BDO bolsters retail businesses and expands digital capabilities

• BDO enhanced its retail business and digital platforms primarily to improve market coverage and enchance operational efficiency
• Consumer lending rose to $9.34 billion, showing resiliency through the pandemic
• Strategic distribution network, along with digital capabilities, underpins the bank’s solid deposit franchise

BDO Unibank Inc. (BDO) was recognised as Most Selected Main Retail Bank in the Philippines and third in Asia Pacific in the BankQuality Consumer Survey and Ranking of Retail Banks 2022 .

BDO enhanced its retail and digital platforms to improve market coverage and operational efficiency

BDO invested in technology to expand its market coverage and ensure efficient operations. The Bank increased its presence in the underserved markets by offering deposit products and micro, small and medium-sized enterprise (MSME) loans via BDO Network Bank. BDO Unibank (the parent Bank), on the other hand, expanded its wealth management products and digital services. The Bank completed major strategic initiatives such as the Next-Gen IT upgrade, rolled out the end-to-end branch automation, and launched the Bank's electronic wallet, BDO Pay.

BDO obtained the top spot, followed by Bank of the Philippine Islands (BPI), LandBank, Metrobank and Union Bank in the BankQuality ranking of retail banks in the Philippines. BDO was chosen by most consumers as their main retail bank for having a re-engineered customer journey and fully digitised processes. 

To ensure consumer’s access to services, BDO has maintained most of its 1,542 branches open while adjusting the manpower needs and operating schedules during the COVID-19 pandemic. The bank leveraged technology to enable the active client participation as well as straightforward, open communication to minimise the effects of restricted face-to-face interaction during the lockdown. It continued to safeguard the well-being of both employees and clients by carrying out health and safety protocols in all branches and offices. It has implemented a vaccination programme for all employees in coordination with the SM Group and local government units. By end-2021, nearly 100% of the bank’s employees had been fully vaccinated.

Given the more optimistic economic picture for 2022, BDO aims to further grow and expand its market reach. The bank’s ongoing IT investments and initiatives are designed to re-engineer business processes that will improve productivity, efficiency and enhanced customer experience. To firmly position the bank for a long-term sustainable growth, it is expected to further strengthen its business franchise, improve operational resilience and create sustainable, quality earnings.

Its closest competitor, BPI has enhanced its existing digital platforms to deliver an efficient customer experience. BPI will introduce new apps to serve the different market segments and improve customer journeys. These enhancements will be introduced to BPI Online and BPI Mobile retail clients, the BanKo app for microfinance clients, and BizLink for corporate clients. It planned to launch an app for small and medium enterprises’ (SMEs’) payments and loyalty. Aside from the digital platforms, part of its digitalisation journey is the rationalisation of branches.

Consumer lending rose  to $9.3 billion, showing resiliency

The increase in home mortgage loans, which account for over half of all retail loans, highlights the resilience of BDO’s consumer lending  business. It posted an increase in consumer loans to $9.34 billion (PHP525 billion). The Bank financed the steady housing demand, leveraged business ties with leading real estate developers, and furthered online housing loan applications amid mobility restrictions.

BDO’s Home Deals enables customers to effortlessly view properties online from certified developers, calculate and compare financing options and deals, and submit housing loan applications online. Credit card usage increased by 13%, boosted by the gradual economic re-opening and promotions that encouraged online spending.

On the other hand, the demand for auto loans dropped by 14%, as a result of work-from-home and inter-province travel restrictions. BDO delivered a net income of $760 million (PHP42.8 billion) in 2021, marking a 51% increase against the $507 million (PHP28.2 billion) in 2020 and signaling the normalisation to pre-pandemic levels. The results translate to a 10.5% return on average equity (ROAE), up from 7.6% in 2020.

BPI remained focused on re-balancing its loan mix by prudently accelerating growth in the higher margin SME and consumer lending businesses. However, the pandemic has revealed the vulnerability of these sectors. Loan balances stood at $23.7 billion (PHP1.53 trillion), up 5.2% year-on-year (YoY), led by the growth in corporate, credit cards, SME and mortgages. Notably, mortgage, credit cards, and microfinance loans have rebounded to pre-pandemic levels. These promising results have put BPI back on track in repositioning its loan portfolio in favour of SME and consumer loans.

BDO, which obtained a score of 37.71% took the third spot in the Asia Pacific’s ranking of most selected retail bank. Singapore’s DBS and Malaysia’s Maybank were first and second placer respectively.

To view the full ranking, visit https://www.bankquality.com/global-rankings/most-recommended-retail-banks-in-asia-pacific

Strategic network distribution and digital capabilities underpins the Bank’s solid deposit franchise

To guarantee clients' continuous access to its products and services, BDO has modified branch manpower staffing and operating schedules. Additionally, the Bank continued its expansion efforts, opening a total of 72 branches, including those of BDO Network Bank to bring the consolidated domestic branch network to 1,521 in 2021 from 1,470 in 2020. With the bank's commitment to address the underserved regions, new branches were primarily placed in rural areas. The bank has a network of over 4,400 automated teller machines (ATMs), which remain the largest in the nation.  Deposits at the bank increased by 8% to $49.9 billion (PHP 2.8 trillion). BDO’s robust deposit growth can be largely ascribed to the 13% hike in current account/savings account (CASA) deposits, now comprising a record of 85% of the total deposits and serving as a stable low-cost funding source for the bank’s lending activities .

Meanwhile, BPI’s business volumes, clients’ activities, and profitability reflected these same trends in economic recovery last year. Notwithstanding the weak first quarter (Q1), the rest of the quarters showed sequential growth in loans and deposit balances, and improvement in asset quality. For 2021, the bank delivered a net income of $414 million (PHP 23.9 billion), higher by 11.5% compared to 2020, and an improved return on equity of 8.4% from 7.7% in the previous year. These results include lower loan loss provisions, record fee income, and well-managed total expenses. These gains helped balance the accelerated spending in technology and digital initiatives, all aimed at driving efficiency, increasing speed to market, and enhancing customer experience.

About the BankQuality Consumer Survey and Rankings 2022 Survey Methodology

The BankQuality™ Consumer Survey and Rankings interviewed 11,000 bank customers in 11 markets across the Asia Pacific region on their engagement, experience and satisfaction with their main retail banks.

• The online survey was conducted from 1 February 2022 to 30 March 2022
• The survey covered a total sample size of 11,000, comprising 1,000 respondents per market in China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Thailand, and Vietnam
• The respondents are between the ages of 18 and 65 years and hold at least one bank product

The BankQuality™ Score (BQS) is derived from the normalised net promoter score (NPS) of “main bank” institutions to a uniform scale of 0 to 1. A standardised z-score is then calculated from the normalised score, with mean set to 100, so that comparison can be made across markets. The final ranking excludes banks that achieved less than 30 “main bank” responses.

About The Asian Banker

The Asian Banker is the region’s most authoritative provider of strategic business intelligence to the financial services community. The global research company has offices in Singapore, Malaysia, Manila, Hong Kong, Beijing, and Dubai, as well as representatives in London, New York, and San Francisco. Its business revolves around three core business lines: publications, research services and forums.

www.theasianbanker.com