investor presentation - bdo€¦ · presentation outline i. overview ii. financial highlights iii....

Investor Presentation

August 2014

Presentation Outline

I. OVERVIEW

II. FINANCIAL HIGHLIGHTS

III. OWNERSHIP, BOARD, AND MANAGEMENT

IV. CORPORATE GOVERNANCE AND CORPORATE SOCIAL RESPONSIBILITY

IV. AWARDS AND CITATIONS

4

• The Philippines’ largest bank with total assets of P1.7 Tn (USD 37.7 Bn).

• A full service universal bank with

one of the widest networks of more than 840 operating branches (with Citi Savings Bank) and over 2,400 ATMs nationwide.

• Has one of the country’s strongest Board of Directors in terms of banking experience and corporate governance.

• Part of the SM Group, one of the country’s largest conglomerates.

About BDO

Acquired GE Money Bank

Est. as Acme Savings Bank

Acquired by SM Group

KB license

Merged with Dao Heng Bank Philippines

Acquired 1st e-Bank’s banking business

Acquired Banco Santander Philippines

Acquired UOB Philippines’ branch banking business

Merged with Equitable PCI Bank.Acquired Amex Savings Bank Philippines

AssetsP13 BN

P36 BN

P77 BNP121 BN

P149 BNP234 BN

P862 BN

P1.0 TN

Commercial Bank Expansion

19761968 1994

P617 BN

Acquired Rural Bank of San Juan

P1.2 TN

P1.7 TN

U/KB license

Milestones• Expansion through organic growth and M&A

2001 1996 2002 2003 2005 2007 2009 2012 2010 2013 2014

Acquired Citi Savings Bank

Acquired the trust business of Deutsche Bank in the Philippines

5

6

• Deposit and related products

• Over-the-counter transactions

• Cross-selling distribution platform

• Cash management services

• Electronic banking• ATMs• Prepaid cards• Merchant acquiring• Remittances

• Brokerage• Bancassurance

• Investment management

• Unit investment trust funds

• Living trusts• Retirement funds• Special trusts /

custodianship

• Auto• Mortgage• Credit cards• Personal loans

• Corporate and middle market lending

• Trade finance• Specialized lending• Financial Institutions• Cross-border

financing

• Underwriting and distribution of Fixed income and equity securities

• Financial advisory• Project finance• Loan syndication

• Wealth advisory• Customized portfolio

management

• Fixed income dealership

• Foreign exchange transactions

• Portfolio management

• Liquidity management

• Direct lease, sale and leaseback arrangements

• Installment paper purchases

• Receivable discounting and factoring

Full Service Bank• Complete range of financial products and services

7

Market Reach• Wide and extensive coverage in key areas

NorthAmerica

3

Europe

2Middle East

1

SEA, HK & Taiwan

10

16 International Offices

Philippines

as of 31 July 2014

846Number ofoperating branches

Savings

836

10

8

Notes:1 According to The Asian Banker, Global Finance, The Asset, & Trade Finance Magazine2 According to The Asset3 In terms of cardholder base & merchant acquiring gross billings4 In terms of corporate issuances5 Among insurance brokers in terms of premiums produced

Business Franchise

#1Loans

#1Deposits

#1Remittance

#1Trust and Asset

Mgt

#1Private Banking

Leading TradeServices Provider1

Major Player in Cash Management2

#1 Credit Cards3

#2 Leasing & Finance

#1 Investment Banking4

#1 LocalInsurance

Brokerage5

• Market-leading positions in almost all business lines

Total Assets

(in PHP billions)

Source: Company data, consolidated statements of condition (SOC). Ranking as at 30 June 2014

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

Industry Ranking

Gross Customer Loans

Customer Deposits Assets Under Management

• No. 1 among Philippine banks

9

1,700

1,4421,285

942

581455 430 422 385 366

MBT BPI LBP PNB China RCBC DBP SECB UBP

BDO Market Share – 17%

(in PHP billions)

973

708641

309 267 267 232170 129 129

BPI MBT LBP PNB China RCBC SECB DBP UBP

(in PHP billions)


