, Banking
MANILA—The country's largest lender, the Henry Sy-led Banco De Oro Unibank,
grew its net profit last year by 46 percent to P8.8 billion, exceeding its target, as a
robust economic environment supported lending, treasury and other fee-based
businesses. The bank, which breached the P1-trillion mark in resources, earlier
targeted to chalk up only P8.1 billion in net profit for 2010. The end-2010 results
translated to a return on average common equity of 11.7 percent, higher than
10.4 percent in 2009. In a disclosure to the Philippine Stock Exchange on
Monday, BDO attributed its strong performance to “a more diversified and
sustainable earnings stream from its core lending, deposit-taking and service
businesses.” Gross customer loans expanded 15 percent to P541.5 billion with
firm growth across all business segments.
45
Total deposits, meanwhile, rose 13 percent to P782.6 billion. A larger earning
asset base coupled with lower funding costs resulted in the 12 percent increase
in net interest income to P34.2 billion.
The growth in noninterest income was not disclosed. On the other hand, the
bank’s fee-based service income hit P10.4 billion.
BDO attributed the increase to strong contributions from trust, private banking,
remittance, transaction banking, insurance, investment banking and credit cards.
On asset quality, BDO said it continued efforts to prudently manage the balance
sheet to protect it through economic cycles.
It boosted provisions to P6.7 billion and raised nonperforming loan (NPL)
coverage to 92 percent from 80 percent a year ago, despite the decline in the
gross NPL ratio to 4.7 percent from the previous year’s level of 5 percent.
Capital adequacy ratio (CAR) to risk assets remained ended the year at 14
percent, well above the current regulatory minimum of 10 percent.
“Following its solid financial performance in 2010, the bank hopes to build on its
gains to pursue further growth opportunities to enhance shareholder value,”
BDO's disclosure said. Inquirer
BDO widens lead over rivals
Philippine Daily Inquirer
First Posted 22:34:00 08/08/2010
46
MANILA, Philippines—Tycoon Henry Sy’s Banco de Oro Unibank has retained its
bragging right as the country’s largest banking conglomerate, widening its lead
over nearest rival Metropolitan Bank & Trust Co. as of end-June. Based on the
latest statement of financial condition filed by the two banks on Thursday, BDO
ended the first semester with consolidated assets of P874.99 billion. Loans and
receivables stood at P495 billion while deposit liabilities amounted to P691
billion.
Metropolitan Bank & Trust Co., on the other hand, reported P818.68 billion in
consolidated assets. Its loans and receivables amounted to P406.98 billion while
the deposit base stood at P588 billion.BDO has dislodged Metrobank as the
country’s largest bank in resources since the third quarter of 2008. Earlier this
year, both BDO and Metrobank beefed up their capital ahead of more stringest
capital adequacy requirements expected to be drawn up under the Basel 3 global
framework. BDO has grown substantially at the turn of the century to become the
country’s largest bank through a series of merger and acquisition deals.
The bank has gobbled up one new bank almost every year: Dao Heng
Philippines in 2001, First e-Bank in 2002, Banco Santander Philippines in
2003, United Overseas Bank -Philippines in 2005, Equitable PCI Bank in 2006,
American Express Savings Bank in 2007 and GE Money Bank in 2009. It is now
currently working on the acquisition of Export and Industry Bank.The Banker
placed BDO 396th among its Top 1000 World Banks ranking, a survey
conducted annually by the British banking and finance magazine. BDO climbed
40 notches from its previous world ranking of 436th. The rankings are based on
47
the definition of core or tier 1 capital as prescribed by Basel ’s Bank for
International Settlements (BIS). Doris C. Dumlao
Fitch affirms BDO rating Keeps bank rating at ‘C/D’
By Doris Dumlao
Philippine Daily Inquirer
LONDON-BASED CREDIT WATCHER Fitch Ratings has affirmed its ratings on
the country’s biggest bank Banco de Oro Unibank, noting that the earnings buffer
of retail tycoon Henry Sy’s bank appeared sufficient to absorb rising credit costs.
