WILL OPEN LONDON BRANCH FOR STARTERS
BPI follows Filipino professionals abroad
BPI follows Filipino professionals abroad
BANK of the Philippine Islands is following Filipino professionals abroad this year with a UK branch it hopes will eventually allow it to sell savings and lending products to compatriots across Europe.
After India and Mexico, the Philippines is the third largest recipient of remittances in the world with more than $12.3 billion estimated sent home last year.
Nearly a quarter of the funds were expected to be channelled through BPI, the Philippines’ second-largest lender, owned by Singapore’s DBS Group and Philippine conglomerate Ayala Corp.
But being a conduit is not a big profit driver for BPI and it plans to get a British banking license shortly that will allow it to sell loans and credit cards to an estimated 35,000 Filipinos in the UK.
The British license — and a London branch — will give it a footprint into Europe. Over eight million Filipinos are working across Asia, Europe, the United States and the Middle East.
"The OFW (overseas Filipino worker) business today does not contribute a large part of the net income of the bank, that’s why we recognize it is a major opportunity," BPI president Aurelio Montinola told a news conference.
"Our approach is simple, we tell the people you go and you make your money outside, we will tie up with you. When it comes to the Philippines, pass it through us," he said, adding that BPI already had remittance offices in the UK, Italy and Spain.
Annual remittance inflows, which in 2005 accounted for around 10 percent of GDP, have expanded rapidly in recent years but Montinola said these annual leaps would not last.
"It’s going to become more regular. There’s probably about a year or two more of growth of more than 15 percent," he said.
In addition to traditional banking products, BPI will also offer overseas Filipinos payment services that will, for example, allow them to pay directly for school fees back home — removing the risk that spendthrift relatives will fritter the cash away.
BPI, meanwhile, kept its leading position in the remittance business last year, with its remittances up by 20 percent to $3 billion in January to November from a year earlier.
The second largest lender in 2005 wrestled the market leadership from perennial winner Philippine National Bank, transferring $2.4 billion of OFW money in 2005, Teresita Tan, senior vice president of BPI said.
The bank’s remittances account for 22-23 percent of the market, she said. The January-November remittances brought the bank on target in meeting its full-year expectations last year, Tan said.
"We have already reached our quota, but we are confident we will hit $3.2 billion in 2006," Tan said.
The bank is eyeing a 25-percent growth in remittances for 2006, Tan said. Housing loans and deposit accounts supported the remittance growth, she said.
"We did a lot of housing loans last year, we have about P1 billion to date. We also opened new accounts for deposits," she added.
The bank last year created a special savings account that targets departing OFWs. Tan stressed the bank expects to post another banner year in remittance this year but declined to state numbers.
"We will continue to lend to OFWs for their housing needs, as well as for investments. We will also continue to offer our savings account product for them." Tan said.
Earnings from remittance operations boost the bank’s fee-based income, Tan said, although the business is just a small part of the bank’s revenue stream.
The bank operates a virtual bank, BPIDirect, which gives OFWs access to the bank’s products and services including remittances. Sixth largest lender PNB transferred $2.2 billion of OFW funds last year equivalent to 20 percent of the market.
After India and Mexico, the Philippines is the third largest recipient of remittances in the world with more than $12.3 billion estimated sent home last year.
Nearly a quarter of the funds were expected to be channelled through BPI, the Philippines’ second-largest lender, owned by Singapore’s DBS Group and Philippine conglomerate Ayala Corp.
But being a conduit is not a big profit driver for BPI and it plans to get a British banking license shortly that will allow it to sell loans and credit cards to an estimated 35,000 Filipinos in the UK.
The British license — and a London branch — will give it a footprint into Europe. Over eight million Filipinos are working across Asia, Europe, the United States and the Middle East.
"The OFW (overseas Filipino worker) business today does not contribute a large part of the net income of the bank, that’s why we recognize it is a major opportunity," BPI president Aurelio Montinola told a news conference.
