BDO bullish on remittances

MANILA, Philippines - The Banco de Oro Unibank Inc. (BDO) has remained unperturbed by the March 11 disaster in Japan, and political unrest in the Middle East and North Africa (MENA) in relation to the inflow of remittances to the Philippines through the bank.

BDO’s business of remittances from overseas Filipinos in Japan is relatively small.

Then the political unrest in MENA is mostly in areas where there are a few overseas Filipinos, except for Libya.

BDO senior vice president and head of BDO Remittance Origination Jonathan C. Diokno said that the bulk of the overseas Filipinos are located in Saudi Arabia and the United Arab Emirates (UAE).

“In fact, those are the areas that play host to majority of the overseas Filipinos that remit to their beneficiaries in the Philippines,” Diokno said.

For BDO, its remittance business had always been strongest in these areas, followed by the European Union, North America and Canada, and the Asia Pacific region.

In the Asia Pacific region, BDO receives a lot of money transfers from Australia, Korea, Japan, Singapore and Taiwan. “There is a lot of promise in Australia with all its economic activities particularly in mining,” the BDO senior executive said.

For 2011, BDO is forecasting a double-digit growth rate or faster than the projected rate for the industry at about six to seven percent. “Since 2008, we have always been growing faster than industry,” Diokno said.

Since 2008, the universal bank of the SM Group of Companies has been the leader in the remittances business in the country’s banking system. It has been reported to account for 26 percent of market share of the formal sector, or remittances that are coursed through the Philippine banking system.

In the same year, the Bank of the Philippine Islands (BPI) accounted for 22-percent market share; the Philippine National Bank (PNB), 16 percent; the Metropolitan Bank & Trust Co. (Metrobank), 13 percent; and, the Rizal Commercial Banking Corp. (RCBC), seven percent.

It is widely perceived that the ranking has not changed since although the size of the market share may have been altered.

“Everybody is in the same frame of thinking, everyone is working hard to maintain their share. There is not reason for any dramatic changes,” he added.

BDO maintains a network of over a thousand bank correspondent arrangements globally, and hundreds of non-bank financial institutions relations including international money transfer companies.

But more than numbers, the BDO senior vice president puts greater premium on its relationships within the bank, the synergy between the bank and the rest of the SM Group, the relationship with partner banks and non-bank institutions, and the overseas Filipinos.

“BDO remittance business is not an island from the bank, from the rest of the world,” Diokno said. “There is a lot of cross selling activities within BDO, then there is the SM group that offers opportunities to expand from within.”

He said that there are a lot of opportunities also in establishing new relationships in growth areas, i.e., with banks, non-banks, and non-financial institutions like mom-and-pop stores.

“It is also all about picking the best partners,” the BDO executive added.

In his presentation at bank’s annual stockholders meeting, BDO president and chief executive officer Nestor V. Tan stressed that part of the bank’s outlook for 2011 is sustained of remittances, aside from economic optimism and stable foreign currencies rates.

“Key expectations for 2011 are moderate loan growth, margin pressures, growth in deposits, sustained growth in fee income, and normalized provisioning levels,” Tan said.

BDO has expanded its cash pick-up channels all over the Philippines, numbering more than 2,400. These include the over 700 BDO branches; 120 SM pick-up locations (YES Currency Exchange Counters in SM Department Stores, SM Business Services, Global Pinoy Centers, Savemore and Makro); 1,200 locations of financial services partners; and nearly 390 branches of rural bank partners.

“We will continuously search for ways to make remittances more secure, convenient and accessible for our clients by improving our existing channels and pursuing new means to address the growing requirements of the OFWs,” Tan said.

Last year, remittances coursed through the country’s banking system grew by 8.2 percent to hit a new record of $18.76 billion last year

Major sources of remittances came from the US, Canada, Saudi Arabia, Japan, United Arab Emirates, Singapore, Italy, Germany, and Norway.