Views From The
Private SectorThe Philippine-Japan Business Investment Forum 2018
Iino Hall, Tokyo, Japan I 27 November 2018
Presented by: Eduardo V. Francisco
Agenda
▪ Introduction to BDO
▪ Views from the Private Sector
▪ What Can We Do For You
▪ Contact Details
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• The Philippines’ largest bank with total assets of P2.9 Tn(USD53.9 Bn).
• A full-service universal bank with one of the widest distribution networks consisting of more than 1,200 operating branches and over 4,000 ATMs nationwide.
• Part of the SM Group, one of the country’s largest conglomerates.
About BDO
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• Wide and extensive coverage in key areas
25 International Offices
Europe - 1010 Remittance Offices
Middle East - 1Representative Office
Asia - 11 1 Full-service Branch
6 Remittance Offices
4 Representative Offices
North
America - 3 Remittance Offices
Philippines - 1,241
Branches
As of 29 October 2018
BDO ONB Total
Luzon 345 12 357
Metro
Manila564 1 565
Visayas 119 18 137
Mindanao 81 101 182
Total
Branches1,109 132 1,241
Market Research
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#1
Customer
Loans
#1
Deposits
#1
Remittance
s
#1
Assets
Under
Managemen
t
#1
Private
Banking
Leading Trade
Services Provider2
Major Player in
Cash
Management3
#1
Rural
Banking
#2
Leasing &
Finance
#1
Investme
nt
Banking4
#1 Insurance
Brokerage5
• Market-leading positions in almost all business lines
#1
Credit
Cards1
Notes:1 In terms of cardholder base, merchant acquiring gross billings, and credit card receivables2 According to Asian Banking and Finance, Global Finance3 According to The Asset, The Asian Banker, Alpha South East Asia4 In terms of corporate issuances5 Among insurance brokers in terms of premiums produced and commissions earned
Business Franchise
2,323
1,560 1,537 1,508
673 654453 443 432 397
MBT BPI LBP PNB CHIB UBP SECB DBP RCBC
1,903
1,3241,239
682545
461379 360 302 233
MBT BPI LBP PNB CHIB SECB RCBC UBP DBP
2,846
2,1901,895
1,706
872 766 721 622 620 586
MBT BPI LBP PNB CHIB SECB UBP DBP RCBC
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Total Assets
(in PHP billions)
Source: Company data, consolidated statements of condition (SOC). Ranking as at 30 June 2018
Note: Financials prepared by banks under BSP’s SOC requirements differ slightly from reported financials under SEC guidelines due to
certain differences in accounting rules requested by the two authorities
Gross Customer Loans
Customer Deposits Assets Under Management
• No. 1 among Philippine banks
(in PHP billions) (in PHP billions)
(in PHP billions)
BDO Market Share – 20% BDO Market Share – 34%
BDO Market Share – 22%BDO Market Share – 19%
1,032
580
435
297
127 107 90 88 84 44
BPI MBT LBP CHIB SCB RCBC PNB UCPB SECB
Industry Ranking
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• Complete range of financial products and services
Corporate &
Institutional
Banking
• Corporate and
middle market
lending
• Trade finance
• Specialized
lending
• Financial
Institutions
• Cross-border
financing
Consumer
Banking
• Auto
• Mortgage
• Credit cards
• Personal loans
• Merchant
payment
processing
Leasing &
Finance
• Direct lease,
sale and
leaseback
arrangements
• Installment
paper
purchases
• Receivable
discounting
and factoring
Branch
Banking
• Deposit &
related products
• Over-the-
counter
transactions
• Cross-selling
distribution
platform
Treasury
Services
• Fixed income
dealership
• Foreign
exchange
transactions
• Portfolio
management
• Liquidity
management
Transaction
Banking
• Cash
management
• Electronic
banking
• ATMs
• Prepaid cards
• Merchant
acquiring
• Remittances
Trust
Banking
• Investment
management
• Unit investment
trust funds
• Living trusts
• Retirement
funds
• Special trusts /
custodianship
Private
Banking
• Wealth
advisory
• Customized
portfolio
management
Investment
Banking
• Underwriting &
distribution of
fixed income &
equity
securities
• Fin’l advisory
• Project finance
• Loan
syndication
Stock
Brokerage
• Equities trading
• Online stock
trading
Insurance
• Brokerage
(property &
casualty)
• Bancassurance
(individual &
group life
insurance)
Rural
Banking
• Salary loans
• Agricultural &
business loans
• MSME loans
Full Service Bank
How We See The Economy
▪ We are in agreement with the government, ADB, IMF of slower
but still robust growth but we still believe 6.4% for 2018 and
6.8% in the medium term is realistic. Near-term headwinds
include faster inflation, rising real borrowing rates, and reform
execution risk. Nonetheless, the elections next year should
provide a boost to the economy.
▪ We believe inflation will already peak in November 2018 and
the full year inflation will be around 5.4%. We believe inflation
next year will go back to around 4%. Base effects, liberalization
of rice imports, stabilizing oil prices and currency, as well as
tighter monetary policy all point to slower inflation in 2019.
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How We See The Economy (cont’d)
▪ As our monetary authorities have already increased rates
several times this year, we believe there might be another 25-
50 basis points increase coming the next few months. We
nonetheless believe the economy is well-positioned in a rising
interest rate environment given very low public and private debt
levels.
