Abstract
The purpose of this study is to compare the financial performance of the two universal banks in the Philippines, BDO and BPI. The study
used financial ratios to measure the financial performance of the three banks. Results of this study indicate which of the two universal banks under
BDO and BPI has a higher operating efficiency, asset use efficiency, and financial leverage for the year 2019 – 2020.
Introduction
A bank is a financial institution licensed to receive deposits and make loans. Banks may also provide financial services such as wealth
management, currency exchange, and safe deposit boxes. There are several different kinds of banks including retail banks, commercial or
corporate banks, and investment banks. In most countries, banks are regulated by the national government or central bank.
Banks are a very important part of the economy because they provide vital services for both consumers and businesses. As financial
services providers, they give you a safe place to store your cash. Through a variety of account types such as checking and savings accounts, and
certificates of deposit (CDs), you can conduct routine banking transactions like deposits, withdrawals, check writing, and bill payments. You can
also save your money and earn interest on your investment.
Banks also provide credit opportunities for people and corporations. The money you deposit at the bank—short-term cash—is used to lend
to others for long-term debt such as car loans, credit cards, mortgages, and other debt vehicles. This process helps create liquidity in the market—
which creates money and keeps the supply going.
Just like any other business, the goal of a bank is to earn a profit for its owners. For most banks, the owners are their shareholders. Banks
do this by charging more interest on the loans and other debt they issue to borrowers than what they pay to people who use their savings vehicles.
Using a simple example, a bank that pays 1% interest on savings accounts and charges 6% interest for loans earns a gross profit of 5% for its
owners.
Financial performance is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues.
The term is also used as a general measure of a firm's overall financial health over a given period. Analysts and investors use financial
performance to compare similar firms across the same industry or to compare industries or sectors in aggregate.
ABOUT THE COMPANY
Banco de Oro
Bank of the Philippine Islands
BDO is a full-service universal bank in the Philippines. It provides a
complete array of industry-leading products and services including
Lending (corporate and consumer), Deposit-taking, Foreign Exchange,
Brokering, Trust and Investments, Credit Cards, Retail Cash Cards,
Corporate Cash Management and Remittances in the Philippines.
Through its local subsidiaries, the Bank offers Investment Banking,
Private Banking, Leasing and Finance, Rural Banking, Life Insurance,
Insurance Brokerage and Online and Non-Online Brokerage services.
Bank of the Philippine Islands is the first bank in the Philippines and in the
Southeast Asian region. BPI is a universal bank and together with its
subsidiaries and affiliates, it offers a wide range of financial products and
solutions that serve both retail and corporate clients.
HISTORY
Banco de Oro
Bank of the Philippine Islands
On January 2, 1968, Acme Savings Bank opened its doors with only two The Bank of the Philippine Islands was established in 1851 and is the
branches in Metro Manila. Banco de Oro Savings and Mortgage Bank Philippines' first bank. BPI is a universal bank that serves both retail and
bought Acme in November 1976.
corporate clients through its subsidiaries and affiliates. Bank of America
(BPI) provides services in consumer and corporate banking as well as asset
In December 1994, BDO became Banco de Oro Commercial Bank. BDO
and payment management. Bank of Asia has nearly 3,000 ATMs and CAMs
became a universal bank in September 1996, earning the designation
in the Philippines, Hong Kong, and Europe (cash acceptor machines). BPI
Banco de Oro Universal Bank (BDO Unibank).
proudly continues this tradition by funding many private and public sector
In 1997, BDO Unibank created BDO Insurance Brokers as a subsidiary (it initiatives and businesses that promote economic growth and nation
is a bancassurance firm). In 1999, BDO Unibank entered into joint building.
ventures with Zamora Assurance, Generali and Jerneh Asia Berhad.
BPI is a leading financial services provider in the Philippines.
MISSION
Banco de Oro
Bank of the Philippine Islands
“We are in business for our customers, shareholders and employees. “We nurture every Filipino’s future with a trusted approach to managing
We shall deliver creatively innovative products and cross-sell the BDO money and innovation that makes life easier every day.”
Unibank Group’s services supported by procedures, systems and
processes which will ensure utmost customer satisfaction. We shall
recognize and reward excellence in our employees and shall provide
an environment conducive to maximizing their potentials as we work
cohesively as a team. We shall generate consistently high returns for
our shareholders.”
VISION
Banco de Oro
Bank of the Philippine Islands
“We shall be at the forefront of the leasing and financing industry in “Building a Better Philippines.”
the Philippines and in the Asia Pacific Region. We shall have the most
extensive market reach and shall be composed of highly trained,
technically competent and upright professionals working as a team and
contributing to the growth of the nation and the communities we serve.
