Asiamoney best bank awards 2018: The Philippines
Best domestic bank: BDO Unibank
BDO Unibank is the dominant force in Philippines banking, accounting for 18% of industry resources, 22% of gross customer loans, 19% of deposits and 34% of total assets under management.
Under chief executive and president Nestor Tan, it continues to expand its presence – at the end of May, it had 1,217 onshore branches and 26 offices in Asia, Europe and the Middle East – and to consolidate its position as the leading domestic provider of insurance broking, private banking and credit cards.
Its top-line data remains as impressive as ever: in 2017, BDO reported net income of P28.1 billion ($525 million), benefiting from strong growth across all business segments and the lowest funding costs among its peers. And it continued its strong performance in 2018: first-half net interest income jumped 19% year on year to P46 billion, driven by a 20% rise in customer loans.
At the end of June, it had a capital adequacy ratio of 14%, and its non-performing loan ratio inched down to 1.2%. BDO continues to outpace and outflank its peers, with a market capitalization nearly double that of rival Metrobank, and 25% larger than Bank of the Philippine Islands.
It is also worth noting that the lender, which started life in 1968 as a thrift bank with just two branches in Manila, remains true to its roots: BDO is the leading provider of remittance services to the nation’s sizeable diaspora, as well as of basic banking services to rural businesses and households. Always one to look to the future, BDO broke new ground in December 2017, issuing $150 million-worth of green bonds, which it will use to finance climate change projects, including the construction of green buildings and renewable energy projects.
Best corporate and investment bank: BPI Capital
For the second year in a row, BPI Capital, the investment banking arm of Bank of the Philippine Islands, wins plaudits. Easily the most powerful onshore investment bank, it took first place in equity capital markets in the 12 months to the end of May, completing five deals worth $460 million and more than 20% of the market, according to Dealogic.
In M&A too, BPI Capital – which offers a full suite of services, from corporate banking and trade finance to commercial lending and cash management – showed its mettle, beating all of its domestic peers.
In February, it was sole manager, bookrunner and underwriter on electronics manufacturing services provider Integrated Micro-Electronics’ P5 billion ($94 million) rights offer, and Robinsons Land Corporation’s $394 million stock rights offer. The latter was a challenging deal, with a tight execution period squeezed in over the 2017 Christmas holidays, in order to secure regulatory approval in early January.
BPI Capital also advised AC Education, a division of Ayala Corporation, on its successful bid in February for 96% of the voting shares of National Teachers College, a Manila-based firm specialising in teacher education. The investment bank took a proactive position on that deal, conducting due diligence on the target, building a financial model, and advising the buyer on its bid strategy.
“Our aim is to help our corporate clients grow financially across all markets,” says Cezar Consing, chief executive of BPI Capital’s parent, the Bank of the Philippines Islands. “And key to that is to understand what they want, and putting the full resources of the bank to work on their behalf.”
Best international bank: Citi
Citi again emerges as the clear winner of this award. Its roots burrow deep into the superstructure of an economy it has served with distinction since 1902.
It continues to expand: the brand new 24-storey Citi Plaza in Bonifacio Global City, in the heart of the capital, houses more than 6,000 employees – out of about 8,000 nationwide – and represents one of Citi’s largest investments in southeast Asia.
There is little it does not do in the Philippines, providing retail services to more than one million affluent individuals, as well as a full suite of corporate, commercial and investment banking services. The US lender reported a 31% increase in normalised net income in 2017 and a 9% rise in revenues, while returns on assets and equity were 2% and 18% respectively.
Martin McLeod, chief financial officer at Citi Philippines, points to a slew of decisions in recent years – from reshaping its digital strategy to focusing more heavily on consumer banking – that have given the bank added momentum.
Citi remains as much of a capital markets powerhouse as ever. In the 12 months to the end of May, it completed several transactions, including sole arranger on HC Consumer Finance Philippines’ inaugural $45 million, one-year loan syndication in September 2017.
Among the big-ticket deals, it was joint lead manager and bookrunner on Union Bank of the Philippines’ $400 million, five-year unsecured bond in November 2017; this year it served as joint global coordinator on the Republic of the Philippines’ landmark $2 billion, 10-year global bond.
Best private bank: Credit Suisse
Private banking in the Philippines is about to get a whole lot bigger. For decades, many high net-worth Filipinos were served offshore, in cities such as Singapore and Hong Kong. But that’s changing. Credit Suisse, the best private bank and high-end wealth manager, is expanding its footprint in the country.
In April, it secured a licence to set up a representative office, giving it greater proximity and access to clients, and enabling the Swiss institution to expand its domestic presence beyond Manila, notes Christian Senn, market group head, Philippines, for private banking Asia Pacific.