In a statement yesterday, Fitch said it kept BDO’s “individual” rating at “C/D” and
“support” rating at “3.”“
The affirmation of BDO’s individual rating reflects its reasonable capacity to
weather the economic slowdown, as higher loan losses are likely to impact only
its earnings and capital impairment risks remain fairly low,” Fitch said.
The credit watchdog said this partly alleviated its concern over the bank’s
reduced capital cushion, noting that its core or tier 1 capital adequacy ratio (CAR)
had declined to 8.4 percent as of end-June this year from 10.7 percent at end-
2007 due to rapid balance sheet growth and weak earnings in 2008.
The agency also noted that while BDO’s earnings buffer appeared sufficient to
absorb rising credit costs, it believed it was relatively low compared to its higher-
rated peers.Fitch’s individual rating on banks ranges from a high of “A” to a low of
“F” with gradations of A/B, B/C, C/D, and D/E. A bank rated “C” is defined to be
48
“an adequate bank, which, however, possesses one or more troublesome
aspects. There may be some concerns regarding its profitability and balance
sheet integrity, franchise, management, operating environment or prospects.”
On the other hand, a bank rated “D” means a bank “has weaknesses of internal
and/or external origin” and “there are concerns regarding its profitability and
balance sheet integrity, franchise, management, operating environment or
prospects.” Banks in emerging markets are seen necessarily faced with a greater
number of potential deficiencies of external origin.“
Downside risks to BDO’s individual rating may be mitigated by improving
macroeconomic conditions, which if sustained could result in better profitability in
the second half of 2009 through 2010. This, together with the possibility of
additional strategic investment from GE Capital, could help raise the bank’s tier 1
CAR to slightly more than 9 percent by end-2009,” Fitch said.
In the agency’s opinion, capital enhancement measures would be crucial to help
preserve BDO’s financial profile and rating, particularly when uncertainties
regarding the economic recovery lingered over the next 12-18 months.
On the other hand, Fitch said BDO’s support rating, which is the highest among
rated Philippine banks, reflected its systemic importance in the country as it
singlehandedly accounted for about 14 percent of the banking system’s total
assets.
Banks see better lending business this year
49
Special Report
By LEE C. CHIPONGIAN
January 5, 2010, 2:53pm
Bankers may be sleeping better at night. But, like the rest of the economy, banks
were affected by the volatile operating environment. “(However) banks are
resilient establishments and are flexible enough (to defy) factors that would result
in low profits,” said Nestor Tan, chief executive officer and president of the
country’s largest financial institution in assets size since 2008, Banco de Oro
Unibank (BDO).
As for the Philippines’ third biggest bank, Bank of the Philippine Islands (BPI), its
top executive expects the national elections this year will drive spending and perk
up business and economic activities which would translate to more funding that
the banks could certainly provide.
BPI president Aurelio Montinola III, also the head of the Bankers Association of
the Philippines, said prospects will be better than 2009’s. “From a country point
of view, how can you not do better than a one-percent growth (in GDP),”
Montinola said. “The elections will stimulate the economy and remittances have
continued to surprise on the upside. Loan growth (in 2009) was strong so it might
trail off.”
Overall, the economy as measured by gross domestic product grew by 1.5
percent year-on-year in the second quarter last year, up from the 0.6 percent rate
posted in the previous quarter, dispelling recessionary fears and defying market
expectations in the process.
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Expectations
Montinola expects banks’ revenues from treasury operations will remain on the
low side this year – same as in 2008 and 2009, mainly because of a rise in
interest rates and inflation. As such, it is expected that banks will report minimal
trading gains. To improve revenue base, banks will have to rely on their lending
business, as usual. A report from the Bangko Sentral ng Pilipinas (BSP)
indicated that as of October, lending net of banks’ reverse repurchase
placements increased to P2 trillion, up by 4.7 percent compared to the same
period in 2008.
