Honda reinforces BPI remittance business

The Bank of the Philippine Islands (BPI) is looking at a 20-percent growth in its remittance business this year. Last year, the bank’s entire remittance business grew by 17 percent to P2.7 billion.

Last year, the remittance business of BPI ranked it third or fourth unofficially. The traditional leaders in the remittance business among the country’s commercial banks are the Philippine National Bank (PNB), the Metropolitan Bank and Trust Co. (Metrobank), and the Equitable PCI Bank.

"We expect it to grow significantly this year," Raul Dimayuga, BPI Direct Savings Bank president said during the agreement signing between BPI, BPI Direct and the Honda Cars Philippines Inc. (HCPI).

The agreement between the three entities forms Honda CAREmittance, a program allowing overseas Filipino workers (OFWs) to avail of auto loans for Honda automobiles through the financial network of BPI.

Most of the businesses derived from OFW remittances generally result in fee-based earnings for the bank to new consumer loans such as housing loans.

The Honda tie-up is the firstever venture of the BPI group and the Japanese automobile manufacturer.

HCPI president and general manager Takashi Sekiguchi said they see a huge potential for new auto sales with the new arrangement. However, he failed to give estimates as it is still "too early in the day."

However, other Honda officials estimate that at least 200 units could end up being sold through the new arrangement. "We have been receiving so many inquiries in the past that we entered into this agreement with BPI, and that is also the basis of our estimates," they added.

BPI’s auto loan business last year was over P15 billion, mainly through BPI Family Savings Bank. That represents roughly a quarter of the consumer lending business of the Ayala Group’s banking subsidiaries.

Bank officials said the new Honda arrangement should lead to bigger auto and remitance business since the entire remittance business grew by 25 percent last year, and that the migration continues to expand unhindered.

The Philippines is the second largest migrant-sending country in the world, and the third largest remittance-receiving country.

Remittances (or money transfers) passing through the country’s banking system reached $7.6 billion in 2003, increasing to $8.6 billion the following year to another record figure of $10.7 billion last year.

The various mode of remittances are through banks (76 percent), door-to-door deliveries account for 20 percent, agency and local offices (over three percent), friends, co-workers, and other means account for a little over one percent.

Two-thirds of the OFWS landed on service, professional and tachnical jobs, and 88 percent of these are women.

There are at least nine million Filipinos working overseas, with nearly three million in the United States. Nearly one million are in Saudi Arabia, and over 400,000 in Canada. There are more than 300,000 each in the rest of Europe (excluding Italy) and in Japan.

Malaysia plays host to over 350,000, the rest of the Americas (330,000), East and South Asia (251,000), Australia (215,000), UAE, (206,000), HongKong, (197,000), Taiwan, (161,000), Italy (138,000), and Singapore, (136,000). Sea-based Filipinos reached over 230,000.

Government assumptions is that remittances will grow by at least another 20 percent ithis year as new and renewed applications are increasing by almost 30 percent annually.