1,365

1,077 1,073

808

437 388301 298 252 218

MBT BPI LBP PNB China RCBC UBP DBP SECB

(in PHP billions)

BDO Market Share – 18%775

492

335219

92 84 63 63 60 57

BPI MBT SChart UCPB RCBC HSBC China PNB LBP


BDO UNIBANK, INC. PHILIPPINE PARENT BANK

• With equity investments in allied and non-allied enterprisesOrganizational Structure

Financial Companies Insurance Companies Real Estate Companies Service Companies

BDO Private Bank, Inc. (100%)

BDO Capital & Investment Corporation (100%)

BDO Securities Corporation (100%)

CBN Grupo International

Holdings B.V. (60%)

Averon Holdings Corporation (100%)

PCIB Securities, Inc. (100%)

Express Padala (HK) Ltd. (100%)

Express Padala Frankfurt GmbH (100%)

BDO Leasing and Finance, Inc. (87%); BDO Capital & Investment Corporation

(11.11%)

BDO Rental, Inc. (100%)

Citibank Savings, Inc. (99.99%)

ArmstrongSecurities, Inc. (80%)

BDO Remit (Italia) S.p.A. (100%)

BDO Remit Limited (100%)

BDO Remit (Macau) Ltd. (100%)

BDO Remit (USA), Inc. (100%)

BDO Insurance Brokers, Inc. (100%)

Generali Pilipinas Holding Co., Inc. (BDO –

38.05% & BDO Cap – 1.95%)

BDORO Europe Ltd. (100%)

Equimark-NFC Development Corp. (60%)

SM Keppel Land, Inc. (50%)

Taal Land, Inc. (33%)

NorthPine Land, Inc. (20%)

Manila North Tollways Corp. (12%)

BDO Strategic Holdings Inc. (100%)

10

The Banker Top 1000 World Banks – Tier 1 Capital

11

Tier 1 Capital Ranking of Banks(as of 31 December 2013)

World Rank Local Rank

Country Name of Bank Tier 1 Capital ($ Mn)Current Previous

264 262 7 CHE Basier Kantonalbank

3,433

265 237 9 IND IDBI 3,429

266 303 11 ESP Ibercaja 3,421

267 284 38 USA Raymond James 3,419

268 251 1 PHL BDO Unibank, Inc. 3,413269 230 4 IDN Bank Negara

Indonesia3,406

270 273 5 AUT Bawag PSK 3,371

271 267 17 DEU Aareal Bank 3,361

272 344 30 CHN Bank of Hangzhou 3,360

273 271 6 MYS Bank Rakyat 3,351

The Banker Top Philippine Banks – Tier 1 Capital

12

Tier 1 Capital Ranking of Banks(as of 31 December 2013)

World Rank Local Rank

Name of Bank Tier 1 Capital ($

Mn)Current Previous

268 251 1 BDO Unibank, Inc. 3,413

314 333 2 Metropolitan Bank & Trust 2,758

382 386 3 Bank of the Philippine Islands

2,108

506 642 4 Philippine National Bank 1,394

590 655 5 Rizal Commercial Banking Corp.

1,099

680 663 6 Security Bank 880

681 702 7 China Banking Corporation

878

751 765 8 Union Bank of the Philippines

736

13

Credit Ratings

Moody’s31 Mar 14

Fitch30 Apr 14

Capital Intelligence08 Oct 13

Issuer/Debt Rating (IDR)

Long Term Baa3 BB+ BB+

Short Term Prime-3 B

Outlook Positive Positive Positive

Bank Financial Strength Rating (BFSR) D+ bb+ BBB-

Outlook Stable Stable

Baseline Credit Assessment (BCA) baa3

Adjusted BCA Rating baa3

Source: Moody’s, Fitch and Capital Intelligence

14

Trading Fact Sheet

Type Common Shares Stock Ticker BDO ISIN PHY077751022 Exchange Philippine Stock Exchage Par Value P10.00 Outstanding No. of Shares 3,580,875,328 Foreign Owneship Up to 40%

