1.) Profile of Competitors
Collectively, the Philippine banking industry posted a Compound Annual Growth Rate (CAGR) hike of 8.46% in asset base between 2004 and 2007 of which, Industry deposits in the country grew at a CAGR of 9.82% from 2004 to 2007. The deposit mobilization is concentrated
with universal and commercial banks which some of its key players are Metropolitan Bank and Trust, Bank of the Philippine Islands, Land Bank of the Philippines and Banco de Oro UniBank Inc. which account for the majority of the Philippine banking industry deposit. Financial Intermediation was the largest shareholder of the loan disbursal by banks during 2004-2007.
Bancassurance will account for 65% of the total sales of insurance products by 2011. Increasing at a CAGR of 69.78%, micro financing in the Philippines is expected to reach 56.5 Billion Pesos.
Increasing mobile penetration will expand the mobile banking user base to more than 11 Million by 2011.
Metropolitan bank and Trust (Metrobank)
Metrobank, as the largest Philippine bank, is always trying to stave off competition to stay as the country's largest bank. It is largest in terms of its assets with P669.1 billion ($14.5 billion) (P46=$1) as of June 2007 and is also the largest Philippine bank in terms of overseas presence. It has a total of 8,721 employees. It has a diverse offering of financial services, from regular banking to insurance.
Metropolitan Bank & Trust Company (MBT) was incorporated on September 5, 1962 by a group of Filipino businessmen principally to provide financial services to the Filipino-Chinese community. Metrobank eventually expanded its business to provide a broad range of banking and collateral services to all sectors of the Philippine economy. As of August 21, 1981, Metrobank was granted a universal banking license by the Bangko Sentral ng Pilipinas (BSP).
This license allowed Metrobank to engage in non-allied undertakings, which include automobile manufacturing, travel services and real estate, as well as finance-related businesses such as insurance, savings and retail banking, credit card services and leasing.
Metrobank offers commercial and investment banking services. Its principal business activities involve borrowing and lending, trade finance, remittances, treasury, investment banking, credit card and savings banking. It is also a major participant in the foreign exchange market in the Philippines, and is accredited by the BSP as a government securities dealer. The company's customer base covers a cross section of the top Philippine corporate market, but has always been particularly strong in the middle market corporate sector of the economy, a significant portion of which consists of Filipino-Chinese businesses. Metrobank provides investment banking services through First Metro Investment Corporation and retail banking through Philippine Savings Bank.
Metrobank subsidiaries and affiliates include;
Domestic subsidiaries and affiliates
• First Metro Investment Corporation
• First Metro Securities Brokerage Corporation
• First Metro Travelex
• MBTC Technology
• Metrobank Card Corporation
• Orix Metro Leasing and Finance Corporation
• Philippine AXA Life Insurance Corporation
• Philippine Charter Insurance Corporation
• Philippine Savings Bank
• SMBC Metro Investment Corporation
• Toyota Cubao
• Toyota Financial Services Philippines Corporation
• Toyota Manila Bay Corporation
• Toyota Motor Philippines Corporation
International subsidiaries and affiliates
• First Metro International Investment Corporation Ltd HK
• MBTC Exchange Service GmbH - Vienna
• MB Remittance Center HK
• Metro Remittance Center SA - Spain
• Metro Remittance (Italia) SpA
• Metro Remittance Singapore Pte Ltd
• Metro Remittance (UK) Limited
Ownership
• George S.K. Ty : 18.26%
• Philippine Depository and Trust Corporation: 17.96% (11.47% Filipino, 6.49% foreign)
• Federal Homes: 7.53%
• Philippine Securities Corporation: 7.5%
• Mary Vy Ty: 6.43%
• Metrobank directors: 3.75%
• Metrobank officers: 0.003%
• Public stock: 37.57%
It continues on its expansion thrusts as it expects to end the year with a total of 552 domestic branches and an automated teller machine (ATM) network reaching 800. The bank will intensify the promotion of its electronic banking services to retail customers, including
self-service channels like phone and Internet banking. While deposit taking is still the key business of branch banking, the bank steadily expanded its other retail businesses like housing and car loans, bancassurance and credit cards. It likewise concluded its roll-out of its sales effectiveness program that helped re-engineer all branches into sales-driven brick-and-mortar outlets.
At the start of the last quarter of 2008, Metrobank’s funding was boosted by a 7.6 percent growth in deposits to P541.4 billion. Cost of deposits was almost flat despite rising interest rates, as low cost deposits grew by 10.9 percent, accounting for 45 percent of the total deposit base. The increase in ATM coverage, meanwhile, has led to a corresponding increase in usage.