Industry non-performing loans ratio, in the meantime, managed to maintain a
below four-percent average at 3.37 percent also as of October while the total
loan portfolio stood at P2.53 trillion, of which P85.33 billion was bad loans.
Tan noted the weak demand in bank credit because of sluggish economic
activity. Towards the middle of the last quarter, banks were also reporting slower
pace of increase in consumer loans such as auto loans and credit card loans.
Demand for credit was slow despite the low-interest rate environment while the
strong dollar remittances – which are expected to hit more than $18 billion this
year – seem not to be contributing to the growth in real estate loans unlike in past
years.
However for this year, Tan and Montinola are hoping consumer lending will pick
up ahead of the election spending.For BDO, Tan is confident that the bank will
meet its P5.5 billion income target for 2009 and expects positive growth for this
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year on the back of a double-digit return on assets. As of the end of the third
quarter, the bank reported a P1.9-billion net income, up 70 percent from the
second quarter which brought its nine-month net income to P4 billion, or 159
percent higher year-on-year.
Consumer lending
The Ayala-controlled BPI, as most commercial and thrift banks this year, is
focusing on creating more business and credit for the small and medium
enterprises. The strategy stems from the fact that big corporations are likely to
postpone major expansions until after the May polls. “(This year) I think it will be
SMEs and consumers that will drive growth,” Montinola said. For BPI alone, a
third of its loans were accounted for by big companies while the mid-size firms
also have equal size of the portfolio. Consumer loans account for the rest of the
loans. BDO’s Tan said consumer spending will continue to be the growth driver
of the local economy, with the sustained remittances and with election spending
providing it a boost.
Philippine Savings Bank (PSBank) president Pascual Garcia II said the thrift
banking sector’s prospects for 2010 while still conservative seem to be better
compared to that of 2008 and 2009. Garcia, also president of the Chamber of
Thrift Banks, noted that 2009 was better than expected, in fact he expects his
bank will exceed its P1.1 billion income target. However for this year the banker
sees more growth in the housing sector as well as the auto industry.Vehicle
makers as represented by the Chamber of Automotive Manufacturers of the
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Philippines is eyeing only four percent sales growth but bankers like Garcia
expects better or 10 percent due to aggressive car loan campaigns.
PSBank, a subsidiary of Metropolitan Bank and Trust Co., rely mostly on
consumer lending to boost income. The bank’s consumer loans such as auto and
housing loans account for 70 percent of its portfolio.
For the next months, most banks expect slower growth in lending to big
businesses or just five percent from 10 percent in 2009 due to the prevalent wait-
and-see attitude of the corporate sector. Any borrowings from the top tier clients
will only be for working capital.
As for lending to the mid-market or SMEs, Montinola sees more opportunity or an
increase of 10 percent to 15 percent compared to what was reported in 2009
while consumer lending is expected to grow by as much as 15 percent.
As of end-September, BPI’s loans increased by eight percent but its net loans
declined by three percent because of slower credit demand. The bank said large
scale industries, which account for 56 percent of total loans, showed a
contraction in its outstanding portfolio because of the relatively huge liquidity in
the system and increased access to capital markets. Still, consumer loans
especially for SMEs are expected to surpass expectations this year. PSBank, for
one, is targeting a 22-percent growth in its net income this year to P1.35 billion.
Capital requirements
BDO, the banking arm of retailing giant SM Group, is considering an additional
capital this year to fund expansion plans. Tan has confirmed this. “We are
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looking at raising capital to support (an) anticipated expansion.” BDO reached
the number one spot by buying banks. Last year it acquired controlling shares in
GE Money Bank and as of December,
it was still finalizing the buyout of Export and Industry Bank. As part of incentives
for the merger and acquisition, BDO will receive an additional 30 branches in
restricted areas on top of the selling bank’s 51 branches, of which 26 are also
located in closed cities in Metro Manila.Thrift banks are also in the market to
raise more funds this year. Rural banks hardly take advantage of the market by
raising funds, except for the larger rural banks such as the Rural Green Bank of
Caraga of the Visayas and Mindanao areas.
