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SWOT Analysis of Philippine Banking

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The number of operating banks as of end-February 2014 was further 6047 banks. By nature of operations, these consisted of: 36 commercial banks, 71 thrift banks and 533 rural and cooperative banks (inclusive of 52cooperative banks), 533 rural banks, 40 credit unions and 6,267 non-banks. Overall banking operations continued to be relatively normal even as asset growth remained subdued and earnings faced pressures. The quality and productivity of bank assets was further eroded by the hike in the inventory of non-performing loans and acquired properties. NPA ratio rose further to 13.6 percent from 12.3 percent a year ago.

Meanwhile, NPA coverage ratio was maintained at 29.8 percent as in the previous year. The overall asset mix also became increasingly more inclined to investments in government securities relative to loans, in part, due to higher liquidity reserve requirements and, in part, due to more cautious lending policies. Deposit mobilization played a major role in stabilizing the banking system and sustaining modest asset growth. This was supported by fresh capital infusion by shareholders.

I.Metropolitan Bank and Trust Company (Metrobank)
•Is a major universal bank in the Philippines. It is listed on the Philippine Stock Exchange with the symbol MBT and is a member of Philippines Deposit Insurance Corporation. Metrobank was established in 1962 and provides banking and financial products and services for individual consumers, businesses and corporate customers. It has a network of 752 branches and 1358 ATMs across the Philippines as at 2010 (2010 Annual Report) as well as a web-based internet banking and mobile platform. Strength:

Growth is high. It has increased its account holders. At the flagship Holborn store, $200 million in deposits which is four times the total at the average mature American branch: Liquidity risk is less comparatively. Inclusion of variety of non-traditional services like pet friendly policy at stores and coin counting machines. Many awards have been won in three years which creates credibility in the market. It is authorized by the Prudential Regulation Authority and regulated by both the Financial Conduct Authority and the Prudential Regulation Authority Weaknesses:

Opened recently and hence consumers may be skeptical about the same. Recording losses in PBT. Since its launch, loss has exceeded 100 million pound in three years. Difficulty in raising funds from notable investors is one of their weaknesses.

Its unique position as being the first High street bank can be leveraged. The non-traditional products can be incentivized and the untapped market of it can be explored. Online platform Metrobank more can boost its growth due to increasing internet penetration Threats:

Increasing competitor’s activity can reduce its market share. Fluctuating economic scenarios and unfavorable banking environment.

II.EastWest Bank
•Was created on July 6, 1994 as the Philippines’ thirty-fourth commercial bank. It was on that date that the Bangko Sentral ng Pilipinas granted EastWest Bank its commercial banking license. Backed-up by the Filinvest Group of Companies, EastWest Bank opened to the public along Senator Gil Puyat Avenue, Makati on August 1, 1994. This was the comeback of the Gotianun’s in the banking space after they sold the Insular Bank of Asia and America to PCIBank in 1986 (which was acquired by Equitable Bank forming Equitable PCI Bank which in turn was acquired by Banco De Oro in 2006) and Family Savings Bank to BPI (which was renamed BPI Family Savings Bank). Strength:

The bank offers a variety of banking and financial services through a network of around 110+ bank branches operating in the US, China, Philippines and Hong Kong. It is expanding its product portfolio by acquiring its competitors in various locations. The company has focused on industries with cross-border growth potential drives its bridge banking strategy. The dedicated banking experts, with specialized knowledge in key growth sectors, keep East West Bank at the forefront of opportunity in the U.S. and Greater China. Good brand visibility in the domestic banking circuit in US Weakness:

The asset base of the bank has been growing at a snail’s pace and this may be a cause for concern in the long term. Cash dues from other banks have increased and it signifies the weak credit terms of the bank which may have a debilitating effect on the performance Total equity of the bank has increased and this signifies a dilution in the ownership. Opportunities:

The Philippines banking industry which suffered in the wake of the financial crisis seems to have recovered and this provides better opportunities to the banks. The global asset management and custody banks sector is growing at a rapid pace. It can explore into this untapped potential to generate more profits. It can as well expand in the other developing countries as they also offer a growth potential for the bank

The US government framed the Dodd-Frank Act, significantly restructuring financial regulation in the US. These severe changes in regulations by US Federal government may affect operations and increase costs. Since the start of the global financial crisis, banking industry in the US has been undergoing a series of consolidations which could impact the margins. Increasing number of online attacks may indirectly affect the revenue for the bank.

III.HSBC Banks Philippines Ltd
•Is one of the worlds largest banking and financial services organizations; the HSBC Group has been doing business in the Philippines for almost 138 years. The Bank currently has a 16-strong total branch network (including 9 branches of the locally incorporated HSBC Savings Bank) located in Metro Manila, Cebu and Davao. STRENGTHS

•International Finance
Since HSBC is a global company itself is well qualified to advise other companies on aspects of international business. With offices around the world, for the international client HSBC often cannot be defeated in this area. HSBC knows how to succeed in Mergers and Acquisitions (M & E) and the organic and the effective development.