Metrobank registered 85.4 million ATM transactions, with over 30 percent from use of Metrobank ATMs by local and international non-Metrobank cardholders. It boasts of its current record of above average 99 percent service availability, among the highest within the Bancnet consortium. BancNet is one of the country’s three major ATM service providers.
Bank of the Philippine Island (BPI)
BPI is the oldest bank in the Philippines still in operation and holds the record as the largest bank in terms of market capitalization in the Philippines (P136 billion = US$3.24 billion as of March 2008), and has consistently been the most profitable bank in the Philippines. It is owned by the Ayala Corporation, the largest conglomerate in the Philippines, and is based in Makati City's Central Business District, on the corner of Ayala Avenue and Paseo de Roxas, across from the Philippine headquarters of HSBC. BPI is also the oldest bank in Southeast Asia and has a long and distinguished history that spans over a century.
It has either influenced or has been influenced by many nations, including parts of the former Spanish Empire, especially Mexico, and the United States. While it is considered by many as an old institution, BPI is trying, with moderate success, to promote itself as a dynamic institution that caters to its various clients, which hail from various sectors of Philippine society.
The Group's principal activities are corporate banking, consumer banking, investment banking, asset management, corporate finance, securities distribution and insurance services.
The Group derives its revenue from three operating business segments namely, Consumer Banking, Investment Banking and Corporate Banking. Their total sale in 2007 is P46, 019,000,000, with a total of 11,925 employees. Consumer Banking covers deposit taking and servicing, consumer lending such as home mortgages, auto loans and credit care finance as well as the remittance business. It includes the entire transaction processing and service delivery infrastructure consisting a network of branches, ATMs and point-of-sale terminals as well as phone and Internet-based banking platforms. Investment Banking provides services covering corporate finance, securities distribution, asset management, trust fiduciary services as well as proprietary trading and investment activities. Corporate Banking consists of the entire lending, leasing, trade and cash management services.
BPI also pioneered rural banking in the Philippines, as its countryside banking operations preceded that of many other banks' rural banking operations by many years. Today, it maintains a large rural branch network, with some branches dating bank to the Spanish or American colonial periods. Its branch network of 830 branches is by far the largest branch network of any bank in the Philippines.
The bank has received several awards from various financial magazines, such as “Euro money” and the Far Eastern Economic Review. Its most recent award was for the best retail bank in the Philippines in 2005.
Bank of the Philippine Island subsidiaries and affiliates includes:
• 1851 Club Inc. AF Holdings & Mgt. Corp.
• AF Merchants Inc. AF Money Brokers Inc.
• Ayala Life Assurance Inc. Ayala Plans Inc.
• BPI Bancassurance Inc. BPI Capital Corp.
• BPI Computer Systems Corp. BPI Direct Savings Bank Inc.
• BPI Family Savings Bank BPI Forex Corp.
• BPI Foundation, Inc. BPI International Finance Ltd.
• BPI Investment Mgt. Inc. BPI Leasing Corp.
• BPI Operations Mgt. Corp. BPI Paseo de Roxas Condominium
• BPI Rental Corp BPI Securities Corp.
• BPI/MS Insurance Corp. CityTrust Realty Corp
• CityTrust Securities Corp. Far East Bank Speed
• FCP Credit Corp. FEB Insurance Brokers, Inc
• FEB Management, Inc. FEB Savings Bank
• FEB Stock Brokers Inc. Filinvest Algo Financial Corp.
• First FarEast Development Corp. Greentop Condominium Corp.
• Santiago Land & Dev't Corp. Shenton Corp
• Zodiac Realty Corp Ownership
• PCD Nominee Corporation: 35.55% (30.17% Filipino, 5.38% non-Filipino)
• Ayala Corporation: 23.28%
• Ayala DBS Holdings¹: 21.43%
• Roman Catholic Archdiocese of Manila²: 8.51%
• BPI directors and officers: 0.08%
• Public stock: 11.15%
Bank of the Philippine Island is known for its firsts in:
• BPI is the first bank in the Philippines, and in Southeast Asia.
• BPI is the first bank to issue the Philippine peso
• BPI financed the first rail system, telephone system, electric power utility, and steamship service in the Philippines
• BPI established the Philippines' first ATM system, with its ATMs being called Express Tellers.
The system eventually evolved into the Expressnet ATM consortium, which has seven members
• Expressnet is also known for its Express Payment System (EPS), which was at first the debit card system of the BPI Express Teller ATM card.
• BPI pioneered the concept of the banking kiosk in the Philippines, with its kiosks being called Express Banking Centers or EBCs or by its older name, the Convenience Banking Center.
