Mba Strategic Paper On Banking - Perfect For Students & Researchers

1Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.EXECUTIVESUMMARYThePhilippineBusinessBank(PBB)isabankinginstitutionpubliclylistedinthePhilippines.PBBisregulatedandsupervisedbytheBangkoSentralngPilipinas(BSP)andtheSecuritiesandExchangeCommission(SEC).PBBhasthelicensetooperateasathriftbankwhichfocusesonMicro,SmallandMediumEnterprises(MSMEs)markets.PBBisadoptinglow-costfocusstrategyasitsgenericstrategy.Itaimstoofferanichemarketwithproductsandservicesthatencourageclientelestopatronizethebank.PBBhaslowcostthancompetitiontomaintainclientsloyaltythusproductsorservicesarebeingofferatthelowestpriceinthemarket.Presently,theExternalFactorEvaluation(EFE)ofthePhilippinebankingindustrywherePBBbelongsshowsthatithasthecapacitytocapitalizeontheexternalopportunitiesandthecapacitytoprotectitselffromtheexternalthreats.Ontheotherhand,theInternalFactorEvaluation(IFE)ofPBBindicatedthatthebankhasstronginternalposition.Overall,theInternal-ExternalMatrixshowedthatPBBisingrowandbuildposition.BasedontheSWOTMatrix,PBBsproposedstrategyisgrowththroughbranchexpansionandstartonlinebankingsystem.AccordingtoarecentdatafromtheDepartmentofTradeandIndustry,MSMEsisaccountedfor99.6percentoftotalregisteredbusinesses.ThisfocusontheMSMEsmarketsisdrivenbythesizeandpotentialofthisparticularmarket.MostbrancheswillbelocatedinareaswithhighconcentrationofMSMEsbusinessessuchasNCR,CAMANAVAandCALABARZON.Andwiththeuseofonlinebankingsystem,eventually,it2Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.willimproveoperationalefficiencyofthebankthusthebenefitwillexpandcustomerbaseandwillsatisfythecustomers.Itisexpectedthatwiththeproperandsuccessfulimplementationoftheproposedstrategy,increaseinbusinesstransactionswillbegained.Eventually,itwillbringinshareholdersvalueandprofitforPBB.INDUSTRYANALYSISTHEPHILIPPINEBUSINESSBANKDefinitionoftheIndustryBanksareoftenplayingahugepartofourlivesnowadays.Itisoneoftheessentialfactorsinsavingmoneyoracquiringourdreamassetsthruloans.Wedepositourpaychecks,takeoutloans,carandhousingloanandsetupsavingsaccountsarethebasicservicesabankcanoffer.Tobetterunderstandwhatisbankingbusiness,listedbelowaretherolesofthebanksinthecommunity:A.Banksprovidefinancialservicesandresponsibleforoperatingapaymentsystem.B.Banksprovidesloanpaymentandloanfunctionsatbanks.Allowclientusecheckingaccountsandortofinanceourcarsandhousingloans.C.Banksoperatebyborrowingfunds-bytakingcreditfromdepositors.D.Banksborrowinthemoneymarkets.Banksborrowfromindividuals,businesses,financialinstitutions,andgovernmentswithsavings.3Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.E.Bankshelpswithinvestmentsandsystemsconducttradesordealwithcapitalmarket.F.Centralbanksdistributecurrencyandestablishmoney-relatedpolicies.Also,banksareprofit-seekingentitieswithstockholders.Theyobtainprofitsbychargingmoreinterestforloansandpayinglessinterestondeposits.Forexample,abankmaychargea3.91%interestrateona10-year,fixedratemortgage,butofferaninterestrateofonly0.15%onasavingsaccountofPhp100,000.00.Theyusethosedepositsandborrowedfundswhichcomeasliabilitiesofthebankandtomakeloansortopurchasesecuritiesthatwillsomehowbecomeassetsofthebank.Banksmaketheseloanstobusinesses,otherfinancialinstitutions,individuals,andgovernments(thatneedthefundsforinvestmentsorotherpurposes).Interestratesprovidethepricesignalsforborrowers,lenders,andbanks.(Whiting,2017)Ontheotherhand,theBangkoSentralngPilipinasandSecurityandExchangeCommissionmaintainedtheregulatoryandsupervisorycontrol.TheBSPisresponsibleforimplementingmonetarypolicyandtheprudentialsupervisionandregulationofthebankingsystem.TheSecuritiesandExchangeCommission(SEC)overseestheconductofthestockandbondmarkets,andtotheextentthatbanksparticipateinthesemarkets,theSECworkswiththecentralbankinsupervisingandregulatingtheactivitiesofthePhilippinebankinginstitutions(Bautista,2000,p.34-35).4Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.ThePhilippineBankingSystemThePhilippineBankingSystemispresentlycomposedofuniversalandcommercialbanks,thriftbanks,andruralbanksandcooperativebanks.BelowarethetypesofbanksasdefinedbytheBangkoCentralngPilipinas.Universalandcommercialbanksrepresentthelargestsinglegroup,resource-wise,offinancialinstitutionsinthecountry.Theyofferthewidestvarietyofbankingservicesamongfinancialinstitutions.Inadditiontothefunctionofanordinarycommercialbank,universalbanksarealsoauthorizedtoengageinunderwritingandotherfunctionsofinvestmenthouses,andtoinvestinequitiesofnon-alliedundertakings.Thethriftbankingsystemiscomposedofsavingsandmortgagebanks,privatedevelopmentbanks,stocksavingsandloanassociationsandmicrofinancethriftbanks.Thriftbanksareengagedinaccumulatingsavingsofdepositorsandinvestingthem.Theyalsoprovideshort-termworkingcapitalandmedium-andlong-termfinancingtobusinessesengagedinagriculture,services,industryandhousing,anddiversifiedfinancialandalliedservices,andtotheirchosenmarketsandconstituencies,especiallysmall-andmedium-enterprisesandindividuals.Ruralandcooperativebanksarethemorepopulartypeofbanksintheruralcommunities.Theirroleistopromoteandexpandtheruraleconomyinanorderlyandeffectivemannerbyprovidingthepeopleintheruralcommunitieswithbasicfinancialservices.Ruralandcooperativebankshelpfarmersthroughthestagesofproduction,frombuyingseedlingstothe5Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.marketingoftheirproduce.Ruralbanksandcooperativebanksaredifferentiatedfromeachotherbyownership.Whileruralbanksareprivatelyownedandmanaged,cooperativebanksareorganized/ownedbycooperativesorfederationofcooperatives.TheBSPlikewisereleasesselectedstatisticsonnon-bankswithquasi-bankingfunctions.Thisgroupconsistsofinstitutionsengagedintheborrowingoffundsfrom20ormorelendersfortheborrower'sownaccountthroughissuances,endorsementorassignmentwithrecourseoracceptanceofdepositsubstitutesforpurposesofre-lendingorpurchasingreceivablesandotherobligations.(BSP,2015).ThestudywillmostlyconcentrateontheThriftBankingsectorwhichoperatesinthePhilippines.6Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.EconomicCharacteristicsDemographicsThePhilippinesGDPhasa6%growththatindicatesthegrowingeconomyofthecountry.OneofthecontributingfactorstothisimprovementistheriseoftheMSMEs.MSMEsmeansaMicro,small,andmediumenterprises.Thistradeisengagedinthefollowingindustry-businessactivity/enterprise,agri-business/services,whethersingleproprietorship,cooperative,partnership,orcorporationwhosetotalassets,inclusiveofthosearisingfromloansbutexclusiveofthelandonwhichtheparticularbusinessentity'soffice,plantandequipmentaresituated.Theirassetsrangefrom:Micro:UptoP3,000,000Small:P3,000,001-P15,000,000Medium:P15,000,001-P100,000,000Large:aboveP100,000,000Theyprovideeconomywithacontinuoussupplyofideas,skills,andinnovationsnecessarytoencouragerivalryandtheproficientallocationofscarceresources.Theyalsocontributetothecreationofwealth,employment,andincomegeneration,bothinruralandurbanareas,thus,ensuringamoreequitableincomedistribution.AccordingtothePhilippineStatistics7Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Authority(2015),MSMEscontributearound35.7%ofthetotalsalesandcensusvalue-addedinthemanufacturingindustry.Thereare900,914establishmentsinthePhilippines.Ofthese,99.5%(896,839)aremicro,small,andmediumenterprises(MSMEs)andtheremaining0.5%(4,075)islargeenterprises.Asindicateinthetablebelow,majorityoftheMSMEsinoperationin2015canbefoundintheNationalCapitalRegion(NCR),with190,166businessestablishments;Region4-A(CALABARZON),131,011;Region3(CentralLuzon)with100,880;Region7(CentralVisayas)with53,218;andRegion1(Ilocos),47,996.Thesetopfive(5)locationsaccountedforabout58.4%ofthetotalnumberofMSMEestablishmentsinthecountry.TheseMSMEsarethetargetclientelesofbanks.Banklendingtosmallandmediumenterprises(SMEs)andmicroSMEshavebeenrisingoverthepastdecadeaslenderscontinuetodisplayrisktoleranceforsmallbusinessborrowers.SavingsbanksprimarilyfocusontheMSMESandSMEssectorasalendinggroup.8Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Figure1:GraphshowingthedistributionofMSMEsbyregionsourcedfromthePhilippineStatisticsAuthority(PSA)ThesourcesoffundofthePhilippinebankingindustryissteadilygrewinthelastsixyears.TheseshowsthosedepositorspatronizethebankingindustryinthePhilippines.Thesustaineddepositinflowsupportedassetexpansionandinvestments.9Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Figure2.FigureshowingthePhilippinebankingsystemssourcesoffundsourcedfromtheBangkoSentralngPilipinas(BSP)Ontheotherhand,thefigurebelowshowsthecomponentsofthetotalresourcesofabank.Theseresourcesarefromthedepositorsofthebankwhichservesasthesupplierwhenbeingofferedforloantocustomersandotherinvestments.Thisshowsmorefundsfromdepositorswillmeanmorefundsforlendingwherebankswillgettheirprofits.10Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Figure3.FigureshowingthePhilippinebankingsystemscomponentsoftotalresourcessourcedfromtheBangkoSentralngPilipinas(BSP)GovernmentPolitical,andLegalInthePhilippines,bankshouldbefamiliarwiththepoliticalsituationtoprojectstability.ThelawunderRepublicAct(RA)10641,AnActAllowingtheFullEntryofForeignBanksinthePhilippines,AmendingforthePurposeRA7721.Thelawallowsupto100-percentownershipofdomesticbanksbyforeignersandtheliberalizedentryofoverseasbanksandfinancialinstitutionsintothecountry.Liberalizationorlocalbankentry,entryofnewplayersin11Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.thebankingsectormayindicatestabilityoratleastagoodperceptionoftheindustry,butbankingoperationswillstillfollowthebasicprinciplesofcompetition.Andbecauselocalbanks'stabilityremainsuncertain,therewillonlybeprobabilitytohavelimitedsavingsavailablefromthesamepoolofdepositors.Meaningthis"forces"willputmorepressuretoThriftBanksbecausecompetitioncreatesmoreoptionsforthecustomers.TechnologyTheresariseinonlinebankingandmobilebankingaspayment,banktransferandbuyinghasbeendoneusingthenet.Thisleadbankstoadapttothischangesinthetechnologytomaintainclientsandtotargetmoredepositors.AccordingtoClaytonLocke(2017),ChiefTechnologyOfficeratIntelligentEnvironmentswrotethatthebankingindustry,integraltoourcommercialandpersonallives,hasalwaysevolvedwiththetimestoembracenewchallengesandconsumerattitudes.Technologyplaysanobviousandincreasinglyimportantroleinthisevolution.Thisleadstothetransformationoffinancialservicesinthebankingsystem.Thedigitaltechnologyprovidesaccesstocustomerstovirtualfinancialservices.Thisturnsofevents,allowsclientstoperformbankingtransactionsconvenient.Theycandopaymentsanytimeandanywheretheyareaslongastheyhaveconnectionstothenet.Withthat,BangkoSentralngPilipinasallowedbankstoengageinelectronicbankingasearlyastheyear2000astheyrecognizetheadvantagefromelectronicbankingintermsofexpandingclientreachandinimprovingfinancialaccess.Subsequently,banksengagedinelectronicbankinggrewbymore12Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.than12timesto119banksasofend-December2016fromninebanksasofend-2000,thebanksystemhad19,084automatedtellermachines(ATMs).(BSP,2016).Figure4.GraphshowingthenumbersofbanksengagedinE-bankingfacilitysourcedfromtheBangkoSentralngPilipinas(BSP)GlobalChallengeBanksshouldalsobereadyforinternationalcompetitionastheforeseenwiththeincomingASEAN.Banksmustdoreformonthepresentstrategiestotransform,enhancecapitalandsatisfyclientstoalignwithglobalregulations.Moreover,thebanksmustimproveservicesas13Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.theyneedtohaveaffiliatesbanksinothercountriestoserveourOFWs.Thesecircumstanceschallengethemtohaveabetteronlinebankingsystemtosynchronizewithotherbanksaroundtheworld.Especiallyforthethriftsbanks,theyhavetobereadyasthelocalbankingindustryhasbeenopeneduptoforeigncompetitionwiththeenactmentofRA10641in2014.Withthat,twoforeignbanksacquiredpresentdomesticthriftbanksafterthesaidlawwasimplemented.(Gov.Tetangco,2017).ThePhilippineThriftBanksThefocusofthispaperisaboutthriftbanksorasavingsbank.AccordingtoInvestopedia(2017),thriftbanksarefinancialinstitutionsthathaveaprimaryfocusontakingdepositsandoriginatinghomemortgagesoralsoknownas"savingsandloanassociationsthataresmallerthanmajorretailorcommercialbanks,andmorecommunity-focused.Thriftbanksfocusonservingtheircustomers,comparedtomajorbankinginstitutionsthataremorefocusonprovidingreturnsforshareholders.Alsototraditionalsavingsaccountsandhomeloanorigination,thriftbanksnormallyoffercheckingaccountsandotherbasicbankingservices,suchaspersonalloans,autoloans,andcreditcards.OnhisspeechduringtheannualreceptiontothebankingcommunitylastJanuary2017,GovernorAmandoM.Tetangco,highlightsthriftsbankssectorscapabilityandtheopportunityandthreatsitsfacing.Listedbelowaretheimportantrolesandsignificantcontributionsofthriftbanks:14Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.ThethriftbankingsectorcontinuestosupportthegrowthofthePhilippinebankingsystem.Itsconsolidatedassetsexpandedby8.3percentandreachedP1.1trillionasofend-December2016andtheindustryassetsbreachedtheonetrillion-pesomarkforthefirsttimeinlastyear.Atthesametime,capitalizationmovedupby6.1%whiledepositsimprovedbyatough9.7percent.TheMSMEsectorisacornerstoneofeconomicgrowth.SuccessfulMSMEsliberatepeoplefrompovertybycreatingjobsandservingascatalystsforgrowthintheircommunities.Withthese,thriftbanksmustmeetchallengeswiththedevelopmentofMSMEs.WiththehelpofBSPscontinuingcollaborationwiththeindustryandotheragenciesofgovernmentthiswillenablingregulatoryenvironmenttoincreaseaccesstofinanceMSMEsthruthriftbanks.Moreover,GovernorTetangcodiscussedthechallengesBSPhashelpedtoaddress:Theuseofcollateralanddevelopingproductlines.TheBSPinitiatedin2008,theCreditSuretyFund(CSF)Program.Thisenabledcooperatives,withoutsufficientcollateral,toaccessbankloansonthestrengthofacreditguarantee.TheProgramwasinstitutionalizedthroughthepassageofRepublicActNo.10744alsoknownasthe"CreditSuretyFundCooperativeActof2015."theyshouldfurtherenhanceMSMEs'accesstocredit.Paralleltothis,theBSPstrengthenedcreditriskmanagementguidelinesforbanks.Thisemphasizescashflowsandtheabilitytopayofaborrowerindeterminingcreditworthiness.15Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Throughthisregulation,theBSPissignalingthatcollateralsshouldplayasecondaryroleincreditdecisions.Thesameregulationexemptsstart-upenterprisesfromsubmittingdocumentsevidencingfinancialcapacityandbusinessplans;thesedocumentsareusuallyrequiredfromregularborrowersinthefirstthreeyearsoftheirbankingrelationship.Allthesearebeinglaiddown,sothatthriftbankscanhelpmeetthefinancingneedsofMSMEsandtheagriculturesector,insupportofcountrysidedevelopment.Thiscouldbeforinvestments,forworkingcapitalandforbusinessexpansion.(BSP,2017).Thedifficultyinexpandingreach,givenourarchipelagicconfiguration.Currently,ofthe1,634cities/municipalitiesinthecountry,35.6percentarestillconsideredunbanked.Establishingbankbranchesinlessurbanizedareasremainsachallengeduetogenerallylowpopulationdensity,geographicinaccessibility,andprevailingsocioeconomicsituations.Thesebarriersposeahugechallengetofinancialaccess.ThisisthereasonwhytheBSPhassetitssightsondigitalinnovationastheprimarycatalysttoreachinggreaterscale.PartoftheseinitiativesistheapprovalbytheBSPofthesettingupofmicro-bankingoffices(MBOs),whichasyouknowarelow-costbankinginfrastructurethatcanbeestablishedwhereitisnotfeasibletosetuparegularbranch.Wehavealsoputoutregulationsone-moneyandmobilebanking.Whilefinancialinnovationisrevolutionizingthemannerofdeliveringbankingproductsandservices,ithasplusesandminuses.TheopportunitiesFinTechbringscomewithheightened16Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.marketcompetitionandthreatsfromcyber-attacks.Thesehavesignificantimplicationsonbanksriskmanagementandconsumerprotectionframeworks.(BSP,2017).ThecompetitionfromthebigboysandnowtheadventofASEANintegration.Since,thelocalbankingindustryhasbeenopeneduptoforeigncompetitionwiththeimplementationofRA10641in2014,theseforcesmayputpressureonthriftbanksthatwillcompetitorscreatemoreoptionsfortheconsumer.Gov.Tetangcostatedthat,Indeed,therearemanyopportunitiestobetterserveyourchosenmarkets.Inpursuingtheseopportunities,weenjoinyoutoremainprudent.Inthisincreasinglyintegratedandglobalizedfinancialenvironment,itisimportantforthriftbankstoalwaysbeguidedbythetenetsofeffectiveriskmanagementandsoundgovernancestandards.(BSP,2017).Achangingglobalenvironment.AccordingtoGov.Tetangco(2017),thriftbanksshouldfullypreparetoaddresstherisksandchallengesthatwillcomewithgrowthopportunitiesinthisrapidlychangingbusinessenvironment.Moreover,thebankindustryshouldbeawarethatloanexposurestoparticularmarketsegments--suchasconsumers,MSMEs8,andagriculture-arevulnerabletomarketshocks.Forthisreason,theBSPwillcontinuetocollaboratewiththeCTBtomakesurethatourreforminitiativeswillleadtoarobustthriftbankingsector,adynamiccountrysideandastrongeconomythatfostersinclusivegrowth.