Garcia said PSBank is planning to raise at least P2 billion in tier 2 capital and a
stock rights offering in the second half of 2010. “It could be a mix,” he said.
“We’re looking at other options and a stock rights offer will depend on the
opportunities.” Expanding PSBank has been on the lookout for possible
acquisitions to increase branch numbers.
Green Bank president Joseph Omar Andaya, who is also the president of the
Rural Bankers Association of the Philippines, said the sector's capital health has
remained better than expectations despite a rough start. "Our loan portfolio is as
it should be and we expect to continue lending to our sectors (agri-based) and
SMEs."
Banking business performed better than expected in 2009 – BSP
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BSP Governor Amando M. Tetangco Jr. said the banking sector has remained
fundamentally sound in 2009. “Important banking reforms, particularly in the
areas of corporate governance, risk management, and asset clean-up, have
strengthened the banking system further, boosting its overall performance in
terms of higher asset growth, enhanced asset quality, improved profitability and
better capitalization,” Tetangco noted as early as October.
By December, he was spouting the same sentiments. “The BSP will continue to
carefully scan the operating environment with a forward-looking perspective, with
a view to moving in a pre-emptive fashion to address any risks to its mandate (of
price stability and to encourage credit),” said Tetangco. BSP’s monetary actions
are also well attuned to business and consumer sentiments.
BDO posts P2.1-B net profit in first half
July 28, 2009, 5:25pm
Banco de Oro Unibank (BDO) reported Wednesday that its net profit from April to
June this year rose 9 percent to P1.1 billion compared to the P1 billion it earned
in the same period a year ago. Compared to the previous quarter, the second
quarter's earnings is likewise better by 11 percent. "Sustaining earlier gains, the
bank's loans, deposits, net interest income and fee-based income continued to
grow. Income from trading activities also improved with a more stable financial
environment," it said in a statement.
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For the first half of the year, while BDO's net profit amounted to P2.1 billion or 10
percent lower from the P2.4 billion it made in the same period last year, it said
the amount still represents a 62 percent growth on a recurring basis, excluding
extraordinary items recorded in 2008.
The bak said gross customer loans grew 28 percent year-on-year to P414.4
billion as of the second quarter on broad-based demand from all market
segments. Deposits, on the other hand, increased 26 percent year-on-year to
P627.1 billion, driven by inflows of low-cost deposits and the redeployment of
branches in high-growth areas.
Its net interest income for the six-month period, meanwhile, rose 32 percent year-
on-year to P14.3 billion because of a larger level of earning assets and an
improved funding mix. Fee-based service income also went up 11 percent year-
on-year to P4.5 billion on the back of higher contributions from funds
management, remittances, credit cards, cash management, investment banking,
and bancassurance activities. Trading and foreign exchange gains, for its part,
improved 46 percent year-on-year to P1.9 billion as the Bank's treasury
operations benefited from a more stable financial market. The bank maintained
its conservative outlook by boosting provisions 64 percent year-on-year to P2.5
billion. A listed entity at the Philippine Stock Exchange, BDO is the largest local
bank in terms of assets, loans and deposits and ranked third in terms of capital,
as of the end of the first quarter 2009.
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Notwithstanding the prevailing tough economic environment, the bank said it was
keeping an optimistic outlook for the rest of the year, targeting a full-year profit of
P5.5 billion.
BDO profits to hike 30% to P8.1 billion this year
By LEE CHIPONGIAN
May 28, 2010, 3:57pm
Banco de Oro Unibank, the country's largest in asset size, expects to grow 30
percent to P8.1 billion this year over 2009 income of P6 billion as the bank
focuses more on middle market or big business loan expansion.