•Record Profits

Last year, HSBC experienced the most profits ever for a UK high street bank. HSBC have revealed their profits more than doubled in 2010 to £10 billion with every region in the black for the first time since 2006. •Listed in London

HSBC is listed primarily in London and Hong Kong stock exchanges, which saves the company a lot of grief in complying with new U.S. legislation Sarbanes-Oxley law. Many companies have chosen to list on foreign stock exchanges, except America, because of expensive new regulations.


HSBC has 140 years of experience in China. Since China is the place to be today for companies and banks, HSBC benefits for being so old Chinese company and accepted by the Chinese people. The best news for HSBC is that, like other companies grow in China, it does too. The reason this happens is that it wins new customers and new global opportunities with each passing day. The HSBC has the largest network of any foreign bank in China and deeply understands the Chinese market and the customer. In a world that is increasingly going the way of China, this is quite a boon to HSBC. WEAKNESSES

•Poor Performance
There is a poor performance in the section of “personal finance services”. HSBC try to fix these problem years ago. But the problem is there every year.

•Brand Name

While it is certainly a global company, HSBC came late in the game to decide to execute a comprehensive marketing strategy and take advantage of the global brand. Because he had created so many different banks in different countries at different times over a period of one hundred years, which set them up with different names – Hong Kong Bank of Canada, the British Bank of the Middle East, etc. Not even all of these banks prior to 1998, bore the logo of HSBC. In 1998, they were all branded together, but the previous lack of branding and name changes can damage the HSBC brand recognition. Customers may have thought that HSBC was responsible local bank and did not realize that HSBC had already serving for decades. OPPORTUNITIES

•Growth on emerging economies

Apart from the growing Chinese middle class Brazilians and Indians have begun to appear as consumer culture, and thus increases wasteful consumers. Some residents of those countries in the past does not even own a bank account, but companies such as HSBC is ready to move in and benefit from the growing middle class in these areas. In places like Argentina and Turkey, HSBC experienced pre-tax profits by 50% in the past years. This is where it grows more.

•Biggest Bank in the Middle East

The other banks are removed from the Middle East. However, HSBC has been running regional activities at the local level and have been rewarded for his efforts with numerous awards and honours for the Middle East market. HSBC is a trusted name there, and the company benefited from new democracy in Iraq by establishing a presence in the country. HSBC is the largest international bank in the Middle East.

•Low Mortgages Interest Rates

The low mortgage interest rate increases the revenues and market’s shares. HSBC has made some records on this. THREATS
•Moving Back to China

The banking colossal HSBC has been most explicit threat yet that it might move its headquarters from London because of the narrowing regulatory noose.

•New Regulations

The investors of HSBC have been warned that future profitability will be affected by the new global policies designed to make the sector of financial more secure, but smoothed the blow with the promise of increasing dividends.

IV.Bank of the Philippine Islands (BPI)
•Is the oldest bank in the Philippines still in operation and is the country’s second largest bank in terms of assets, the country’s largest bank in terms of market capitalization, and the country’s most profitable bank. It is owned by the Ayala Corporation – the largest conglomerate in the Philippines. It is currently listed in Forbes as the Philippines’ largest bank in terms of market value and overall ranking. Strengths

-Adequate Capital
-Low cost deposits
-Nationwide branch network
-Competent Management
-Strong Owners (Ayalas)
-Low deposit rates
-Long product cycles
-Questionable acquisitions
-Declining margins
-Include young population
-Growing Economy
-New Alternative channels
-Competition from other banks

V.Allied Bank Philippines (now Philippine National Bank)
•Was one of the largest banks in the Philippines. It is also one of two universal banks in the Philippines not to be traded on the Philippine Stock Exchange, the other being the United Coconut Planters Bank. In February 9, 2013, the bank was merged with Philippine National Bank, creating the 4th largest private domestic bank of the Philippines. Strengths

Economies of scale are the cost advantages that PNB obtains due to size. The greater the volume, the greater the advantages and this qualitative factor will lead to a decrease in costs. Weaknesses

Weak management increases business risks and reduces profits for PNB, because they are responsible for the health of the business. “Weak Management (PNB)” has a significant impact, so an analyst should put more weight into it. This statement will lead to a decrease in profits. “Weak Management (PNB)” is a difficult qualitative factor to overcome, so the investment will have to spend a lot of time trying to overcome this issue. Opportunities

Leveraging the balance sheet allows PNB to quickly expand into other markets and products, especially in fragmented industries. Growth rates and profitability of the company is one of their opportunities also which may put the company into success. Threats

-Unexpected problems
-Growing competition and lower profitability
-Increasing costs
-Increase in labor costs
-External business risk

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