Type Sponsored Level 1 ADR ADR Ticker BDOUY ISIN US05537Y3045 Ratio 1 ADR = 10 Ordinary Shares Depositary Bank Deutsche Bank Trust Company Americas Contact Details ADR Broker Helpline Tel (New York) + 1 212 250 9100 Tel (London) + 44 207 547 6500 Email [email protected] ADR website www.adr.db.com

Depositary Bank's Local Custodian Deutsche Bank AG, Manila Branch

Stock Details

American Depositary Receipts (ADR) Program Details


I. OVERVIEW





16

(in PHP billion) 1H14 1H13 YoY %

Interest Income 30.6 27.0 13%

Interest Expense 5.9 7.1 -15%

Net Interest Income 24.7 19.9 24%

Non-interest Income 14.2 20.4 -30%

Fee Income 8.3 7.7 8%

Trading & FX 4.2 11.0 -62%

Others 1.7 1.6 6%

Gross Op Income 38.9 40.1 -3%

Operating Expense 24.2 21.1 15%

Pre-Provision Op Profit 14.7 19.0 -22%

Provisions 2.6 4.0 -38%

Taxes 1.1 0.9 22%

Net Income 11.1 14.1 -22%

1H14 Income Statement

17

(in PHP billion) 2009 2010 2011 2012 2013Interest Income 48.8 49.9 50.5 54.0 56.6

Interest Expense 18.3 15.8 16.9 17.9 13.4

Net Interest Income 30.6 34.2 33.6 36.1 43.2Non-interest Income 15.5 17.8 20.9 24.4 31.8 Fee Income 9.6 10.4 12.3 13.4 15.5

Trading & FX 3.6 5.8 5.6 8.2 12.8

Others 2.3 1.6 3.0 2.8 3.6

Gross Op Income 46.0 52.0 54.5 60.5 75.0Operating Expense 32.1 34.8 35.8 39.5 43.3

Pre-Prov Op Profit 13.9 17.2 18.7 21.0 31.7

Provisions 6.2 6.7 6.1 4.9 7.0

Taxes 1.7 1.6 1.7 1.6 2.1

Net Income 6.0 8.8 10.8 14.5 22.6

2009 to 2013 Income Statement

(in PHP billion) 2Q14 2Q13 YoY %

Resources

Reserve Assets 473.5 259.2 83%

Investment Securities 193.7 226.4 -14%

Gross Customer Loans 975.1 806.6 21%

Investment Properties 10.1 9.3 9%

Other Assets 32.1 29.0 11%

Total Resources 1,684.5 1,330.5 27%

Liabilities

Deposits 1,365.9 1,015.4 35%

Bills Payable/Sub-Debt 86.3 91.3 -5%

Other Liabilities 63.6 64.0 -1%

Total Liabilities 1,515.8 1,170.7 29%

Total Capital 168.7 159.8 6%

Total Liabilities & Capital 1,684.5 1,330.5 27%

18

2Q14 Balance Sheet

19

(in PHP billion) 2009 2010 2011 2012 2013Resources Reserve Assets 176.6 229.6 203.5 201.2 491.5 Investment Securities 171.7 197.3 188.4 237.3 227.9 Gross Customer Loans 472.7 541.5 670.1 769.0 911.5 Investment Properties (net) 13.8 12.0 10.1 9.1 10.4 Other Assets 27.2 20.5 22.1 25.0 31.5

Total Resources 862.0 1,000.9 1,094.2 1,241.6 1,672.8Liabilities Deposits 694.7 782.6 858.6 931.6 1,345.3 Bills Payable/Sub-Notes 54.6 89.0 97.7 100.4 97.3 Other Liabilities 44.9 40.5 44.1 55.2 65.8

Total Liabilities 794.2 912.1 1,000.4 1,087.2 1,508.4 Total Capital 67.9 88.7 93.8 154.4 164.4Total Liabilities & Capital 862.0 1,000.9 1,094.2 1,241.6 1,672.8