Credit Suisse doubled its roster of Philippines-focused relationship managers in the 12 months to the end of May, helping to boost profitability by 15% year on year in the first quarter. It offers a host of services including family office and trust services, export finance, advisory and discretionary mandates, and impact and alternative investment strategies, as well as bespoke peso-denominated ultra-high net-worth solutions.
It also offers its HNW clients a range of cultural and financial education services, helping families to bond with one another, decode complex tax and trust laws, and grasp succession planning.
UHNW clients are served in other ways, too, invited to art auctions and golf tournaments, and to its annual investors’ conference in Hong Kong, and global megatrends conference in Singapore. Over the next few years, much of the country’s considerable family-held wealth is set to pass into the hands of a new generation. Private banking is expected to enjoy a golden age in Philippines, and no institution is better placed to benefit than Credit Suisse.
Best digital bank: UnionBank
Edwin Bautista, president and chief executive of Union Bank of the Philippines, has serious digital ambitions. His financial institution is the country’s standout digital bank, and a worthy winner of this award. But this is just the start. A trailblazer in artificial intelligence and robotic process automation, Union Bank is using blockchain to reach rural lenders, partnering with ConsenSys and Microsoft Azure to develop a blockchain-based interbank switch.
Its online adventure started two decades ago, when it launched the forerunner to EON, the first digital banking service in southeast Asia to roll out so-called ‘selfie’ banking, which enables customers to open an account or take out a loan using facial recognition technology. And it continues to innovate, recently launching The Ark, the nation’s first fully digital bank, described by Bautista as a “third space” where clients can chat with staff, while entrepreneurs mingle and share ideas.
Union Bank hopes to have 15 Arks in place by the end of 2018. Union Bank Online, a recently launched retail banking platform, allows customers to view all their accounts on any digital platform, whenever and however they want. Then there’s the ‘Rafa’ chatbot, the first of its kind in the Philippines, which handles debit and credit card activations, and provides details of recent transactions.
Union Bank reckons 80% of all interactions with customers are now routed through digital channels, a ratio that seems likely to rise as the bank continues its inexorable transformation.
Best bank for SMEs: Rizal Commercial Banking Corporation
Rizal Commercial Banking Corporation (RCBC) has been honing its small and medium-sized enterprise operations for years, creating tailored services that cater to all types of SMEs, whatever their size, industry, and ambition. Rizal Microbank meets the needs of micro-sized SMEs, which are estimated to comprise 99.6% of all registered onshore businesses, while its eWMN Programme champions female-owned corporates, offering loans, business education and training, as well as organising networking forums and seminars.
At the other end of the spectrum is the commercial and SME (CSME) team, which caters to larger companies. RCBC recently opened a CSME satellite office in the southern city of Butuan; two more are set to open later this year.
Everything circles back to the Makati-based lender’s financial inclusion programme, which focuses on reaching customers in the far-flung islands and provinces, and which is aligned with the Philippine Development Plan, a five-year project to boost economic growth, combat climate change and cut energy bills.
RCBC reckons its financial inclusion programme was responsible for a 22% year-on-year increase in the bank’s overall CSME loan portfolio in 2017; the sector-wide expansion over the same period was just 10.6%. And the bank is just getting started. In the middle of 2017, it unveiled a new SME business portal, a digital platform dedicated to the needs of smaller enterprises.
It also launched its small business loan initiative, a credit scoring system that simplifies the processes of bringing new customers on board and account handling, and identifies and makes contact with business owners with potential and ambition, but no access to formal bank funding.
Best bank for CSR: Bank of the Philippine Islands
Bank of the Philippine Islands has been a corporate social responsibility leader for decades. Its BPI Foundation, which celebrated its 40th birthday in May this year, continues to channel capital to a huge number of worthy causes. But it is over the last three years that the lender has really taken its CSR profile to the next level, helping to improve social cohesion and environmental protection, aligning itself with the UN’s Sustainable Development Goals and the national development agenda, and driving domestic innovation and financial inclusion.
BPI Foundation programmes reached nearly 190,000 people in 2017, up substantially from the previous year, when the reach was fewer than 50,000. To date, the bank says the foundation has directly helped 300,000 people. In future, it aims to continue supporting the country’s army of micro, small and medium-sized enterprises (MSMEs), helping small farmers to build scale and invest in new technology, while also bringing more people and corporates into the formal banking system.
Its entrepreneurship development programmes, which reach out to social entrepreneurs, university students and MSMEs, are driven by a genuine desire to instil greater creativity, drive and financial inclusivity in one of the emerging world’s fastest-growing economies, and stand as clear proof of why BPI deserves this award.