BDO President Nestor Tan said there is also big potential for small business and
microlending but the middle market is the segment that they “know best.” “What
we're looking forward to is focused loan growth, conservative provisioning and
NPA (non-performing assets) reduction; branch expansion and sustained growth
in lowcost funding, growth in fee-based services income, and further
improvement in productive (projects),” said Tan.
Tan said they expect loan portfolios to grow 10 percent this year, with consumer
loans especially housing loans growing double-digit figures. “Our consumer
lending is still young and embryonic, and we're still bullish on housing because
we believe there's backlog there,” Tan said. Presently, the bank's market sharing
in its loan portfolios is mostly large ticket lending, but according to Tan, consumer
lending is "growing the fastest."
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For 2010, the bank is also expanding its branches by 40 to almost 750 this year
to ride on the increased economic activities, export and remittances growth. They
expect the economy to grow by five percent, higher than official government
forecast of 1.1 percent, while they see the Greek debt crisis as possible
downside risk, although they think deficit and interest rates are within control.
Tan said they see three trends in the banking sector this year and in the future,
which is a lot of market shift, consolidation and disintermediation to “drive
banking forward.” “In market shift the traditional borrowers are no longer here
and moved overseas and as for consolidation, these are not only mergers and
acquisitions (but the) laggards have to rethink their strategy,” said Tan.
“Disintermediation has been happening for sometime (corporates) no longer
borrow they go direct to the market to raise the funds,” he said. Tan said that for
2010, BDO mainly is “poised for growth.”
BDO Leasing upbeat on growth amid challenges
By JAMES A. LOYOLA
June 3, 2010, 3:29pm
BDO Leasing and Finance Inc. is optimistic about its growth prospects this year,
given the overall business confidence index in an upbeat trend, while also
prepared for possible economic challenges ahead.
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With Banco de Oro Universal Bank as its parent firm, thus resulting in synergy,
BDOLF continued to perform well in 2010 as the net loan portfolio further grew to
P9.8 billion at the end of the first quarter.
BDO Leasing intensified its marketing efforts in 2009 and with the support of its
parent bank, BDO Unibank, grew its net loan portfolio by 19 percent to P9.1
billion from P7.7 billion in 2008 while total assets ballooned to P13.1 billion in
2009 or 25 percent higher than the P10.4 billion the previous year.
Total revenues posted a significant increase from P1.4 billion in 2008 to P2.2
billion in 2009, or a 61 percent increase mainly coming from rental revenues.
It took a conservative stance vis-à-vis the economic environment, taking into
consideration the effects of typhoons Ondoy and Pepeng by increasing its loan
loss provisioning. BDO Leasing also effected a one-off adjustment in
depreciation for its assets in its wholly owned subsidiary, BDO Rental. Despite
these adjustments, coupled with the thinning of margins due to competition, the
company still managed to post a respectable 2009 net income of P300 million.
The steady performance allowed BDO Leasing to declare cash dividends to
shareholders in July and December amounting to P432 million or P0.20 per
share. This is the highest dividend payout made by the company from the time it
became publicly traded in 1997.
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Meanwhile, to support earning asset growth, BDOLF secured an approval from
the Securities and Exchange Commission (SEC) to raise its Short-Term
Commercial Paper (STCP) license from P4 billion to P8 billion.
The STCP issue was given a high rating of "PRS 2 minus" by Philippine Rating
Services Corporation (PhilRatings) based on "BDO Leasing's solid market
position, sound capital base and the continuing benefits derived from its synergy
with the parent company, BDO, as well as the relatively positive prospects for the
local leasing and financing industry."
BDO net profit jumps 173% P6.1 billion
By JAMES A. LOYOLAMarch 1, 2010, 5:21pm
Banco De Oro Unibank Inc. posted a 173 percent jump in audited net income for
2009 to P6.1 billion from P2.2 billion in 2008, driven by robust growth in operating
income and a slower increase in operating costs.