EBCs can be found in malls, supermarkets, plazas and other locations and operate beyond normal Philippine banking hours, which are from 9.00 to 15.00 on weekdays.
• The first local bank in the Philippines to introduce 24 hour branch banking called BPI Express.
• BPI is the first bank in the Philippines to make use of a call center and telephone banking, known as BPI Express Phone
• Launched BPI Express Mobile - Mobile Banking facility which enables accountholders to inquire about their deposit, credit card, auto and housing loan and BPI Prepaid Card balances, transfer funds between enrolled deposit accounts, pay bills to over 200 merchants, reload Globe Telecom and Touch Mobile prepaid mobile phones and BPI Prepaid Cards BPI Express Cash, and transfer money to and from Globe GCash wallet.
• Launched BPI Express Credit Gold Mastercard with Paysafe System, the country's first EMV (Europay, MasterCard, Visa) compliant chip card.
• The first airline co-brand chip credit card issued in the Philippines - BPI WorldPerks MasterCard with its partner Northwest Airlines.
• The first local bank in the country to offer most number of third currencies in its products and services - Savings Accounts and Time Deposit Accounts (As of March 2007)
2.)Competitive Profile Matrix (CPM)
Legend: 4= Major Strength; 3= Minor Strength; 2= Minor Weakness; 1= Major Weakness
In the Banking industry, the determined critical success factors are financial position, technology, customer service, strategic locations, customer loyalty, organizational structure, management, human capital, innovation, and market share. The highest weight is given to customer service simply because the customers are the bread and butter of any banking institution. Following the merger last May, there has been a tremendous surge of numbers in the organization of BDO- 15,000 people, 700 branches, and 1,200 ATMs. With these, there is an increase in customer numbers and with higher expectations to fulfill. That’s why BDO was given the highest rating together with Metrobank as far as customer service is concerned. With an
increase in numbers of personnel, the company now tends to a higher number of customers.
Banks needs to cater to time-conscious depositors without sacrificing their services.
Considering the extent of competition in the banking industry, one should not only put a branch in any location but in a strategic location. That’s why strategic location is the second factor given the highest weight. Putting up branches in strategic locations like mall and urban areas will give an advantage over its competitors. Metrobank and BDO were given the highest rating for their branches were located strategically. Almost anywhere you can see their branches. Their ATM machines are highly accessible. The next factor is market share. Being the market leader in an industry is a certain advantage. Comparing the net assets of the Big three in the banking industry, Metrobank shadows over the rest. BDO being the second largest is trailing behind while BPI follow suit. The next factor with a given weight of 10% is financial position. The Big three in the industry are Metrobank, BDO and BPI having a net assets of P669,100,000, P60,540,628, 136,000,000 respectively. Having the same weight at 8%, the next factors are management and innovation. Everyone was given the highest rating in management due to their sheer expertise in managing their own respective organizations. Being in an industry that adheres in servicing the customers with utmost importance, innovation is needed. With new age at hand, industries should adhere and cater to time-conscious consumers with fast and state of the art technology. Early preparation for business growth and capacity required to put the necessary adjustments in place and move towards a smooth implementation. The next factor is Organizational Structure. Having the mall magnate, Henry Sy, as the Chairman Emeritus and Teresita Sy-Coson, as the Chairperson, we can say that BDO has a good organizational structure. The last two factors are Customer Loyalty and Human Capital. Merging two organizations, with their distinct characters and cultures, into one cohesive and solid team presented great challenges and complex priorities for Human Resource Management. BDO considers human resource integration and organizational development a continuing primary trust. With such a huge manpower, they provide training and development programs to
adequately support the changes in structure, systems, and services. Everyone was given a rating of 3 in the customer loyalty.
3.) Summary and Conclusion
The Philippine economy is buoyant but it is projected to have a slowdown due to threatening crisis. Although GDP and GNP increased drastically in the past years due to the appreciation of peso against the US dollar and a huge surge of OFW remittances, the Philippine economy will feel the domino effect of the crisis in the upcoming months. Mass layoffs, decrease in consumer spending, withdrawal of investments and deposits. With the decrease in spending of households, the industry will take a sudden turn. With every country feeling the effect of the sudden turn of events, very few businessmen will invest in our country to conduct business. In this matter, capital sources will drastically decrease. A strong peso, increase in remittances, and slight improvement of GDP-GNP will give the economy a shield to lessen the impact of the ‘tsunami’ crisis. The improving technological conditions brought about a change in the lifestyles of Filipinos. As a result, this brings an increase in production which provides for a higher capital and higher borrowings. While bottom line numbers may not be as impressive, the industry is clearly building for the future, putting a lot of emphasis on asset quality, governance and transparency, and sound business strategies with clear accountabilities.