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Best Domestic Bank
BDO Unibank is the commercial bank to beat in the Philippines. Led by veteran chief executive and president Nestor Tan, the Manila-based lender dominated much of the banking sector during the awards period.
|Nestor Tan, BDO Unibank|
Plus it was among the frontrunners in investment banking, private banking, credit cards, leasing and insurance brokerage.
BDO Unibank reported a record net income of P32.7 billion in 2018, up from P28.1 billion the previous year, thanks to strong recurring earnings from its core businesses. Loans rose 15% to P2 trillion and deposits climbed 14% to P2.4 trillion, leading to an impressive 20% expansion in net interest income.
“Good execution of our strategy and key initiatives over the past year allowed us to further strengthen our various businesses and increase our client coverage,” says Tan. “These in turn translated to good financial results.”
Research analysts are only too happy to sing the bank’s praises.
“BDO Unibank is very focused and very aggressive,” says one local head of research. “They know where they stand and they know where they want to be.”
A Manila-based strategist adds: “BDO Unibank has a good strategy and it has consistently delivered.”
Best Bank for SMEs
Lending to small and medium-sized enterprises has never been easy in the Philippines. That may be surprising given that SMEs account for more than 90% of registered businesses and make a large contribution to the national economy. But poor credit information has held back what should be one of the country’s most promising market segments.
Hats off then to Security Bank, the seventh-largest bank by assets, which has not
only transformed this into a successful core business, but also made it look easy.
|Sanjiv Vohra, Security Bank|
Security Bank, now led by chief executive and president Sanjiv Vohra, demonstrated outstanding commitment to the particular needs of its SME clients over the review period.
The bank’s small business loans portfolio grew by a remarkable 137% in 2018 and continued its strong momentum in the first quarter of 2019. Small business loans as a percentage of total consumer loans almost doubled from 5% in the first quarter of 2018 to 9% in the first quarter of 2019.
Analysts speak favourably of the bank’s digital innovations, its electronic cash management services and its ability to wheel out new products. A good example of the latter is Business Express Loans. This reduces the processing turnaround for SME loan applications of up to P5 million ($95,000) from three weeks to a maximum of five days.
“Security Bank is a solid niche bank,” says one senior research analyst in Manila. “They are extremely good at what they do and they have decided to grow in the consumer and SME space.”
Best Corporate & Investment Bank
First Metro Investment Corporation
The Philippine capital markets had a tough year in 2018. Several issuers waited for market sentiment to improve, while a handful of planned fund-raisings were pulled. Against this lacklustre backdrop, First Metro Investment Corporation, the investment banking arm of the Metrobank Group, won plaudits for its innovation and timely execution, fending off rivals BDO Capital & Investment Corporation and BPI Capital.
A couple of landmark deals highlighted its capabilities. First Metro was the sole
arranger for the P1 billion ($19 million) fixed-rate corporate notes for Aeon Credit Service (Philippines), a subsidiary of Japan-based retail firm Aeon Group of Companies, in September 2018.
|Rabboni Francis Arjonillo, First Metro Investment Corporation|
The transaction was ground-breaking on several fronts. It was the first issuance under the Asean+3 multi-currency bond issuance framework (Ambif) in the Philippines and the first fully guaranteed debt facility of the Credit Guarantee & Investment Facility (CGIF) in the country.
A total of seven noteholders participated in the transaction, which was more than three times oversubscribed.
First Metro, under president Rabboni Francis Arjonillo, was also the sole issue manager, bookrunner and lead underwriter for the P8 billion Philippine Savings Bank stock rights offering. This was the only purely domestic equity transaction for the awards period. The offer was done in three months, from announcement to listing, making it one of the fastest equity capital raisings completed via public offer.
Best International Bank
Competition for the best international bank award in the Philippines was unusually fierce this year, with impressive submissions coming from Citi, HSBC and Standard Chartered. Citi won because of its performance across the full spread of banking business.
Citi Philippines, under country officer Aftab Ahmed, had an exceptional year, with
strong growth in revenue and profit. During the period under review, the bank’s net income rose 36% to P4.3 billion ($82 million) and return on equity hit a lofty 26%. Citi is the largest foreign bank in the Philippines measured by the number of customers, asset base and profitability, and remains the best, with a clear focus on the public sector, top-tier local corporates, multinationals, financial institutions and affluent consumers.
|Aftab Ahmed, Citi Philippines|
Citi’s contact centre in the Philippines now handles more than 20 million calls a year. The bank has nearly 8,100 full-time employees, the largest in its history, with plans to continue expanding.