In a disclosure to the Philippine Stock Exchange Monday, the bank said profits
were also 11 percent higher than the P5.5 billion target for 2009.
The Bank's operating income was generated from core businesses, leading to
reduced reliance on volatile trading income.
Net interest income increased 33 percent to P30.6 billion in 2009, given a larger
level of earning assets and improved margins. Net interest income was driven by
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the 20 percent expansion in gross customer loans to P472.7 billion, and growth
in low-cost deposits.
Loan demand was sustained across all market segments, while low-cost deposit
growth was fueled by additional branch redeployments.
Total non-interest income grew 13 percent, while fee-based service income,
exclusive of trading income and one-time gains, grew 12 percent.
BDO’s non-performing loan (NPL) ratio dipped to 3.2 percent from 4 percent as
of the fourth quarter of 2008. As the bank took early steps to adjust its risk
management processes even before the onset of the financial crisis in late 2008.
Nevertheless, the BDO said it maintained its conservative outlook setting aside
provisions of P6.2 billion, thereby improving its NPL coverage ratio to 80 percent.
For this year, BDO hopes to do well by leveraging on its operating scale and
maintaining good growth in its core businesses amid a more favorable operating
environment. In this light, the Bank is considering plans to raise fresh capital to
support its medium-term growth objectives and further reinforce its position in the
industry. The amount, structure and timing have yet to be finalized at this point.
With a strengthened business franchise across most business lines, BDO
maintained its industry leadership in terms of total assets, customer loans,
deposits, and trust assets under management.
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CHAPTER 5
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
This chapter presents the summary of findings throughout the research
study. The conclusion to all of the data have had gathered and
recommendations from the researchers.
Summary of Findings
The BDO maintained its high standard of loan services that made the
customers trust their company and continue their transactions despite of some
issues in banking system. Base on the financial statement of the firm for the past
three years the bank is stable when it comes to the
Conclusion
We therefore conclude that when it comes to credibility, BDO is
unquestionable; In fact, it has shared enough to the economic development and
continues to think for a more classic strategy. It earns confidence and respect for
people in satisfying and securing their clients transactions as well as encouraging
individuals to connect with BDO.
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RECOMMENDATIONS
In a company where economic condition is uncertain, people tend to find
resources in a service that they wanted. So far, BDO offers a reasonable interest
rate in loan services but to be able to serve its clients and encourage individuals,
BDO should continue to invest to new technology and hire dedicated staff and
officers. They must respond and adapt to the growing and changing customer
needs as we move closer to the new millennium where speed and convenience
will be the highest demand for its continuous way on top.
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BIBLIOGRAPHY
Websites:
http://investing.businessweek.com/research/stocks/earnings/earnings.asp?ticker=BDO:PMhttp://www.asianbanks.net/HTML/Countries/PH/PHmktshare.htm?searchFor=2010+market+share+of+universal+and+comerial+banks&goButton=go#: http://business.inquirer.net/money/breakingnews/view/20081210-177210/BDO-sees-lending-slowdown-in-09http://business.inquirer.net/money/topstories/view_article.php?article_id=79197http://business.inquirer.net/money/topstories/view/20110124-316351/Bank-lending-seen-to-slow-down-in-second-half
http://business.inquirer.net/money/features/view_article.php?article_id=325662http://business.inquirer.net/money/topstories/view_article.php?article_id=232582http://business.inquirer.net/money/topstories/view/20100808-285682/BDO-widens-lead-over-rivals
http://business.inquirer.net/money/topstories/view/20090924-226747/Fitch-affirms-BDO-rating http://www.mb.com.ph/node/236996/bank
: http://www.mb.com.ph/node/213210/bdo-po
http://www.mb.com.ph/node/259441/bdo-profit
http://www.mb.com.ph/node/260368/files/horoscope/mbhoroscope.html
http://www.mb.com.ph/articles/245750/bdo-net-profit-jumps-173-p61-billion
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