(BSP,2017).17Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.ThePortersFiveForcesModelthatShapeIndustryCompetitionFigure5.IndustryAnalysisusingPorters5ForcesModelCompetitiverivalrywithinanindustry.CompetitioninthePhilippineBankingIndustryisconsideredhighlycompetitive.Banksfacetoughercompetitionbroughtbytheexistenceofvariousbanksincludingnon-bankswithquasi-bankingfunctions.Becauseofthiscompetitivecompetition,banksarestrugglingtopullclientsawayfromtheircompetitorbanks.Theyofferlow-interestfinancing,higherratesondeposits,bettercustomerservice,andgreaterconvenienceswiththeircompetition.Bargainingpowerofcustomer.Atfirst,letmeintroducethethriftbankscustomers-thepeopleborrowingmoneyfromthebanks.FromhereIcansaythattheBargainingPowerofCustomerishighbecausetheycanactuallychooselowerinterestratesofloanproducts.Ihave18Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.interviewedoneofPBBclient(Mr.EduardoQue,ownerofMCBrideCorporation),hesaidthathehascreditlinefacilitiesfromdifferentbanks.Whenheneedstoborrowfunds,healwayslooksforathriftbankthatofferslowerinterestpercentage.Threatofnewentrants.Thethreatofnewentrantsisconsideredhigh.ThelawunderRepublicAct(RA)10641,AnActAllowingtheFullEntryofForeignBanksinthePhilippines,AmendingforthePurposeRA7721.Thelawallowsupto100-percentownershipofdomesticbanksbyforeignersandtheliberalizedentryofoverseasbanksandfinancialinstitutionsintothecountry.Liberalizationorlocalbankentry,entryofnewplayersinthebankingsectormayindicatestabilityoratleastagoodperceptionoftheindustry,butbankingoperationswillstillfollowthebasicprinciplesofcompetition.Andbecauselocalbanks'stabilityremainsuncertain,therewillonlybeprobabilitytohavelimitedsavingsavailablefromthesamepoolofdepositors.Meaningthis"forces"willputmorepressuretoThriftBanksbecausecompetitioncreatesmoreoptionsforthecustomers.Bargainingpowerofsupplier.Astheresultoftheanalysis,depositsarethebankshighestcontributorsourceoffunds.Capitalistheprimaryresourceinanybankanddepositorsmayconsiderasthesupplierofthebank.Thebankssupplieroritsdepositorsbargainingpowerishighsincetheycanchoosewheretodeposittheirmoney.Therearedifferentkindsofbankswheretheycansavetheiraccountfromthriftbanks,ruralbanks,commercialbanksandtouniversalbanks.19Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Threatofsubstituteproducts.Thethreatofsubstituteproductsfortheindustryisalsoconsideredhighbecausethereareseveralnonbankinstitutionsthatoffersinsurances,mutualfunds,andfixedincomesecurities.ConclusionfortheCompetitiveForcesInconclusion,thecompetitiveforcesinthebankingindustryisHIGH,thisindicatesthatthebankingbusinessisnotrelativelyattractive.Though,possibleentrantsofforeignnewplayersarehighsincethereisalawgivingthemafullentryinthecountry,thiswilldiscouragethemtoenterthebankingsectorbecauseofthehighcompetitionandthereareothersubstituteproductsthatcanbeeasilyfoundbytheclients.Moreover,sincetherearesomanybanksintheindustrysupplierspowerarehighgivingthemchoiceswheretodeposittheirmoneyandthebargainingpowerofthecustomersisalsohighbecausetheycanchoosethebankwithlowestinterestrate.20Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.MajorPlayersTable1ComparativeAssetsandGrowthRatesofDifferentBanksNameofBankAssetsGrowthRateLoansGrowthRateDepositsGrowthRateCapitalGrowthRateChinaBankSavings86,248.233.52%62,195.274.85%74,088.833.41%9,163.20.08%CitySavingsBank76,676.428.87%67,990.779.90%54,673.3010.77%11,258.218.08%PBB73,357.824.07%56,492.797.87%59,397.71.97%9,865.171.41%PNBSavings38,563.342.50%32,594.064.20%25,891.587.10%11,591.39.80%CompetitorsChinaBankSavingsLocation:VGPCenterBldg.,6772AyalaAvenue,1226MakatiCityPresident:Mr.AlbertoEmilioV.RamosBranches:155officesAsubsidiaryownedbyoneofthecountrystopuniversalbankstheChinaBankCorporation.CBSavingshasimproveda3.52percentontotalassetsofP86,248.23billionasofend-March2017.Moreover,italsoimprovedintotalloanportfolioof4.85percentandnow21Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.amountstoP62,195.27billion.Itstotaldepositsnowamountingto74,088.83billionhave3.41percentimprovement,anditstotalcapitalreachedP9,163.20billionwith.08percentimprovementasofend-March2017.CitySavingsBankLocation:CitySavingsBankFinancialPlazacor.OsmenaBoulevard.andP.BurgosSt.,6000CebuCityPresident/ChiefExecutiveOfficer:Mr.CatalinoS.AbacanBranches:106officesCitySavingsBankisformerlyknownasCebuCitySavingsandLoanAssociation,athriftbanksubsidiaryofUnionBankofthePhilippines(UnionBank)andamemberoftheAboitizGroup.Ithasanimproved8.87percenttotalassetofP76,676.42billionasofend-March2017.Inaddition,CitySavingsBankalsoimproveda9.90percentonthetotalloanportfolioofP67,990.77billion.Italsohas10.77percentimprovementonitstotaldepositsandnowamountto54,673.30billion,andtotalcapitalreaching11,258.21billionor8.08percentimprovementasofend-March2017.PNBSavingsBankLocation:11/FAlliedBankCenter,6754AyalaAve.,MakatiCity1226President:Mr.JovencioD.Hernandez.Branches:55officesPNBsavingsbankiswhollyownedsubsidiaryandtheconsumerarmofPhilippineNationalBank(PNB).PNBSBstartedinSouthernLuzonasitbelievesthatprogresswouldmovesouthofMetroManila.WithPNBSBbenefitedfromthebusinessupsurge.PNBSavingsBank22Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.hasatotalassetofP38,563.34billionor2.50percentimprovementasofend-March2017.PNBSavingsBankimproveda4.20%ontotalloanportfolionowamountto32,594.06billion.ASofthemoment,itstotaldepositsisamountingto25,891.58billionandhave7.10percentimprovementandtotalcapitalreaching11,591.39billionor.80percentimprovementasofend-March2017.PhilippineBusinessBankLocation:350RizalAve.Ext.cor.8thAve.,GracePark,CaloocanCity1403President/ChiefExecutiveOfficer:Mr.RolandoR.AvanteBranches:139officesPBBistheonlystand-alonethriftbankamongitsclosecompetitors,witha4.07percentimprovementofassetstotalingof73,357.82billionasofend-March2017.PBBhasimproveda7.87percentwithitstotalloanportfolioamountingto56,492.79billion.Itstotaldepositsnowamountto59,397.71billionandimproved.97%percent,andtotalcapitalreaching9,865.17billionor1.41percentimprovementasofend-March2017.OpportunitiesandThreatsOpportunities1.Emergingmicro,small,andmediumenterprises(MSMEs).TheresearcherhasnotedintheprevioussectionthatthePhilippinesGDPhas6percentgrowthand99.5percentregisteredbusinessesinthecountrythatareaccountedforMSMEssector.Thisisanopportunityforbanks,especiallyforthethriftbanksastheseincreasingGDPareexpectedtobeemergedinMSMEs.Thiscanbeseenasanattractivemarketnichethatcanbeusedthenbybanksdrivenbythesizeandpotentialofthisparticular23Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.market.Basically,everynewclientthatabankmakescreatesnewmoneyintermsofprovidingthemloans.2.Mobileandinternettechnologyasalternativedistributionchannelforthriftbanks.Bankscontinuousinnovationinmobileandinternettechnologywillgiveopportunitiestoopenchannelsinreachingoutgreatercustomersespeciallyforthecountrysunbankedareas.Thisdigitaltransformationofbankingservicesisparalleltothemarketneeds.Thistechnologybecomesanessentialplatformtoaccessanddeliverfinancialservicestothebanks'customers.Inparticular,withtheuseofe-banking,customersaremoreconvenientindoingtheirtransactionintheeasiestway.THREATSTheadventofASEANintegration.Asdiscussedinourindustryanalysis,ithasbeenmentionedthatthefullentryofforeignbanksisallowedinthecountry.ThisisathreatasitsexpectedtocreateheightenedcompetitioninthePhilippinebankingsystem.Theseforeignbankscannowentertotheindustryandgetmarketshareagainstexistinglocalbankscateringtheirtargetcustomers.1.Universalandcommercialbanksexpandingintothriftbanksassubsidiaries.Presentbanksinthecountrywithenoughfundingcaneasilyexpandintothriftsbanksastheyhaveseenitsprofitability.Ortheycaneasilyacquiresmallthriftsbanksastheirsubsidiaries.Table2PhilippineBankingIndustrysExternalFactorEvaluation(EFE)MatrixOpportunitiesWeightRatingWeightedScoreEmergingmicro,small,andmediumenterprises(MSMEs).3041.20Mobileandinternettechnologyasalternativedistributionchannelforthriftbanks..302.6024Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.ThreatsTheadventofASEANintegration..203.60Universalandcommercialbanksexpandingintothriftsbanksassubsidiaries..203.60TOTAL1.03.0BriefExplanationofExternalFactorEvaluationExternalFactorEvaluation(EFE)Matrixhastotalweightedscoreof3.00.AstheresultshowsthatPhilippineBusinessBankisrespondingaboveaveragetotheenvironmentforexploitingopportunitiesandtoovercomethreats.ConclusionoftheIndustryAnalysisBasedwiththeindustryanalysis,thriftbankingsysteminthePhilippinesisveryhighcompetition.ItisnotrelativelyattractiveforentrantsofnewplayerasdiscussinthePortersFiveForcesModel.ButthereareopportunitiesfortheestablishedbankinthePhilippinesduetothegrowingeconomicmarket.Moreover,thereisanedgeforthriftbankstoexpandduetothethrivingMSMEs.Inaddition,thereisafuturewithonlinebankingbusiness.Thisisanopportunityforbankstostrengthencustomerloyaltyaswellasachancetoaddnewproductofferingstogainafootholdinthemarket.25Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.COMPANYANALYSISNatureoftheBusinessHistoryPhilippineBusinessBankwasincorporatedasaPhilippinecorporationandregisteredwiththeSEConJanuary28,1997asTotalSavingsBankandwasgrantedtheauthoritytooperateasathriftbankin1997.OnDecember16,1997,theSECapprovedthechangeofcorporatenameoftheBanktoPhilippineBusinessBank(ASavingsBank)whichtheshareholdersbelievebetterreflectstheBanksbusinessthrustandfocus.AsabankinginstitutionpubliclylistedinthePhilippines,PBBisregulatedandsupervisedbytheBSPandtheSEC.PhilippineBusinessBank(alsoknownasPBB)isaFilipinosavingsbankwhichfocusesoncorporateandsmallandmediumenterprisesmarketssegment.PBBprovidesclosetoafullrangeofbankingservicesandproductsincludingcashmanagement,retailandcorporatelending,depositproducts,internationaltradefinance,treasuryandtrustproducts.ThisfocusontheSMEmarketisdrivenbythesizeandpotentialofthisparticularmarket.AccordingtoarecentdatafromtheDepartmentofTradeandIndustry,SMEsaccountfor99.5percentoftotalregisteredenterprises.TheBankbelievesthattheSMEsegmentisthemajorsourceofentrepreneurshipandeconomicdynamismwhichprovidetrade,manufacturingandoutsourcingandservicesandhelpcontributetocommunityandlocaldevelopment.Lastly,theBankhadfocusintheSMEsegmentwhichisunderservedwithmostfinancialinstitutionsfocusingonthebankingrequirementsoflargecorporations.26Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.PBBhasgrowninanetworkofbranchespresenceinseveralcommercialandindustrialcentersofthecountryandrecruitedbranchandaccountofficerswithextensiveclientnetworksinthesespecificcommunities.TheBanksnetworkgrewfromtwo(2)branchesin1997to139branchesasofDecember31,2016withmostbrancheslocatedinareaswithhighconcentrationofsmallandmediumbusinessessuchasCaloocan,Malabon,Navotas,ValenzuelaandQuezonCity.PBBhasalsoaggressivelyexpandeditsbranchnetworkinhighlyurbanizedareasoutsidetheMegaManilasuchasDavao,GeneralSantos,Bacolod,andCebu.PBBbelievesthatclientproximity,understandingitstargetsbankingrequirements,thereputationofitsbranchandaccountmanagementstaffwithintheirrespectivecommunities,andtheoverallreputationofPBB,arethekeygrowthfactorsinthebankingbusiness.PBBhasalsomadestrategicacquisitionstospeedupexpansion.AmongtheruralbanksboastingconsiderabledepositandclientbasesthatithasacquiredinthepastincludeInsularSaversBankwhichhaseightbranches,BataanSavingsandLoanInc.withthreebranchesandCavite-basedRuralBankofKawitInc.(PBB,2010)PBBsProductsandServicesDepositProductsPBBbranchescaterstheoveralldepositproductsincludingSavingsaccount,Checkingaccount,Automatictransferaccount(ATA),Payrollaccount,Campussavers,TimeDeposit,Hi-greenfunds,Hi-5TD,FCDUsavings,andFCDUTimedepositaccount.TotaldepositsPhp58.908billionon2016,riseupby7.07%fromPhp55.016billionintheyear2015.27Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.LoanProductsPBBoffersvariousloanpackagesthatarehandledbythemarketinggroupsincludingCommercial,industrialanddevelopmentalloans,andConsumerloans.PBBhasreorganizeditsmarketingorlendinggroups,asthebankestablishedtheInstitutionalBankingGrouptostreamlinetheaccountmanagementprocesses-itiscomprisedofthefollowingunits:CommercialBanking,CorporateBanking,ConsumerBanking.ThefollowingunitsarelocatedonHeadOfficeandhasclusterspositionedinthestrategicbrancheslocationsupervisedbyAccountOfficers.Bankstotalloanon2016wasPhp51.437billion,roseby23.23%fromPhp41.738billionintheyear2015.TrustProductsTrustproductsarehandledbyTrustdepartmentincludingPBBdiamondfund-aUITF,Livingtrust,Employeebenefitplansundertrust,Trusteeofpre-needplans,Escrowagency,Mortgagetrust,Investmentmanagementarrangement/personalorcorporate.Ourtrustadvisorsarekeypersonsinguidingclientsaccordingtotheirpersonalneeds.TreasuryProductsPBBofferstreasuryproductswhicharemarketedanddistributedthroughourTreasurySalesandMarketingcenterwhichislocatedatTaguigCity.Treasuryproductsarecoveringinterbanklending&placement,foreignexchange,fixedincome,credit,equityandderivatives.CorporateSocialResponsibilityPBBhasresponsiblebankingbysupportingthesocio-economicagendaofpromotingcountrysidedevelopment-thebankfoundingwasallabouthelpingourcommunity,partneringwithlocalcompaniestohelpgrowtheirbusinessesandinvestinginthetowns/citieswherewe28Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.livedandworked.Fueledbythedesiretoserve,PBBsetouttobuildadifferentkindofbankandbankingculture-onethatinspiredouremployeesandconnectedwithourclients.AMYFoundation,Inc.(anacronymwhichstandsforAlfredoMacamYao,theownerofPBB)istheCorporateSocialResponsibilityarmofthebank.Itsmainobjectivewasgearedtowardstheupliftment,developmentandadvancementofstreetchildren,leadingtothegrantingofacademicscholarshipstodeservingandunderprivilegedchildrenofthePhilippinesociety.Likewise,itaimstoprovidefinancial,technicalandmanpowerexpertisetowardsthevariousprojectslinedupbytheFoundationinthefuture.Theadvocacycomesfromitsvisiontoimprovethequalityoflifeofdeprivedbutdeservingyouthbyproducingmorecollegegraduatesandprofessionalshencelesseningthenumbersofout-of-schoolyouth.Whichthefoundationsetsitsmissiontosendtocollegedeservingchildrenoftheunderprivilegedsectorbyprovidingtuitionfeesand/orschoolstipends,withthehopethattheywillhaveanimprovedlivingconditionandbeself-reliantinthenearfuture-undertakeprojectsandactivitiestoequiptheyouthwithknowledgeandskillsneededtoupliftthemselvesandtheirfamiliesfrompoverty.Thatmakesitasagoaltohaveacommunityfilledwithcollegegraduatesandprofessionals.PBBCorporateSocialResponsibilityinitiatives-Continuousscholarshipgrantsto93AMYFoundationscholars(numberofscholarsasofDecember31,2016).BeneficiaryofAMYScholarsenrolledinpartners(suchasPolytechnicUniversityofthePhilippines,PamantasanLungsodngMaynila,PhilippineNormalUniversity,etc.)andnon-partnerschools.29Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.OrganizationalStructurePhilippineBusinessBank-BoardofDirectorsProfiles30Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.31Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.32Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.PhilippineBusinessBankisprincipallyownedbythefamilyofChairmanEmeritusAlfredoM.Yao,alsothefounderofZest-OCorporation.Zest-OCorporationisabeveragecompanyinthePhilippinesandwasfoundedin1981.AccordingtoPhilstar(2015),for35years,Zest-OCorp.hasbeentheno.1juicedrinkinthecountry.AsidefromhisinterestinPBB,ChairmanEmeritusAlfredoM.Yaoisthefounderand/ormajorityshareholderofadiverserangeofbusinessinterests,fromfoodandbeverages,realestatedevelopment,airtransport,andpharmaceuticaldistribution.BelowconglomeratemaporgroupcorporatestructureshowsPBBslinkwiththeZest-OGroup.33Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.34Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.FinancialAnalysisThissectionwilldeterminePBBsstability,solvency,liquidityandprofitabilityinsustainingitsinvestment.35Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.FinancialHighlightsPBBTotalResourcesgrewby7.14percentfromP65.582billionin2015toP70.266billionby2016.TotalDepositsamountedtoP58.908billionin2016givesa7.07percentincreasefromP55.016billionlasts2015.PBBNetIncomeofP668.624milliongivessignificantincreaseby33.15percentfrom2015netprofitofP502.142million.Aweighty23.23percentgrowthinTotalLoanPortfoliowhichreachedby51.437billionfromthe41.738billionin2015.ThecapitalfundhasincreasedtoP1.1billionor12.98percentfromP8.47billionequitylasts2015.36Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.GivenbelowarethefinancialinformationandPBBsRatios:37Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.38Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Table3PhilippinesBusinessBanksFinancialRatiosRatios20162015LeverageRatioDebtRatio0.830.87DebttoEquityRatio6.156.74ProfitabilityRatioReturnonAsset0.950.76ReturnonEquity6.985.92GrowthRatioRevenue2.1110.74NetIncome33.150.17Intermsoftheratios,DebtRatiofor2015is0.87thismeansthatforeverypesoofPBBsassets,PBBhasP0.87ofdebt.DebtRatiofor2016is0.83whichalsomeansthatforeverypesoofPBBsassets,PBBhasP0.83ofdebt.ThecomputationonlyshowsthatPBBsTotalAssetamountishigherthanitsTotalLiability.DebttoEquityRatiofor2015and2016were6.74and6.15respectively.DebttoEquityRatioshowstheabilityofthebanktoborrowmoneyandtosustainitsbusinessactivities.The39Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.reasonbehindisthatPBBusestheinvestedmoneyfromthedepositorsandlendingittothebanksborrowers.Thecomputationresulting0.76percenton2015and0.95percenton2016ReturnonAssetmeansthatPBBisquitebelowinmanagingitsassetstogenerateearnings.However,ROAsindustryaverageforbankingis1.13percentwhichistypicallyquitelow.Amovementfrom0.76to0.95isstillanimprovement.PBBhas5.92percenton2015and6.98percenton2016ReturnonEquitybasedontheresultofcomputation,itreflectsthateveryamountinvestedbytheshareholdershasareturnof5.92percenton2015and6.98percenton2016.Areturninthe12-15percentrangeisaverage.Therefore,amovementfrom5.92and6.98isquitelowevenwiththeimprovement.PBBhasanincreaseof10.74percentduring2015and2.11percentduring2016initsrevenueandanincreaseof.17percentduring2015and33.15percentduring2016ofitsnetincome,thismeansthatthecompanyisdoingwellwithregardtoitsprofitability.Throughtheyears,PBBisimprovingonitsdebtratioanddebttoequityratioanditsuggestthatmoreandmoreconsumers(individualsandcorporate)aretrustingtheirsavingswiththebank.However,ReturnonAssetrationeedstomoreutilizeitsassets,theratiossuggestthatPBBisexperiencingasteady,ifnotgreat,growthdespiteinefficiencyofmanagingtheirresources.Forinstance,thoughReturnonEquityratiohasresultsapositivereturnonownersinvestment.Thebanksreturnonequityin2016suggeststhatthemoneyofcompanystockholdersisstillinneedtobeefficientandeffectiveinutilizinginvestments.Growthratiosimpliedthatthebanksmanagementwasstillabletocontrolitsexpensestogenerateprofit.40Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.However,itshouldalsoimproveinmanagingitsresourcestofurtherremainsustainableinthelongrun.LookingaPBBfromafinancialperspective,itissafetosaythatthefirmisstillearningaslotwith33.15percentinnetincomefrom2016versus0.17percentlast2015.Thebankstillmaintainspositivereturnonassetsandreturnonequityratios,meaningthattheresourcesarestillbeingutilizedtoanextentthatthebankmakesaprofit.ThegoodthingaboutPBBisthatovertheyears,theycontinuetoincreasetheirassets,andbyincreasingit,thisgivesthemabilitytohavefinancialstability,andatthesametime,havemoreflexibilityintheirbankingtransactions.CapitalAdequacyRatio(CAR).Ameasureoftheamountofabankscapitalexpressedasapercentageofitsriskweightedcreditexposures.UnderBSPregulationsBasel1.5,theriskbasedcapitalratioofabankrequiresthequalifyingcapitalaccountshouldnotbelessthananamountequalto10%ofitsriskweightedassets.RiskweightedassetsisthesumoftheBankscreditriskweightedassets,operationalriskweightedassets,andmarketriskweightedassets.Table4PhilippineBusinessBanksCapitalAdequacyRatio(AmountsinMillions)201620152014NetTier1Capital9,2418,7098,275Tier2Capital470376407TotalQualifyingCapital9,7119,0858,682RiskWeightedAssets41Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.CreditRiskWeightedAssets48,73843,38238,348OperationalRiskWeightedAssets3,9303,5803,233MarketRiskWeightedAssets4,4774,378139TotalRiskWeightedAssets57,14551,34041,720CapitalRatios:Totalqualifyingcapitalexpressedaspercentageoftotalriskweighted-assets17.0%17.7%20.8%NetTier1capitalexpressedaspercentageoftotalriskweighted-assets16.2%17.0%19.8%ThePBBCapitalAdequacyRatioTier1(CAR)andtheTotalCARat16.2%and17.0%decreaserespectivelyasofDecember31,2016.EventhereisadecreaseinthepercentageofCARfor2016,PBBcapitalpositionremainedabovetheBSPsminimumrequirements.ThisquitedecreaseintheCARofPBBisduetoahighincreaseintherequireddeductions.Theserequireddeductionsarethoseofunbookedvaluationreservesandothercapitaladjustments,totaloutstandingunsecuredcreditaccommodationstoDOSRI,deferredtaxassetnetofdeferredtaxliability,sinkingfundforredemptionofredeemablepreferredshares,goodwill,andotherregulatorydeductions.ThriftbanksarerequiredtocomplywiththeminimumcapitalrequirementofP2.0billionandPBBhascapitalfundwhichstoodatP9.57billionasofend-December2016.PBBhassatisfactorilycompliedwiththecapital-to-riskassetsratioasofDecember31,2016and2015.(PBB,2016,p.113)42Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.FinancialAnalysisConclusionTheresearcherconcludesthataftertheresultofcomputationonratios,PBBsustainabilityontheindustryisstillingoodpositiongiventhatthechangesofitstotalresources,totalloans,depositliabilities,capitalfundsandnetincomeisstillwithintheindustrystandard.Intermsoftheratios,profitabilityratiosarequitebelowintermsofefficiency,butthisisjustduetoanincreasingaggressivenessofthebankintermsoffinancingandmarketingofdeposits.Theseresultswillbeviewedtobenefitthebankinthelongrun.Ontheotherhand,PBBhasalsoadecreaseinitsCARbutnominalenoughtoensurethatthebankhasthecapacitytoabsorbsuddenlossesintheeventofsuddenmarketshock.StrengthandWeaknessesStrength1.DiverseandInnovativeServices.PBBhasathriftbankslicenseandfunctionsofacommercialbank.PBBisthefirstthriftbankallowedbytheBSPtoofferType2Derivatives&Type3LimitedUserAuthorityandthefirstthriftbankwhichhasanauthoritytoofferinternationaltradetransactions(bankguarantees&commercialletterofcredit).Priortotheamendments,undertheexistingregulatoryoftheBSP,onlyuniversalandcommercialbanksareallowedtooffertheirownproductstoclientsundereitheratype2(LimitedDealer)oraType1(ExpandedDealer)Authority.Withtheirslogan,makingthingshappentoday,thebankhasabletobuildastrongcustomerbasetotheextentofofferingdiverseandinnovativeservices.Currently,theSMEsegmentisgettingmoreinvolvedwithinternationalsuppliersandcustomers.43Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Thus,thehedgingwillhelpthemcontroltheirFXexposures,whichinturn,willmakethemmorecompetitive.2.StrongandCompetentManagement.PBBhasanadequatecapitalandstrongowner.PBBhasafirmandcompetentmanagementoperatedbytheYaoFamily,whichpioneeredtheestablishmentofZest-OGroupofCompanies.Further,thememberofBoardofDirectorshasyearsofexperiencesespeciallyinbankingandholdsavariousdegreeofeducationalattainment.WEAKNESSES1.BrandImaging.Clientsdonothaveaconsistentvieworimpressionofproductsandincompanyitself,PBBmarketinghasdifficultyincommunicatingwithprospectiveclientsandconvincethemtobuy.PBBhasaneedtoimprovethebanksmarketingstrategytoincreasebrandawarenessthroughoutthecountry.2.AdvancedTechnology.WhilePBBdoesnotofferonlineservices,mostoftheplayersoffere-bankingserviceswhichwillgivestreamlineprocessesandgiveseasyaccessandconvenienceforcustomers.44Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.EvaluationInternalFactor(IFE)MatrixTable5PBBsInternalFactorEvaluation(IFE)MatrixStrengthsWeightRatingWeightedScoreStrongandCompetentManagement.3041.20DiverseandInnovativeServices.203.60WeaknessesBrandImaging.302.60AdvancedTechnology.202.40TOTAL1.02.80ConclusionofCompanyAnalysisInternalFactorEvaluation(IFE)Matrixhastotalweightedscoreof2.8.Thisscoreindicatesthatthebankusesitsstrengthstoovercomeitsweaknesses.Inconclusion,PhilippineBusinessBankwasaboveaverage,indicatingthatthebankhasastronginternalposition.StrategicIssues1.ArethereplaceswithmanyMSMEswherePBBisstillnotpresent?2.DoesPBBneedtoadaptonlinebankingsystem?IsitneededbythecustomersespeciallytheMSMEs?3.HowwillPBBstrengthenitsbrandimage?45Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.STRATEGYFORMULATIONVisionBymakingthingshappentoday,PhilippineBusinessBankwillhelpbuildstrongbusinesscommunitieswherepeoplecanachievetheirdreams.MissionThebasisfortheBanksgrowthshallbeourcommitmentforhigherstandardseveryday,ineverythingwedoinprovidingcompetitiveproductsandservicesandthroughenthusiasticexecutionandteamworkinproducingsatisfaction-forourcustomers,ourshareholders,ourassociatesandourcommunities.SettingthePathTohelpourclientelemakethingshappentoday,byprovidinghighquality,professionalandresponsivebankingservices.TohelpSMEsinbuildingabroadeconomicbasebyhelpingthemsucceedintheirbusinessandmakingbankingservicesaccessibletothem.TobuildanurturingworkculturewhichrespectsindividualdifferencesandencouragesexcellenceTopromotethebestinterestsofourclients,stockholders,employeesandotherstakeholders.46Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Table6AnalysisofPBBsMissionStatementsComponentRemarksPBBsMissioncontains1.CustomerPBBaimstoprovidethehighestlevelofsatisfactionforourcustomers.Yes2.ProductorServicePBBcommitsforhigherstandardinprovidingcompetitiveproductsandservices.Yes3.MarketPBBhelpSMEsinbuildingabroadeconomicbasebyhelpingthemsucceedintheirbusinessandmakingbankingservicesaccessibletothem.Yes4.TechnologyPBBmissionstatethatthebankwillprovidecompetitiveproductsandserviceswhichwillmakebankingservicesaccessibletocustomers.Yes47Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.5.ConcernforSurvival,GrowthandProfitabilityPBBmissionclearlystatethatthebasisforthebanksgrowthshallbeourcommitmentforhigherstandardseveryday,ineverythingwedoinprovidingcompetitiveproductsandservices.Yes6.PhilosophyPBBhelpourclientelebymakethingshappentoday,byprovidinghighquality,professionalandresponsivebankingservices.Yes7.Self-ConceptPBBpromotethebestinterestsofourclients,stockholders,employeesandotherstakeholders.Yes8.ConcernforPublicImagePBBmissionclearlystatethatthebasisforthebanksgrowthshallbeourcommitmentforhigherYes48Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.standardseveryday,ineverythingwedoinprovidingcompetitiveproductsandservices.9.ConcernforemployeesPBBpromotethebestinterestsofourclients,stockholders,employeesandotherstakeholders.YesPBBsmissionstatementisattainableandtheobjectivesareclear.Allthe9componentsofagoodmissionarefoundinPBBsmissionstatement.Iamagreedwiththebanksmissionstatementandproposalofothermissionstatementisnotneeded.49Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.SWOTMatrixTable7SWOTAnalysisStrengths1.Strongandcompetentmanagement2.DiverseandinnovativeservicesWeaknesses1.Brandimaging2.AdvancedtechnologyOpportunities1.Emergingmicro,small,andmediumenterprises(MSMEs)2.MobileandinternettechnologyasalternativedistributionchannelforthriftbanksSO(S1,O1)OpeningofnewbranchesnearMSMEs(S2,O2)StartonlinebankingsystemWO(W1,O1)Prepareaggressivemarketingplanforbrandbuildingandenhancemarketingproducts(W2,02)ImprovedcomputerandofficeequipmenttoadaptwiththetechnologydevelopmentinpreparationforonlinebankingThreats1.TheadventofASEANintegration2.Universalandcommercialbanksexpandingintothriftsbanksassubsidiaries.ST(S1,T1)OpeningofnewbranchesnearMSMEs(S2,T2)Focusinpromotingthetype2derivativesandinternationaltradefinance,theuniqueproductofPBBWT(W1,T1)Establishthebrandnameinpreparationfortheglobalcompetitions(W2,T2)AdaptacoresystemforallbranchesforeasyconnectionandstreamlineprocessinsidePBBAsclearlyindicatedwiththeSWOTmatrixanalysis,themainstrategyPBBcandoincludesopeningnewbranchesneartheMSMEsandstartinganonlinebankingsystemwithfocusedmarketingcampaignforbuildingthebrandname.50Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.TheInternal-External(IE)MatrixFigure7.Internalandexternalmatrixanalysis.WiththeEFEandIFEmatrixresult,PBBscored3.00and2.80respectively,itconcludesthatithasapotentialtoexpandtogrowandbuildbranchesnearMSMEsandcanstartitsonlinebankingsystem.PBBcanuseitstrengthstoovercomeitsweaknessesandcopeupwiththepossiblethreats.51Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.TheBostonConsultingGroup(BCG)MatrixFigure8.Bostonconsultinggroupmatrixanalysis.PhilippineBusinessBankstandsatquestionmarkpositioninBCGMatrix.AsPBBhaverelativemarketshareof4.52percentandmarketgrowthrateof2.11percentcomparetothe8.89percentintheindustryaverage,thereisstillalotofgrowthpotentialforthethriftbankingindustry.Thebankshouldreceivelargeinvestmentstomaintainorstrengthentheirposition.TheappropriatestrategiesaremarketpenetrationandproductdevelopmentwhichthebankcanexpandtogrowandbuildbranchesnearMSMEsandcanstartitsonlinebankingsystem.52Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.GenericStrategiesandSuggestedStrategiesAtpresent,PBBapplyalow-costfocusstrategytoencourageborrowerstopatronizethebank.Moreover,thisstrategywasbeingimplementedtocatchtheattentionofMSMEsasthebestbanktomakeloansforbusinessstart-upsandexpansionduetolowinterestrates.ThiswasdiscussedduringtheKapihansaPBBwiththeexecutivesofPBBheldlastJune30,2017,atthePenthouseHeadOffice.Itspresident,Mr.RolandoR.Avante,stressedtheimportanceofthisstrategy.ThatPBBhaslowcostthancompetitiontomaintainclientsloyaltythusproductsorservicesarebeingofferatthelowestpriceinthemarket.Furthermore,PBBhasfocusonnichemarketwhereMSMEsarebeingprioritized.Withthis,PBBneedstoachievecostadvantageinawaythatisdifficultforrivalstoreplicatetheirtechniquesandstrategies.Throughadoptingthelow-coststrategy,PBBwillcontinuetosearchforcostreductiontohavesignificantstrengthinitsgoodpositionintheSMEmarketsegment.However,tomaintainthemarketsharePBBmustdoadiversificationstrategytoexpandandexploretoanewventure.Theycanapplymarketpenetration,productdevelopmentandhorizontaldiversification.Belowtableshowssomecomparisononscheduleoffeesandcharges:Table8ComparisononScheduleofFeesandChargesNameofBankCheckingAccount:CostofCheckbookPassbookReplacementInitialDepositFeeChinaBankSavings5,000165200CitiSavingsBank5,000350150Phil.BusinessBank2,00015510053Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.PNBSavings3,000200150ProposedStrategiesOpeningofnewbranchesnearMSMEs.TofurtherincreasePBBmarketshare,set-upbrancheswithsizablelevelsofdepositsanddemandforconsumerandMSMEsloans(areassuchasCaloocan,Malabon,Navotas,Valenzuela,Pasig,andQuezonCityaswellasprovincialareasinBulacan,Pampanga,Tarlac,Cavite,LagunaandQuezon.).Thiswilldriveprovinciallendinganddeposittakinginitiatives.Startonlinebankingsystem.ToenhancetheITinfrastructureandstartinternetbankingchannel(facilityoffersaccesstoaccountinformation(inquireaccountbalances),fundtransfer(transferfundsimmediatelytoanyPBBaccountoranaccountmaintainedatBancnetmemberbanks),andloanapplicationonline(fasterturnaroundtimeinloanapplication).ThiswaywillmakeeasybankingforthetargetMSMEsanddepositors.Advertisingofthecompany.PBBtostrengthenthebrandimage,marketingdepartmentmustplananaggressiveadvertisingeffortwhichwillleadtoincreaseinloanportfolioanddepositlevels.Thentheymustimplementadigitalstrategyfortheproposedonlinebankingsystem.54Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.IMPLEMENTATION7SFrameworkFigure9.McKinseys7smodelframework.Strategy.ThebankwillfocusonitsbranchexpansioneffortsinareassuchasCAMANAVA,Pasig,andQuezonCityaswellasprovincialareasinBulacan,Pampanga,Tarlac,Cavite,LagunaandQuezon.PBBaimstoexpanditspresenceinallmajorcommercialandindustrialareas,particularlythoseareasshowingrapidgrowthofMSMEsandentrepreneurialactivity.Structure.OrganizationalstructureofthebankiscomposedofBoardofDirectors,OfficeoftheChairman,OfficeoftheViceChairman,OfficeofthePresident,OfficeoftheChiefOperatingOfficeranditsdifferentgroups.ThePresidentsupervisesthebankunitsthatdirectlyreporttothePresidentandthegroupsofthebankarenamely:CorporatePlanning&InvestorRelations,HumanResourcesGroup,InformationTechnologyGroup,AccountManagement&LendingGroup,BranchBankingGroup,treasuryServicesGroup,CreditServicesGroup,LegalGroup,andunderOfficeoftheChiefOperatingOfficeristheOperation&ControlGroupand55Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.GSC&AdminGroup.ThePresidentandCEOalsoexercisesadministrativesupervisionovertheGroupsthatarereportingdirectlytotheBoardofDirectors.Systems.PhilippineBusinessBankhasawiderangeofsystemsthatfacilitateday-to-daybusiness.Theseincludepersonnelmanagementsystem,employeerecruitmentandselectionsystem,customerrelationshipmanagementsystemandtransactionprocessingsystem.PBBhasaspecificsystemthatsupportsandautomatedbanktransactions.EnhancementofthecurrentInformationTechnologyinfrastructureanddevelopanonlinebankingsystemisaimedatsupportingthetargetbusinessgrowth,andatthesametimemaintainingadvantagesbyseekingcustomertransactionsandmeansofafasterchannel.Thus,PBBwillofferyouaconvenientandsecurewaytotransactonline.Style.Currently,PBBisadoptingthemixofdemocraticandautocraticstylesofleadership.Basedonitsorganizationalstructure,thePresidentandCEOexercisesadministrativesupervisionoverthegroupsthatarereportingdirectlytotheBoardofDirectors.Asidefromthepositionsholdbythetopofficers,thebankhascommitteeswhichnormallythePresidentandCEOmakesdecisionsbutitencouragethemanagementtohaverecommendationsandfeedback.Staff.AsofDecember2016,PBBhas1,373totalnumberofemployees.Alloftheseemployeesarerecognizedbythemanagementofthebankasitsgreatestasset.Thebankhasrealizedtheneedtohavethebestpeoplewhichwilldeveloptoraiseacompetitiveorganization.56Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Skills.FortheenhancedperformanceofPBB,continuoustrainingandjobexposureisessentialforthedevelopmentoftheemployees.Trainingisoneofthemostimportantavenuesthroughwhichthebankhelpstheemployeesremainrelevantintheirfieldsofexpertise.Torealizethis,ourTrainingUnitproactivelylooksafteremployeestrainingneedstomeetandexceedrecognizedstandards.PBBhaslaunchedtheLeadership101,SituationalLeadershipandtheBOTP-BasicSupervisionandconductedtrainingprogramsincustomerserviceandservicequalityworkshopstopromotetheservicecultureofthebankwhereemployeesareaddressedforeffectivecustomerservice.SharedValues.Thebankprovideshighquality,professionalandresponsivebankingservices.IthelpsMSMEsinbuildingabroadeconomicbasebyhelpingthemsucceedintheirbusinessandmakingbankingservicesaccessibletothem.Table9LBPsMcKinsey7sFrameworkAligned(yesorno)Ifnot,ProposedSharedValuesServiceexcellence,teamwork,responsiveness;thebankprovideshighquality,professionalandresponsivebankingservices.Yes57Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.StrategyGrowthstrategythroughexpansionofbranchesandcontinuousinnovationthruenhancingITinfrastructure.NoOpeningofnewbranchesnearMSMEsandenhancetheITinfrastructureandstartnewonlinebankingsystem.StructureFunctionalorganizationstructuregovernedbyBODwithPresidentandCEOastheheadofthecompanyhavingdifferentgroups.YesSystemsCustomersupport,personnelmanagementsystem,employeerecruitmentandselectionsystem,customerrelationshipmanagementsystemandtransactionprocessingsystem.YesYesStyleMixedautocraticanddemocraticmanagementstyle.YesStaffPBBtotalemployeescomprisedasregularemployees;supplementsalltheneededposition.Staffshasannualappraisal,rewardsandfringebenefits.YesSkillsEmployeesskillsinrelationtoserviceofferingsandbusinesssupportYes58Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.StrategicPlansTable10PBBsStrategy,ProgramandActivitiesStrategyProgramActivities/TaskTimeFrameManpowerAccomplishmentsOpennewbranchesneartheMSMEsareas.EnhancetheITinfrastructureanddevelopanewonlinesystemAdvertisingofthecompanyLookforstrategiclocationsfornewbranches.DevelopmentofthecurrentwebsiteofthebankbyseekingcustomersatisfactionandmeansoffasterchannelMarketingdepartmentmustplananaggressiveApplicationfornewbrancheswithBSPandestablishingofnewbranchlocations.Lookforasystemprovider,meetandsigncontract.Testingandimplementationofthenewbankingsystem.TrainingsandseminarsforemployeesinpreparationforthenewsystemAmplifyadvertisingtoclientsandpotentialJanuary2018toDecember2022LessthanoneyearonetotwoyearsManagementCommittee,MarketingCommitteeandTrustInvestmentCommitteeInformationTechnologyCommitteeMarketingCommitteeEstablishmentofbranchesinkeystrategiclocationsnearMSMEsareas.Increaseitsdeposits,andincreasebrandawarenessimageandincreaseinmarketshare.Increasecustomertransactionsandefficientoperations,technologyadvancementandincreasenetincome.Througheffectiveadvertisement59Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.advertisingeffortinvestorsbymeansofTVadvertisements,internet,printads,andradio.andsalespromotion,therewillbeanincreaseinbrandawarenessimage,increaseinthenumberofclientsandmarketshare.FundingRequirementsOpeningofnewbranches.PBBwillbehavinglicenseapplicationfor15newbranchesin2018.ThisisinlinewiththebanksbranchexpansionprogramforwhichithasallocatedPhp200MillionofitsIPOproceedstocoverthecostofnewlicensesplusprocessingfeeswhichamountedtoatotalofPhp2.2MillioninthefollowingareassuchasCAMANAVA,Pasig,andQuezonCityaswellasprovincialareasinBulacan,Pampanga,Tarlac,Cavite,LagunaandQuezon.Advertisingofthecompany.AdvertisementswillcostmoreorlessthanPhp20Milliondependingonthemarketingprogramitwilluseasadsandsalespromotion.Startingonlinebankingsystem.SigningacontractwithasystemproviderwillcostmoreorlessthanPhp50Milliondependingonthetermsandconditionswiththeserviceprovider.PBBExpressOnlineService(PBBEOS)willbeprovidedforPBBclientswhichallowsonlinetransaction.Withthehelpofthisfacilityyoucannowinquirebalances,transferfundsandsubmitapplicationforloanswithouthustle.Howtouseit?Followitsstep-by-stepprocedures:Forbalanceinquiry:Step1:Log-intoyourPBBexpressonlineaccount60Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Step2:GotoBalanceInquirymenuStep3:InputtheAccountNumberandPasswordStep4:SubmittheRequestForfundstransfer:Step1:Log-intoyourPBBexpressonlineaccountStep2:GotoFundTransfermenuStep3:Fill-outtherequiredfieldsStep4:SubmittheRequestForloanapplications:Step1:Log-intoyourPBBexpressonlineaccountStep2:GotoLoansmenuStep3:Choosethedesiredloan(i.e.personalloan,carloan,housingloan)Step4:Fill-outtherequiredfieldsandattachedthecompleterequirementsStep5:SubmittheRequestBelowistheProcessFlowforOnlineLoanApplication:61Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Figure9.Processflowforonlineloanapplication.Figure10.PhilippineBusinessBanksstrategicmap.Foreffectiveimplementationofthebanksstrategy,strategicobjectivesarerun-downintomeasurableparametersanddesignatedtothevariousdivisionsofthebank,whichisthenpouredthroughtheentireorganizationalstructure.ThePBBstrategymapisusedtocreatesthelinkagesbetweenthefourdimensions:financialperspective,customerperspective,internalprocessperspectiveandlearningandgrowthperspective,andhowtheysupporteachotherinordertocreatevalueforthecustomerandimproveprofitability.Theproposedstrategyofthebankistoincreaseshareholdersvalue,increasemarketshare,improveassetqualityandincreasecustomertransactionsandcustomersatisfactionthroughexpandingitsbranchesandoffersanonlinebankingsystem.62Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Figure11.PhilippineBusinessBanksbalancescoreboard.PBBwillhaveaprovenbranchesanddigitalchannel,enablingthebanktogrowrevenuesandimproveshareholdervalue,improvementinturnaroundtime,expandcustomerbase,andsatisfycustomers.63Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.FINANCIALPROJECTIONSEconomicEnvironmentAssumptionsInthesectorofsupportformicro,small,andmediumenterprises,MSMEswilltakealargechunkofthepieforitisseenasacriticaldriverforthecountryseconomicgrowth.Theirsheernumberisoverwhelming,astheyaccountforover95%ofallbusinessesinthecountry.However,itremainssignificantlyunderservedbyfinancialinstitutions,accordingtotheDepartmentofTradeandIndustry.TheinterestonMSMEscontinuestobuildamoreinclusivevaluechain.ThePhilippineshasparticipatedin2017WorldTradeOrganization(WTO)forumtosupportandencourageourMSMEstoengageinInternationalTradetransactions.TheWTOmembersalsoseektoaddressandmakeasignificantcontributioninsupportingthegrowth,anddevelopmentofMSMEs.And,byconsideringtheopportunitiesitoffers,thiswillfostertheparticipationofMSMEsintheglobalmarket.ThesizeoftheopportunityofemergingMSMEsmarketlooksaveryattractivesegment,asitisassumedthatinthecomingyears,itisestimatedthatbankrevenuescouldjumpfromP3.5billionin2018toP5.9billionby2022-agrowthrate64Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.of10percentto15percentperannum.TheprojectedgrowthinMSMEbankingrevenuesisdrivenbythreeimportantfactors:highGDPgrowthinemergingMSMEmarkets,increasedpenetrationofalargenumberofunservedandunder-servedMSMEsandanincreasedtake-upoftheaddedbranchesandhigherrevenueononlinebankingproducts.Moreover,in2016,PhilippinesGDPhas6.9percentgrowthrateandthegovernmentislookingtogrowtheMSMEscontributiontoPhilippinesgrossdomesticproduct(GDP)to40percentnextyearfromitscurrentcontributionof35percent,accordingtoTradeAssistantSecretaryRafaelitaAldaba.Meanwhile,theincreasedpenetrationofalargenumberofunservedandunder-servedMSMEs,duetothisscenario,DTIcreateda5-yearMSMEDevelopmentPlan.Itisexpectedthatloansfromthistypeofclientswillincreaseby10percentto15percentannuallyastheplantargetsanimpressivetotalvalueadded.ThereisalsotheprogramcalledCreditSuretyFundimplementedbytheBSPwhichaimstohelpmicro,smallandmediumenterprises(MSMEs)byprovidingcollateralalternativesforandpaymentassuranceontheirbankloans.Also,BSPhassetitssightsondigitalinnovationastheprimarycatalysttoreachinggreaterscale,especiallyinlessurbanizedareas.PartoftheseinitiativesistheapprovalbytheBSPofthesettingupofmicro-bankingoffices(MBOs),whichasyouknowarelow-costbankinginfrastructurethatcanbeestablishedwhereitisnotfeasibletosetuparegularbranch.TheBSPhasalsoputoutregulationsone-moneyandmobilebanking.Lastly,Abiggertake-uponclientsdepositsfromtheaddedbranchesandhigherrevenueononlinebankingproductsisexpectedtogrow,asPBBisaccountedtohave159officesin2022whichwillgivea15%increasefrom139officesandourestimateassumesthattheonline65Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.bankingproductwillclose10percentto15percentinthenextfiveyears,thisisduetoasubstantialandcontinuousgrowthintheoverallconsumerlendingproductoftheindustry.Addingthesenewonlineproductswillcontributetoourannualgrowthintermsofthebanksgrossrevenue.Thus,therecommendedstrategiesforPBBareexpectedtomaximizethecompanysstrengthandcompetitiveadvantagewhileminimizingtheimpactofthreatsandeliminatingitspresentweaknesses.Specifically,PBBhasadvantagestoitsclosecompetitorsasthebankhasmorebranchesandhaveanonlinebankingsystem.Thesestrategieshavefinancialeffectstothecompanyandthefollowingarethefinancialprojectionsconsideringtheimpactofthesestrategies.FinancialAssumptionsA.FinancialAssets(DuefromBSP,loansandreceivables,andAFSsecurities)-increaseby10%forthefirsttwoyearsandincreaseby15%bynextthreeyears.B.FinancialLiabilities(deposits,accruedexpensesandotherliabilities)willincreaseby10%forthefirsttwoyearsandincreaseby15%bynextthreeyears.C.InterestIncomeisprojectedtoincreaseat10%forthefirsttwoyearsand15%onthenextthreeyears.D.IncomeonInvestmentisexpectedtoincreaseby10%forthefirsttwoyearsandincreaseby15%bynextthreeyears.66Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Table11PBBsFiveYearsProjectedStatementofFinancialPosition____________________________________________________________________________________________________________________________________________________________67Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Table12PBBsFiveYearsProjectedStatementofProfitorLoss______________________________________________________________________________68Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.