2009 to 2013 Balance Sheet

20

Financial Performance Indicators2009 2010 2011 2012 2013

Profitability Return on Ave. Common Equity 10.4% 11.9% 12.4% 12.0% 14.5% Return on Average Assets 0.7% 1.0% 1.0% 1.2% 1.6%

Margins and Liquidity Net Interest Margin (NIM) 4.1% 4.1% 3.5% 3.4% 3.2% Loans to Deposit Ratio 68.0% 69.2% 78.1% 82.5% 67.8% Liquid Assets to Total Assets 40.2% 42.6% 35.8% 35.3% 43.0%

Cost Efficiency Cost to Income Ratio 69.8% 66.9% 65.6% 65.2% 57.7% Cost to Assets Ratio 3.9% 3.7% 3.4% 3.4% 3.0%

Asset Quality NPL Ratio 5.0% 4.7% 3.4% 2.8% 1.6% NPL Cover 79.8% 92.1% 106.0% 125.7% 170.7%

Capital and Leverage Capital Adequacy Ratio 12.4% 14.0% 15.6% 19.1% 15.4% Tier 1 Ratio 8.4% 10.0% 10.0% 15.2% 14.3%

21

Loan Growth• Outpacing industry growth with broad market coverage

22

Deposit Growth• Remains strong, with focus on CASA growth

Net Income

23

• Sustained growth with record profits

8.810.8

14.5

22.6

11.1

0

2

4

6

8

10

12

14

16

18

20

22

24

2009 2010 2011 2012 2013 1H14

(P bn)

6.0

24

Note:Minimum CET1 and Tier 1 ratios under Basel III are inclusive of the 2.5% capital conservation buffer

Capital Adequacy Ratio (Consolidated)• Comfortably above Basel III standards to support medium

term growth plans

14.5%13.8%

15.8%

19.2%

15.4%

Basel IIMin Req

CAR

Tier 1

Basel IIIMin Req


I. OVERVIEW





26

Shareholder Structure

Source: Top 100 Shareholders as of 30 June 2014

• Majority owned by the SM Group

SM Investments Corp. 40.9% PCD Nominee Corp. (Non-Filipino) 32.0% PCD Nominee Corp. (Filipino) 9.4% Multi-Realty Development Corporation 8.8% Sybase Equity Investments Corporation 5.1% Sub-Total, Top Shareholders 96.2%

Top Shareholders as of 30 June 2014

Financial

Services

27

Property

Retail

Access to SM’s customer netw ork

• Alm ost 16,000 Ph i l ipp ine t enant s

• More t han 5 ,000 suppl iers

• 3.5 m i l l ion average da i ly foot t ra f f ic

• In-house business• Hom e m ort gage

f inanc ing for SM proper t y pro jec t s

New business opportunity

• Goodw i l l f rom t he SM f ranc hise

• J o in t produc t developm ent

SM expert ise• Middle m ark et

k now ledge• Ex pert ise in re t a i l

m ark et and rea l es t a t eBranch locat ions• Branc hes, ATMs in SM

m al ls

• Lead ing res ident ia l c ondom in ium developer in Met ro Mani la in t erm s of un i t s so ld

• Am ong t he fast est grow ing c om m erc ia l , resor t s and hot e l deve lopers in t he Phi l ipp ines

• Largest loc a l re t a i l c hain w i t h 245 st ores nat ionw ide

• Dom inant dom est ic m al l developer /operat or - 49 m al ls w i t h GFA o f over a lm ost 6 .4 m n sqm

• Biggest dom est ic bank ing operat ions

• In t erest s in BDO and Ch ina Bank

The SM Group• Harnessing synergies with the country’s largest conglomerates

7 directors out of 11 have over 100 years’ combined experience from both local and foreign banking institutions

3 directors are practicing attorneys, two of which head their own law firms, and the other a Philippine bar topnotcher and member of the State Bar of New York

• One of the strongest Board of Directors in the industry with extensive banking and related experience

ExperiencedBankers

Practicing Lawyers

1 director is a successful businessmen who has made his mark in the field of retailing

SuccessfulEntrepreneurs

Board of Directors

28

Board of Directors

Henry T. Sy SeniorChairman Emeritus — first appointed to the Board in 1976 Founder and Chairman of the SM Group of Companies Started his entrepreneurship career in 1958 Chairman of SMIC, SM Prime Holdings and SM Dev. Corp.

