Post on 09-Sep-2015
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Submitted By:Matienzo, Millicent S.J.4ALM
Submitted To:Prof. Ricardo Palo
San Beda College ManilaMarch 5, 2015
EXECUTIVE SUMMARYBanco de Oro Unibank, Inc. or BDO is a universal bank in the Philippines involved Finance and Insurance industry and provides financial services that extends not only to personal banking, but also corporate banking. It is owned by the SM Group of Companies one of the countrys largest conglomerates, which is in turn owned by Henry Sy. BDO is now the largest bank in the Philippines in terms of assets, loans and deposits. Its market niche touches the corporate market, the middle market banking segment and the retail or consumer market.In the conducted external analysis of BDO (4.3.1.) and its competitor analysis (4.2.2.), it is shown that BDOs is equipped in taking effective advantage of opportunities and minimizing threats. The analysis show that there are opportunities present for BDO to take, such that of the rise in demand for mobile banking applications, increase in automotive loans and the unification into a single market come the 2015 ASEAN Economic Integration which pose as challenges that BDO should overcome. However, there are also threats that BDO should minimize. In the internal analysis (5.8) and the financial analysis (5.3), it was shown that BDO is in a position that is proactively upgrading and striving to cater to its clients and providing quality services. It shows the strengths of BDO as a business, which should be utilized more in answer to opportunities. Meanwhile, such analysis also showed BDOs weaknesses that should be mitigated. it was also found that BDO is in a position to aggressively take on the challenges posed by the opportunities stated. In doing so, the objectives for BDO formulated were to increase in net income while maintaining expense, increase in market share, increase in presence in rural areas and to invest more in technology. In order to achieve such, based on the strategy formulation matrices (6.1. to 6.7.), it was recommended for BDO to pursue intensive strategies which are that of product development and market penetration and also horizontal integration.I. INTRODUCTION1. Nature of BusinessBanco de Oro Unibank, Inc. or BDO is a universal bank that is involved in providing financials services to individuals and corporate markets and specializes in lending, deposit-taking, Foreign, Exchange, brokering, trust and investments, credit cards, corporate cash management and remittances in the Philippines. BDO belongs to the SM Group of Companies, one of the country's largest conglomerates, with businesses spanning between retail, mall operations, property development, and financial services owned by tycoon Henry Sy.BDO provides services for both individuals and corporations. As for individuals or also called as personal banking, it offers eBanking; with services such as phone banking, ATM banking, online banking and mobile banking, trust and investments, account management, credit card management, loans, remittances and insurance. BDO also offers services to corporations such as cash management services, trade facilities, investment banking, treasury, foreign exchange, investment advisory services, insurance, leasing and financing, trust and investments and corporate credit card management.
2. BDOs HistoryBDO had its beginnings on January 2, 1968 as it started as a thrift bank having the name Acme Savings Bank while having only two branches in Metro Manila. In November of 1976, Acme was acquired by Henry Sy and was renamed as Banco de Oro Savings and Mortgage Bank. In December of 1994, Banco de Oro became a Commercial Bank, and to portray its new status as a bank, it was renamed Banco de Oro Commercial Bank, and in September of 1996, BDO became a universal bank, which made BDO to change its name to its current, Banco de Oro Universal Bank. BDO is one of the banks owned by a Chinese-Filipino in the Philippines. Examples of other include Metrobank and Chinabank. In order to remain competitive and strengthen itself through vision, innovation and value, in 1997, BDO became involved in insurance services by establishing a subsidiary called BDO Insurance Broker, thus making it a, bancassurance firm. In 1999, it expanded its insurance through partnership with Assicurazoni Generali S.P.A., one of the worlds largest insurance firms, and Jerneh Asia Berhad, a member of the Kuok Group in Malaysia. In March 2000, BDO partnered up with its insurance affiliates, Generali Pilipinas Life Assurance Company and Generali Pilipinas Insurance Company. On June 15, 2001, BDO merged with Dao Heng Banks Philippine subsidiary. The merger increased the number of BDOs branches from 108 branches prior to the merger to 120 after the merger. BDOs expansion through its increasing number of branches had become one of BDOs competitive advantages, and as it reached out to its increasing number of depositors. The bank further expanded in April 2005, United Overseas Bank sold 66 out of 67 of its Philippine subsidiarys branches to BDO, and as it set to rationalize its operation from retail to wholesale banking, BDO, on March 22, 2006, after all United Overseas Bank completed its integration into BDO network, it increased the number of its BDO branches to 220. On August 5, 2005, BDO and SM investments, bought 24.76% of the shares of Equitable PCI bank, the Philippines third-largest bank, and 10% of an Equitable PCI affiliate, Equitable Card Network, one of the Philippines largest credit card issuers, from the Go Family. On December 27, 2006 both Banco de Oro Universal Bank and Equitable bank had agreed to merge, thus making the Banco de Oro-Equitable PCI bank. As of February 2007, it became known as Banco de Oro Unibank, Inc. As of March 31, 2014, BDO is the countrys largest bank in terms of total resources, capital, customer loans, total deposits, and assets under management and has about 23,600 employees. In December 2014, BDO had acquired Mindanaos largest rural bank.