______________________________________________________________________________ConclusionoftheStudyTheresearcherconcludethatthebranchexpansionnetworkandonlinebankingsystemwillincreasetransactionsandwilleventuallyleadtoanincreaseinmarketshare.ThecombinationofthesestrategieswillresultinanincreaseinPBBclients,asaresult,anincreaseinbusinesstransactions.Increasingincomewouldmeanthattherearemorecustomertransactions,moreinvestorsinvesting,moreloanapplicationswhichwouldleadtoexpansionandestablishmentofmorebranchesandeventuallyanincreaseinthemarketshare.Toenhancetheseprojectionsandtofullyfulfillthestrategies,PBBshoulddecreasetheirexpensesbyreducingtheiraccruedexpensesandotherliabilities.Thebankcannotdecreasetheinterestinthedepositsliabilitieswhichwouldtodecreaseincustomerdeposits.PBBhas16percent69Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.miscellaneousexpensesandrepresentationandentertainment,decreasingitwouldprobablydecreasethetotalotheroperatingexpenses.Theincreaseinliabilitiesisaresultofincreaseindepositsforthesucceedingyears.Increaseinliabilitieswilllikewiseincreasetheasset.Thesedepositsmaybelongonthecashbalanceandmajorpartofitwillbeinvestedindifferentinvestmentsliketradingsecuritiesandbonds.Increaseindepositswillincreasetheloansandreceivablesofthebanktherebyincreasingtheincome.ThetotalequityofPBBwillalsofollowtheincreasingtrend.Theincreaseinthenumberofbranchnetworks,whichincreasestotalassets,andwillalsoresultintheincreaseintheStockholdersEquity.Moreover,thebankwillcontinuetogrowwiththehelpofitsclientandemployeesandPBBwillcontinuetobetheoneoftheTop6ThriftBanksinthePhilippines.70Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.AppendixAPhilippineBusinessBank-DepositandInvestmentServicesSavingsAccountMinimuminitialdeposit/Placement:P1,000.00Minimummaintainingbalancetoearninterest:P1,000.00Interestrate:.25%p.a.EasymonitoringthruapassbookCheckingAccountMinimumInitialDeposit/Placement:P2,000.00(individual)P5,000.00(corporate)Maintainingbalance:P2,000.00(individual)P5,000.00(corporate)Non-interestbearingAutomaticTransferAccount(ATA)MinimumInitialDeposit/Placement:P2,000.00(SA)P5,000.00(CA)Minimummaintainingbalancetoearninterest:P2,000.00(Savings)Interestrate:.25%p.a.forS/AInterestcrediting:quarterlyforS/APayrollAccountMinimumInitialDeposit/Placement:P100.00(Savings)P100.00(Checking)MotherAccount-Checking:P50,000.00+(1,000.00xNo.ofEmployees)71Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Maintainingbalance:P100.00(Savings)P100.00(Checking)MotherAccount-Checking:P50,000.00+(1,000.00xNo.ofEmployees)Minimummaintainingbalancetoearninterest:P1,000.00(Savings)Interestrate:.25%p.a.(Savings)Interestcrediting:quarterly(Savings)CASA(ATA)(Auto-Transfer)Individual:MinimumInitialDeposit/Placement:P2,000.00(SA)P5,000.00(CA)Minimummaintainingbalancetoearninterest:P2,000.00(Savings)Interestrate:.25%p.a.forS/AInterestcrediting:quarterlyforS/ACorporate:MinimumInitialDeposit/Placement:P5,000.00(SA)P10,000.00(CA)Minimummaintainingbalancetoearninterest:P5,000.00(Savings)Interestrate:.25%p.a.forS/AInterestcrediting:quarterlyforS/ADailytransactionsrecordedinPassbook/BankStatementCampusSaversMinimumInitialDeposit/Placement:P100.00Maintainingbalance:P100.00Minimummaintainingbalancetoearninterest:P500.00Interestrate:.25%p.a.72Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Interestcrediting:quarterlyEasymonitoringthruapassbookOpentoallstudentsfromelementarytocollegeTimeDepositMinimumInitialDeposit/Placement:P1,000.00Minimummaintainingbalancetoearninterest:P1,000.00Interestrate:pre-determinedbasedontheamountandtermofplacementTermofDeposit/Placement:30to360daysInterestcrediting:atmaturityTransactionRecords:CertificateofTimeDepositHi-GreenFundsMinimumInitialDeposit/Placement:$20,000.00Maintainingbalance:$20,000.00Minimummaintainingbalancetoearninterest:$20,000.00Interestrate:pre-determinedbasedontheamountandtermofplacementTermofDeposit/Placement:6monthsInterestcrediting:atmaturityTransactionRecords:CertificateofTimeDepositHi-5TDMinimumInitialDeposit/Placement:P50,000.00Minimummaintainingbalancetoearninterest:P50,000.0073Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Interestrate:pre-determinedbasedontheamountandtermofplacementTermofDeposit/Placement:5years+1dayInterestcrediting:monthlyTransactionRecords:CertificateofTimeDepositFCDUSavingsIndividual:MinimumInitialDeposit/Placement:$100.00Maintainingbalance:$100.00Minimummaintainingbalancetoearninterest:$500.00Interestrate:.25%p.a.Interestcrediting:quarterlyCorporation:MinimumInitialDeposit/Placement:$500.00Maintainingbalance:$500.00Minimummaintainingbalancetoearninterest:$500.00Interestrate:.25%p.a.Interestcrediting:quarterlyEasymonitoringthruapassbookFCDUTimeDepositMinimumInitialDeposit/Placement:$1,000.00Minimummaintainingbalancetoearninterest:$1,000.0074Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.Interestrate:pre-determinedbasedontheamountandtermofplacementTermofDeposit/Placement:30.60.90.180daysInterestcrediting:atmaturityTransactionRecords:CertificateofTimeDepositPhilippineBusinessBank-LoanProductsandServicesCommercial,IndustrialandDevelopmentalLoansBillsPurchaseTermLoanOmnibusLineDiscountingLineTradeFinance-ImportLCOpening-Negotiation/DP/DA/Transaction-DomesticLCOpening-ExportLCAdvising/Negotiation-IssuanceofCreditLineCertification-IssuanceofBankGuaranteeAgriculturalLoansSpecializedLendingFacilitiesforSMEs-DBPIGLFandISSEPIIPrograms-SSSDevelopmentalLoansFloorStock/InventoryFinancingConsumerLoansAutoLoanSalaryLoanHousingLoanTrustProductsandServicesPBBDiamondFund-aUITFLivingTrustEmployeeBenefitPlansUnderTrustTrusteeofPre-NeedPlansEscrowAgencyMortgageTrustInvestmentManagementArrangement/PersonalorCorporate75Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.BusLoanContracttoSell(CTS)FinancingFacilitiesOtherBusinessServicesRemittanceServices-Mail&TelegraphicTransfers(Domestic&International)-WesternUnionMoneyTransfer-MoneyMoversLocalPaymentOrders-Manager'sCheck/GiftCheck/DemandDraftForeignDraftsSafetyDepositBoxFacilitiesNightDepositoryBox(availableatselectedbranches*TheFort,Calamba,BatangasCity)GroupPayrollServicesBillsPayment/CollectionServicesSSSPayments/PhilHealth76Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.AppendixBPhilippineBusinessBankBoardofDirectorsPositionNameChairmanEmeritusAlfredoM.YaoChairmanFrancisT.LeeViceChairmanJeffreyS.YaoPresident&CEORolandoR.AvanteDirectorHonorioO.Reyes-LaoDirectorAmadorT.Vallejos,Jr.DirectorDaniloA.AlcosebaDirectorDra.LeticiaM.YaoDirectorRobertoA.AtendidoIndependentDirectorPaternoH.DizonIndependentDirectorBenjaminR.Sta.Catalina,Jr.ManagementOfficersofPhilippineBusinessBankPositionNameChairmanFrancisT.LeeViceChairmanJeffreyS.YaoPresident&CEORolandoR.Avante77Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.ChiefOperationOfficerPeterN.YapSVP/TreasurerJosephEdwinS.CabaldeSVP/BusinessDevelopmentOfficer(Luzon)ReynaldoT.BoringotSVP/BusinessDevelopmentOfficer(VizMin)RosendoG.SiaFVP/HeadofCentralOperationsRoselleM.BaltazarFVP/HeadofComplianceAgustinE.Dingle,Jr.FVP/HeadofBranchBankingFelipeV.FriginalFVP/ChiefRiskOfficerBelindaC.RodriguezFVP/HeadofGeneralServicesLizaJaneT.YaoVP/HeadofAccountingRolandoG.AlvendiaVP/HeadofCommercialBanking3&4EfrenP.MercadoVP/HeadofCorporateBankingEduardoR.QueVP/HeadofConsumerBankingClarissaS.RiveraVP/HeadofLegalAtty.RobertoS.SantosVP/HeadofCorporatePlanningJohnDavidD.SisonVP/HeadofCreditServicesMiamiV.TorresVP/OICofInformationTechnologyEnricoT.TeodoroAVP/HeadofCommercialBanking2IrisP.AlmerinoAVP/HeadofCreditReviewMa.DorisC.DeChavezAVP/HeadofCommercialBanking1JacquelineA.KorionoffAVP/HeadofTechnologyControlTadeoD.MedranoAVP/HeadofSystems&MethodsLuningningT.RamosAVP/HeadofAuditLaurenceR.RapanutAVP/HeadofTrustTeresitaS.SionAVP/HeadofProductDev't.&CorporateAffairsJudithC.SonglingcoChiefLendingOfficerAngelineH.Hwang78Thismaterialisprovidedforeducationalpurposesonlyandisnotintendedforsubmissionasoriginalwork.Itservessolelyasreferenceandstudymaterial.ReferencesBSPSupervisedBanks/Statistics.(n.d.).RetrievedJuly20,2017,fromhttp://www.bsp.gov.ph/banking/bspup.aspThePhilipineBankingSystem.(n.d.).RetrievedJuly20,2017,fromhttp://www.bsp.gov.ph/downloads/Publications/2016/StatRep_2Sem2016b.pdfAboutMicro,Small,andMediumEnterprises(2015).Retrievedfromhttp://www.dti.gov.ph/businesses/msmes/msme-resources/msme-statisticsThriftBankDefinition|Investopedia.(2003).RetrievedJuly22,2017fromhttps://www.investopedia.com/terms/t/thriftbank.aspPhilippineThriftBanksinaChangingEnvironment.(2017).RetrievedJuly22,2017fromhttps://www.bis.org/review/r170404b.htmAnnualFinancialReportofPBB2016.RetrievedAugust4,2017fromhttp://www.pbb.com.ph/images/2016_annual_report.pdfRepublicAct10641AnActAllowingFullEntryofForeignBanksinthePhilippines.RetrievedAugust7,2017fromhttp://www.bsp.gov.ph/downloads/laws/RA10641.pdfAboutChinaSavingsBank(2017).Retrievedfromhttp://cbs.com.ph/about-china-bank-savings/AboutCitySavingsBank(2017).Retrievedfromhttps://citysavings.com.ph/about-usAboutPhilippineNationalBankSavingsBank(2017).Retrievedfromhttps://www.pnbsavings.com.ph/site/about