Recognizing that the customer is the focus of our activities, we shall
lead the industry by providing modern and relevant financial services
which exceed their expectations.”
ORGANIZATIONAL STRUCTURE
Banco de Oro
Bank of the Philippine Islands
TARGET MARKET
Banco de Oro
Bank of the Philippine Islands
BDO is devoted to providing goods and services that exceed client The Bank of the Philippine Island's credo is that they desire to understand
expectations in terms of value and every area of customer service, and fulfill their clients' financial requirements, and that they would be
while staying wise and trustworthy stewards of their money.
trusted with the people's most essential financial transactions in order to
develop a long-term relationship.
PRODUCTS AND SERVICES
•
•
•
•
•
•
Banco de Oro
Lending (corporate, middle market, SME, and consumer)
Deposit-taking, Foreign Exchange, Brokering
Trust and Investments
Credit Cards
Corporate Cash Management and Remittances.
The Bank also provides Leasing and Financing, Investment
Banking, Private Banking, Bancassurance, Insurance
Brokerage, and Stock Brokerage services through its
subsidiaries.
•
•
•
•
•
•
•
•
Bank of the Philippine Islands
Consumer banking and lending
Asset management
Payments
Insurance
Securities brokerage and distribution
Foreign exchange
Leasing
Corporate and investment banking
TAGLINE
Banco de Oro
Bank of the Philippine Islands
“Make the Best Happen”
“We find ways”
NUMBER OF OPERATING
BRANCHES AND ATMs NATIONWIDE
Banco de Oro
BDO operates 1,500 branches and offices around the country, as well
as over 4,400 ATMs.
Bank of the Philippine Islands
BPI maintains a network of over 800 branches in the Philippines, as well
as around 3,000 ATMs and CAMs across the country (cash accept
machines).
ONLINE BANKING FACILITY FEATURES
•
•
•
•
•
•
Banco de Oro
Access your accounts 24/7
Check your account balances and transactions for the past 3
months
Transfer money (Fund Transfer) to any enrolled BDO
account and Send money (Wire Transfer) to local or
international banks through telegraphic transfer
Pay your bills and buy load
Reload BDO Cash Cards
Order more checkbooks & perform stop payment on issued
checks
•
•
•
•
•
Bank of the Philippine Islands
View the details of all your accounts
Pay bills and enroll new billers
Transfer funds to own and others (enrolled, other BPI and nonBPI accounts)
Manage your card control settings
View your electronic statements and more
FINANCIAL HIGHLIGHTS
2019 & 2020
Link for Annual Report
(links were take from the companies’ respective websites)
•
Banco de Oro
https://www.bdo.com.ph/sites/default/files/pdf/BDO%20Uni
bank%202020%20Annual%20Report.pdf
•
Bank of the Philippine Islands
https://www.bpi.com.ph/assets/aboutbpi/financialstatements/bpi
2020afs.pdf
Financial Statements Highlights
Banco de Oro
Bank of the Philippine Islands
Consolidated Financial Statements – Balance Sheet
Banco de Oro
Bank of the Philippine Islands
Consolidated Financial Statements – Income Statement
Banco de Oro
Bank of the Philippine Islands
Financial Ratios
Banco de Oro
Bank of the Philippine Islands
Trend Analysis for Assets, Liabilities, Equities, and Net Income
Banco de Oro
Assets
%
Liabilities
%
Equity
%
Net
Income
%
Bank of the Philippine Islands
Year (Amount is in Billion Pesos)
2016
2017
2018
2019
2020
2325
2668
3022
3188
3374
100
114
129
137
145
2107.4
2369.8
2694.1
2818.9
2981.9
100
112
128
134
142
217.6
298.3
328.1
370.6
393
100
137
151
170
181
26.2
100
28.1
107
32.7
125
44.2
169
28.2
107
➢ BDO’s Total assets has an upward trend from 2016 to 2020.
Assets
%
Liabilities
%
Equity
%
Net
Income
%
Year (Amount is in Billion Pesos)
2016
2017
2018
2019
1726
1904
2085
2205
100
110
121
128
1561
1723
1836
1935
100
110
117
124
165
181
249
270
100
110
151
164
2020
2233
129
1953
125
280
170
22.1
100
21.4
97
22.4
101
23.1
105
28.8
130
➢ BPI’s Total assets has an upward trend from 2016 to 2020.
➢ BDO’s Total liabilities has an upward trend from 2016 to
2020.
➢ BPI’s Total liabilities has an upward trend from 2016 to 2020.
➢ BDO’s Total Equity has an upward trend from 2016 to 2020.