Jesus A. Jacinto Jr.Vice Chairman — first appointed to the Board in 1996 Chairman and President of BDO Insurance Brokers Chairman and President of Jaces Corp. MBA Columbia University

Teresita T. SyChairperson — first appointed to the Board in 1977 Serves as Director in multiple subsidiaries of BDO Vice Chairperson of SMIC and Director of other SM Group

companies, including Multi-Reality Dev. Corp.

Antonio C. PacisDirector — first appointed to the Board in 2004 Director of BDO Capital Corporate lawyer since 1967 Degree from Harvard Law School

Josefina N. TanDirector — first appointed to the Board in 2007 President of BDO Private Bank Former Director of EPCIB from 2005 to 2007 Former Director of Banco de Oro from 2001 to 2005

Nestor V. TanPresident — first appointed to the Board in 1998 Holds Directorships of numerous BDO subsidiaries Director of the Bankers Association of the Philippines MBA Wharton School

Cheo Chai HongDirector — first appointed to the Board in 2010 Director of UOB (Philippines), UOB Global Capital Private,

UOB (Thai) and Encus International Head of Corporate Planning and International of UOB Group

Jimmy T. TangIndependent Director — first appointed to the Board in 1984 Serves as Independent Director since 2002 Previously served as Director since 1984 Chairman and President of AVESCO Group of Companies

Gilberto C. TeodoroIndependent Director – first appointed to the Board in 2014 Served as Secretary of National Defense from 2007-2009 Masters of Laws from Harvard Law School Topnotcher, 1989 Philippine Bar Examinations

Jones M. Castro Jr.Independent Director — first appointed to the Board in 2012 Served as Head for South Asia and SEA at Wells Fargo Bank MBA Stanford University

Jose F. BuenaventuraIndependent Director — first appointed to the Board in 2013 Senior Partner of Romulo Mabanta Buenaventura Sayoc & De

Los Angeles Law Offices since 1976 Master of Laws from Georgetown University Law Center

Christopher A. Bell-KnightDirector — re-elected to the Board in 2013 Previously served as BDO Director from May 2005 - Sep 2010 Former VP and Country Head of the Bank of Nova Scotia Associate of the Chartered Institute of Bankers - British

• With broad business and professional experience

29

Arthur L. Tan Head — IT Operations With BDO since 2002 17-year banking experience

Dennis B. Velasquez Head — Central Operations With BDO since 1995 33-year banking experience

Evelyn L. Villanueva Head — Risk Management With BDO since 2002 33-year banking experience

Evelyn C. Salagubang Head — Human Resources With BDO since 2007 20-year experience in HR

Luis S. Reyes Jr. Head — IR & Corplan With BDO since 2003 32-year banking experience

Rafael G. Besa Head — Marketing With BDO since 2007 9-year banking experience

Ricardo V. Martin Head — Compliance & Legal With BDO since 2001 33-year banking experience

Lucy Co Dy Head — Comptrollership With BDO since 1985 37-year banking experience

Corporate Support

Walter C. Wassmer Head — Business Lending With BDO since 1997 33-year banking experience

Rolando C. Tanchanco Head — Consumer Lending With BDO since 2004 25-year banking experience

Jaime C. Yu Head — Branch Banking With BDO since 1997 31-year banking experience

Pedro M. Florescio III Head — Treasury With BDO since 2001 29-year banking experience

ServicesIntermediation

Nestor V. Tan President With BDO since 1997 32-year banking experience

Ador A. Abrogena Head — Trust and Investments With BDO since 1990 36-year banking experience

Jonathan C. Diokno Head — Remittance Origination With BDO since 2001 20-year banking experience

Josefina N. Tan Head — Private Banking With BDO since 2003 38-year banking experience