"Our approach is simple, we tell the people you go and you make your money outside, we will tie up with you. When it comes to the Philippines, pass it through us," he said, adding that BPI already had remittance offices in the UK, Italy and Spain.
Annual remittance inflows, which in 2005 accounted for around 10 percent of GDP, have expanded rapidly in recent years but Montinola said these annual leaps would not last.
"It’s going to become more regular. There’s probably about a year or two more of growth of more than 15 percent," he said.
In addition to traditional banking products, BPI will also offer overseas Filipinos payment services that will, for example, allow them to pay directly for school fees back home — removing the risk that spendthrift relatives will fritter the cash away.
BPI, meanwhile, kept its leading position in the remittance business last year, with its remittances up by 20 percent to $3 billion in January to November from a year earlier.
The second largest lender in 2005 wrestled the market leadership from perennial winner Philippine National Bank, transferring $2.4 billion of OFW money in 2005, Teresita Tan, senior vice president of BPI said.
The bank’s remittances account for 22-23 percent of the market, she said. The January-November remittances brought the bank on target in meeting its full-year expectations last year, Tan said.
"We have already reached our quota, but we are confident we will hit $3.2 billion in 2006," Tan said.
The bank is eyeing a 25-percent growth in remittances for 2006, Tan said. Housing loans and deposit accounts supported the remittance growth, she said.
"We did a lot of housing loans last year, we have about P1 billion to date. We also opened new accounts for deposits," she added.
The bank last year created a special savings account that targets departing OFWs. Tan stressed the bank expects to post another banner year in remittance this year but declined to state numbers.
"We will continue to lend to OFWs for their housing needs, as well as for investments. We will also continue to offer our savings account product for them." Tan said.
Earnings from remittance operations boost the bank’s fee-based income, Tan said, although the business is just a small part of the bank’s revenue stream.
The bank operates a virtual bank, BPIDirect, which gives OFWs access to the bank’s products and services including remittances. Sixth largest lender PNB transferred $2.2 billion of OFW funds last year equivalent to 20 percent of the market.
The bank is eyeing $2.4 billion in remittances for 2006. BPI expects its lending growth this year to remain in a range of around 6-8 percent, broadly the same as in 2006 despite record cheap borrowing rates.
The central bank, which cut borrowing rates on overnight deposits in November to stir risk-adverse local lenders into action, has said it expects double-digit loan growth this year.
But Montinola said while credit demand among consumers and small businesses was strong, the larger corporations were still opting to borrow in the debt market, where they could access larger amounts and an international pool of investors.
He added, however, that weaker overnight rates at the central bank and record low returns from government paper could force local banks to lend more.
"The environment will incentivize all of the banks."
Like rivals, BPI has been selling its bad debts and expects to offload another tranche of soured debt this quarter. Montinola declined to quantify the sale but said he expected BPI’s non-performing loan ratio to go below 6 percent of total loans.
The industry’s bad debts fell to 7.16 percent of total loans at end-October, the lowest since the Asian financial crisis. – (with reports from Reuters)
The central bank, which cut borrowing rates on overnight deposits in November to stir risk-adverse local lenders into action, has said it expects double-digit loan growth this year.
But Montinola said while credit demand among consumers and small businesses was strong, the larger corporations were still opting to borrow in the debt market, where they could access larger amounts and an international pool of investors.
He added, however, that weaker overnight rates at the central bank and record low returns from government paper could force local banks to lend more.
"The environment will incentivize all of the banks."
Like rivals, BPI has been selling its bad debts and expects to offload another tranche of soured debt this quarter. Montinola declined to quantify the sale but said he expected BPI’s non-performing loan ratio to go below 6 percent of total loans.
The industry’s bad debts fell to 7.16 percent of total loans at end-October, the lowest since the Asian financial crisis. – (with reports from Reuters)
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