➢ BPI’s Total Equity has an upward trend from 2016 to 2020.
➢ BDO’s Total Net income has an upward trend from 2016 to
2019. 2020’s net income has decreased by 62% compared to
last year. This is due to the pandemic where almost
companies have been affected.
➢ BDO’s Total Net income has an upward trend from 2016 to
2019. 2020’s net income has decreased by 33% compared to
last year. This is due to the pandemic where almost companies
have been affected.
➢ BDO suffered a higher percentage of decrease rate in net
income compared to BPI. However, BDO still has a
higher amount of net income, which is Php 107 Billion
compared to Php 97 Billion of BPI.
SUMMARY
Banco de Oro
The country’s biggest bank, BDO Unibank, reported a 78.6% plunge
in its net income in the 1st half of 2020, as it increased its loan loss
buffer amid the coronavirus pandemic.
BDO announced on Monday, July 27, that its net income in the 1st 6
months of the year stood at P4.3 billion, lower than the P20.1 billion
in the same period last year.
The bank booked total provisions of P22.4 billion in anticipation of
potential delinquenciGross non-performing loan (NPL) ratio
increased to 1.95%, while NPL cover settled at 139.4%.
“The provisions are anticipatory in nature, and meant to safeguard the
balance sheet. By recognizing the provisions upfront, the bank can
now focus on growing its business as restrictions under ECQ/GCQ
(enhanced community quarantine/general community quarantine) are
gradually relaxed,” BDO said.
Net interest income went up by 17%. Customer loans rose by 11% to
P2.3 trillion, while total deposits went up by 9% to P2.6 trillion.
Current and savings account deposits expanded 19%, now accounting
for 77% of total deposits.
As of end-June 2020, branch operations have been fully restored
from only 45% at the start of the ECQ in mid-March 2020. es due to
the coronavirus pandemic.
Bank of the Philippine Islands
BANK OF THE Philippine Islands (BPI) saw its net income drop by
25.7% last year as it set aside bigger loan loss provisions, with the
coronavirus pandemic continuing to affect the economy.
The Ayala-led bank’s net profit went down to P21.4 billion in 2020 from
P28.8 billion in 2019, based on the annual report disclosed by the
company.
This translated to a return on equity of 7.7%, down from 10.97% in 2019,
while return on assets stood at 0.98%, lower than the prior year’s 1.38%.
BPI attributed the income decline to higher provisioning for credit losses
on expectations that the economy’s slowdown would lead to higher
nonperforming loans (NPL). Its loan loss reserves stood at P28 billion
last year, five times as much as the P5.6 billion it set aside in 2019.
Meanwhile, its NPL ratio stood at 2.68%, higher than the end-2019 level
of 1.66%, based on its annual report for that year. Its NPL coverage ratio
was at 115.2% last year, up from the end-2019 level of 102.1%.
BPI’s revenues climbed by 10.5% year on year to P101.9 billion in 2020.
Its net interest income grew by 10.2% to P72.3 billion on the back of a
5.8% increase in its average asset base and a 14-basis-point rise in net
interest margin to 3.49%.
“Going forward, BDO believes that its solid balance sheet, sustained
business growth, and dedicated team effort will allow the bank to
weather the COVID-19 crisis and sustain its long-term performance
post-pandemic,” BDO said.
Non-interest income also went up by 11.1% from a year ago to P29.7
billion on bigger gains from securities trading. This, even as income from
fees fell 5% to P19.5 billion.
Source: https://www.rappler.com/business/bdo-earnings-reportjanuary-june-2020
The bank’s operating expenses were almost steady at P48.1 billion last
year, but its cost-to-income ratio improved to 47.2% from the 52.4% seen
in 2019.
BPI saw a 4.6% drop in its loan portfolio to P1.4 trillion last year “as a
result of a slowdown in corporate lending.” The main contributors to the
decline were the mortgage and microfinance loan segments, it said,
which expanded by just 6.6% and 5.7%, respectively.
Meanwhile, deposits with the bank edged up by 1.2% year on year to
P1.7 trillion. The bank said the 16.6% growth in current account, savings
account or CASA deposits partially offset the 33.2% decline in time
deposits. BPI’s CASA ratio stood at 79.6% last year, while its loan-todeposit ratio was at 82%.
BPI’s assets grew by 1.3% to P2.2 trillion at end-2020. Total equity was
a P279.8 billion, translating to a common equity Tier 1 ratio of 16.2%,
up from 15.17% in 2019 and a capital adequacy ratio of 17.1%, also
higher than the prior year’s 16.07%.
Source: https://www.bworldonline.com/bpi-posts-lower-profit-in-2020on-increased-loan-loss-reserves/