Eduardo V. Francisco Head — Investment Banking With BDO since 1999 27-year banking experience

Emmanuel T. Narciso SVP — Transaction Banking With BDO since 2011 30-year banking experience

Evylene C. Sison Head — Asset Management With BDO since 2010 23-year banking experience

Maria Theresa L. Tan General Manager — BDO Insurance With BDO since 2009 22-year banking and insurance experience

Geneva T. GloriaHead — Remittance Distribution With BDO since 2003 26-year banking experience

Senior Management Team • With extensive professional banking expertise

30

Anthony Chua Head — Global Operations With BDO since 2014 Over 30 years of banking experience


I. OVERVIEW





32

Corporate Governance

Five (5) principles of CG practices:

• Accountability• Fairness• Integrity• Transparency• Performance

• Strict adherence to best practices and ethical standards

Structure and mechanisms in place:

• Independent Directors

• Segregation of roles• Checks & Balances • Code of Conduct &

Business Ethics

Full transparency and timely information

disclosures

Protection of stakeholders’ rights and interests

33

Corporate Governance• Compliant with regulatory requirements

BoardBoard

Corporate GovernanceCorporate Governance

Minimum no. of Independent Directors (2) 4 Independent Directors Cert. Of Attendance – Board MembersCert. Of Qualification of Ind. Directors

Corporate Governance ManualCG Guidelines Disclosure TemplateSEC Annual Corp Governance ReportLeading Practices on Corp GovernanceCode of Conduct and Business Ethics

34

Corporate Governance• Recognition for CG initiatives

Silver Awardee Corp Governance Scorecard

Awardee for seven (7) consecutive years

Among the Top 50 Publicly-Listed Companies in the ACGS Scorecard 2013

35

Corporate Social Responsibility

• Disaster Response• Disaster Response

• Relief operations using the SM supply chain and ground handling by BDO branches

• Rehabilitation and reconstruction

• Shelter/housing and resettlement areas, health centers, school buildings/classrooms and multi-purpose halls

• Community Development & Capacity Building• Community Development & Capacity Building

• Sustainable livelihood, skills training & practical education

• BDO Foundation Micro-Finance Center for microfinance training and development programs

• BDO Foundation’s Advocacies

• Project BANGKA (motorized boats with fishing nets for San Dionisio fishing village in Iloilo)

36

Corporate Social Responsibility

• Construction/modernization of public health centers/ facilities

• BDO-Worldwide Fund for Nature (WWF) Philippines Partnership Project

• Go Green Program

• Healthcare• Healthcare

• Green/Environmental Initiatives• Green/Environmental Initiatives

• Energy conservation/efficiency, proper solid and hazardous waste disposal

• Tree planting, vegetable growing projects

• BDO Foundation’s Advocacies


I. OVERVIEW





“. . . the first time Finance Asia has given this award to a Philippine bank . . .”

Institutional Awards and Citations, 2013-2014

Best Asian Bank

Best Bank in thePhilippines

Best Private Bank

In the Philippines

Best Investment Bank

in the Philippines

EUROMONEY

Best Equity House

in the Philippines

Institutional Awards and Citations, 2013-2014

Excellence In CorporateGovernance

Excellence In Investor

Relations

Best Retail Bank

in the Philippines

Institutional Awards and Citations, 2013

Platinum Award

Most Organized Investor Relations

Among the Best Senior Management IR Support

Platinum Award

Among the Best Investor Relations Companies in the

Philippines

Excellence In Investor

Relations

Nestor V. Tan

One of Asia’s Best CEOs (Investor Relations)

Luis S. Reyes, Jr.

One of the Best IR Professionals (Phils)

Pedro M. Florescio

One of Asia’s Best CFOs

(Investor Relations)

Best FX Bank/ Provider

Best in Trade Finance

Fund House of the Year

Institutional Awards and Citations, 2013

Leading Counterparty

Bank

Thank you.www.bdo.com.ph

investor presentation - bdo€¦ · presentation outline i. overview ii. financial highlights iii....

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