▪ As the BSP has turned more hawkish, our Philippine Peso
exchange rate has already stabilized and we anticipate it to
remain range bound at P53-54/USD 1 by end of 2018. We
believe the country’s low external debt, rising FDI inflows, and
the prospect of rate hikes should support the currency.
Nonetheless, a tighter Fed policy outlook amid wider CA deficit
projections should continue to exert pressure on the PHP.
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How We See The Economy (cont’d)
▪ The government has an ambitious target to boost infrastructure
spending and we appreciate and see it. Admittedly, it is more
back ended and we will see the roads, bridges and airports in
the next few years. Government has spent P437 Bn in
infrastructure and other capital outlays during the first 7 months
of the year, or roughly 40% of the P1.1 Tn infrastructure budget.
▪ We believe the government's other tax reform measures under
TRAIN 2 (tax reform for acceleration and inclusion) can still be
passed, although the window is narrowing fast because of the
upcoming elections. These revenue measures will ensure the
government retains its credit rating and we have no major
concerns on the fiscal deficit widening or increased borrowings,
given that the country's external debt has roughly halved since
2008. The 3% budget deficit cap for 2019 is still manageable.12
How We See The Economy (cont’d)
▪ Loan growth within the Philippine banking system is still strong
at around 15-18% y/y, while non-performing loans remain low at
less than 2%. A lot of this are also new borrowers who
previously did not borrow from the banking system. These
loans are productive and will help many companies.
▪ The PSE Index is now very competitive trading at around 16.5x
2018 earnings and 14.6x 2019 earnings. It is already roughly at
a 5 year low. We recommend that investors look at
conglomerates, banks and real estate companies with strong
balance sheets, as these are the ones that stand to benefit in a
rising interest rate environment.
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How We See The Economy (cont’d)
▪ There is a lot of M&A happening but it seems local families or
conglomerates buying into other Philippine companies.
Japanese investors need to show that they not only bring in
financial support but have to make potential targets realize they
can open up markets and bring strategic value.
▪ The Duterte administration has announced their preference for
ODA and we appreciate that most of the ODA to date has come
from Japan. There are a lot of pledges from other countries like
China but we are waiting for actual signings and disbursements.
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What Can We Do For You
BDO is the largest bank in the Philippines with the largest
distribution network. We would be happy to help you in your various
needs as we can assist you in the following:
▪ Identifying and introducing you to potential local partners
(whether alliance, JV, acquisition, PPP, unsolicited bid, etc)
▪ Assisting you in your partnership from due diligence,
structuring, negotiations and funding
▪ Helping you lever your investment by providing possible
acquisition finance (Yen, USD, PHP short term or long term
financing via bilateral or syndicated loans)
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▪ Helping you hedge your investments in the country
▪ Providing permanent financing via corporate notes or bonds
▪ Refinancing debt at the target company level
▪ Tapping the capital markets by issuing SEC Registered Bonds
in the country on our Philippine Dealing Exchange (PDEX) or
listing in the Philippine Stock Exchange (PSE)
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What Can We Do For You
INVESTMENT OPPORTUNITIES
▪ Philippine corporates are cash rich and looking for investments
abroad or brands to bring into the country. Possible tie ups even
for Japanese SMEs would be welcome specially in food and
retail. Filipinos love Japanese cuisine and fashion.
BDO PARTNERSHIP WITH JAPAN
▪ BDO has Japan Desk as a fully-staffed, functional lending unit in
the Bank's Institutional Banking Group. Japan Desk is dedicated
to market and service Japanese corporate companies operating
in the Philippines and retail needs of Japanese customers.
Japan Desk is comprised of 34 personnel, of whom 5 are Senior
Officers and 13 are Japanese-speaking.
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What Can We Do For You
Outstanding Local Underwriter : 2006
PLATINUM AWARDS (PAST 20 YEARS)
Best Domestic Investment BankBest Domestic Equity House
Best Investment Bank in the Philippines: 2006-2014 & 2017
Best Equity House in the Philippines: 2006, 2007, 2009, 2010, 2013, & 2017
Best Bond House in the Philippines: 2007, 2008, 2010, 2012, & 2015
Best Debt House in the Philippines: 2006-2010
Best Equity House in the Philippines: 2006 - 2008, 2010
Best Investment Bank in the Philippines: 2007-2016
Best Bond House in the Philippines:2007-2010, 2012-2013 & 2016
Best Equity House in the Philippines: 2008 , 2013 & 2016
Best Domestic Investment Bank in the Philippines: 2006-2014
Best Corporate & Institutional Bank in the Philippines: 2015,2016
Project Finance bank of the Year in the Philippines : 2015
Best Equity House in the Philippines: 2008, 2010 & 2015
Best Loan House in the Philippines : 2015-2016
Top Corporate Issue Manager/Arranger : 2011- 2017
Best Investment Bank in the Philippines : 2013, 2014, 2018
Syndicated Loan House in the Philippines : 2013, 2014
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Eduardo V. Francisco+63 917 855 6248 l [email protected]
Best Investment Bank: 2016-2017
Best Advisory House: 2017
Best Fixed Income House: 2015-2017
Best Equity House: 2016 - 2017
Best Project Finance House: 2016-2017
Top Investment Bank,
Philippines – 2016