Analysts continue to give the thumbs up.
“Many of the innovations that have been adopted by local banks originally came from Citi,” says one head of research in Manila.
To round it off, Citi’s investment banking business executed a number of landmark transactions encompassing the full spectrum of debt, equity and advisory services. The bank acted as joint bookrunner on the $1.5 billion 3.75% 10-year SEC-registered bond of the Republic of the Philippines.
It was also joint lead manager for the Asian Development Bank in two of its green issuances to advance the United Nations Sustainable Development Goals.
Best Digital Bank
Union Bank of the Philippines has done it again. The ninth-largest bank in terms of assets, Manila-based UnionBank has led the charge into digital banking.
|Edwin Bautista, UnionBank|
During 2018, the bank continued to blaze a trail with the launch of Project i2i, a clearing system that uses blockchain technology to connect rural banks and streamline processes such as interbank funds transfer, financial and accounting reports and remittances.
Another product that has realized value is bills payment. Not so long ago, it could take as long as 15 working days to process a payment. UnionBank has slashed the time to one day. Since the start of 2018, the bank says this has translated into cost savings of more than P17 million ($340,000).
Close to 80% of all UnionBank’s interactions with customers are now routed through digital channels. It’s all part of the bank’s strategy for financial inclusion or, in the words of Bautista, making sure that “no one gets left behind”.
Best for Microfinance
Bank of the Philippine Islands
When it comes to financial inclusion and, in particular, the Philippines’ young microfinance sector, two local commercial banks stand out from the crowd. BDO Unibank and Bank of the Philippine Islands (BPI) have both expanded aggressively into this previously overlooked market segment. Better still, both have ambitious plans to up their game.
But while BDO Unibank’s rural banking arm (called One Network Bank) continues to
impress with its coverage of the micro, small and medium-sized enterprises, it is BPI’s BanKo, the product of a merger between two specialized thrift bank units, that is setting the pace.
|Cezar Consing, BPI|
BanKo’s network almost doubled from 103 to 200 branches last year. It plans to open an additional 100 branches this year to cope with increasing demand from a new generation of bright young entrepreneurs.
“Microfinance is the smallest business unit at the bank, but it is where we see the biggest growth potential,” says Cezar Consing, chief executive and president of BPI.
That’s good news for small businesses, which all too often have been forced to borrow at exorbitant rates from money lenders. It’s also good news for the long-term growth of the bank’s bottom line, since this business segment should be one of the most promising sectors of the economy.
Best Private Bank
An increasing number of local and foreign banks now offer private banking services to high net-worth clients in the Philippines. Some local banks excel in this business, none more so than BDO Unibank. Since its establishment in 2003 as the first full-service private bank in the Philippines, BDO Private Bank has consistently introduced new products and services to help clients to meet their diverse financial goals and objectives.
Growth has been impressive. Funds under management surged to P350 billion ($6.7 billion) in 2016, from P7 billion in 2003, providing a resounding vote of confidence in the bank. They continued their upward trend to P401 billion at the end of 2018, a 2.6% increase over the previous year. As of June 30, the bank had 8,245 clients, each with an average of $1 million in assets under management.
“Our industry-leading position is the result of a relentless drive to progressively add value to client relationships by structuring diverse portfolios bespoke to each client’s unique circumstances,” says Albert Yeo, president of BDO Private Bank.
One of the secrets of the bank’s success is the wide selection of domestic and international products that it offers, regardless of provider. Another is its roll-out of digital banking services. That’s a combination that few of its rivals have been able to match so far.
Best Bank for CSR
Bank of the Philippine Islands
Bank of the Philippine Islands (BPI), led by chief executive and president Cezar Consing, was set up in 1851 and is the oldest bank in the Philippines.
At the heart of the bank’s corporate and social responsibility philosophy is a genuine belief in empowerment. Through its social development arm BPI Foundation, the bank seeks to assist communities and individuals to participate in the dynamic and fast-changing economic landscape by offering programmes in financial education, entrepreneurship development and sustainable environment.
Take, for example, the BPI Technical-Vocational training programme. Launched in 2018, this teaches a valuable combination of technical, entrepreneurial and management skills to help improve business acumen. So far seven communities have benefitted from this programme.
Then there is the bank’s Mindanao rainforest programme that aims to restore the ecosystem and improve food security and environmental sustainability in conflict areas in this southern part of the country.
To date, BPI has directly assisted more than 300,000 people, making it a worthy recipient of this year’s award.