II. RESEARCH DESIGN AND METHODOLOGYIn order to accomplish this paper the data requirements include that of financial statements, operational highlights, financial projections and recent surveys. Industry studies, trends, economic conditions are also required regarding the industry analysis. To achieve the comparison between the subject company and its competitors, information and background regarding top competitors are sought. Lastly, to complete the paper, internal information on BDO is also gathered.Sources are gathered mostly from BDOs website and annual reports. Correspondence through phone calls and emails with BDO representatives were also used. Other secondary sources were also gathered from the National Statistics Coordination Board, National Statistics Office, National Economic Development Authority, World Bank, Bangko Sentral ng Pilipinas websites.The financials for the years 2014 to 2016 are merely projected and should not be taken as actual statements of BDO. Although this paper is submitted in 2015, it was written in 2014, thus the study was based on 2013 information. It is also assumed that, for financial projections, the tax treatment were the same and that there were no dividend payments during the years projected. There are no direct citations found throughout the paper for consistency purposes in the format. However, all the references used are found in the bibliography. This is so as not to constitute as plagiarism.It should be noted further this paper is limited only Banco de Oro Unibank, Inc. who operates in the Philippines, however it must be said that there are BDO branches abroad. The paper is focused mainly on industries serving in the financial and insurance sector and that the study is for studying the performance of the company and its strategic position.
III. COMPANYS MISSION AND VISION
3.1 Corporate Mission-Vision StatementTo be the preferred bank in every market we serve by consistently providing innovative products and flawless delivery of services, proactively reinventing ourselves to meet market demands, creating shareholders value through superior returns, cultivating in our people a sense of pride and ownership, and striving to be always better than what we are today tomorrow.
3.2. Evaluation of the Mission-Vision StatementThe vision statement was found to be as what answers the question What do we want to become. BDO answered such question almost as though immediately because the answer to such is found at the very beginning of the statement. BDO states that it desires To be the preferred bank in every market we serve... Upon first glance, the vision of the company is evidently clear, thus making it a viable mission-vision statement.The mission statement, it is evaluated based on Fred Davids Framework and Characteristics of a Mission Statement. BDOS mission statement is not lengthy in character as it has fifty five words which follows that such statements are to be only up to two hundred and fifty words in length. Moreover, the mission statement is broken down to be able to fully comprehend and evaluate the mission statement.COMPONENTSPRESENCESPECIFIC STATEMENT
1. CustomersYesIn the phrase in every market we serve implies that BDOs pool of customers is large and diverse seeing as that it uses the markets instead of customers. It may be implied that these markets are BDOs customers who are willing to transact and invest with BDO as their preferred banking institution.
2. Products Or ServicesYesWith the statement consistently providing innovative products and flawless delivery of services, BDO aims to provide its customers with products that is adaptive to the needs of its clients and as well as with the advancement of technology. More so, BDO aims to deliver such products with its swift and efficient service. The statement is concise as to mentioning its products and services.