Views From The Private Sector The Philippine-Japan Business Investment Forum 2018

Transcription

1 Views From The Private Sector The Philippine-Japan Business Investment Forum 2018 Iino Hall, Tokyo, Japan I 27 November 2018 Presented by: Eduardo V. Francisco

2 Agenda Introduction to BDO Views from the Private Sector What Can We Do For You Contact Details 2

3 INTRODUCTION TO BDO

4 4 About BDO The Philippines largest bank with total assets of P2.9 Tn (USD53.9 Bn). A full-service universal bank with one of the widest distribution networks consisting of more than 1,200 operating branches and over 4,000 ATMs nationwide. Part of the SM Group, one of the country s largest conglomerates.

5 Market Research Wide and extensive coverage in key areas North America - 3 Remittance Offices Europe Remittance Offices Middle East - 1 Representative Office Asia Full-service Branch 6 Remittance Offices 4 Representative Offices Philippines - 1,241 Branches 25 International Offices BDO ONB Total Luzon Metro Manila Visayas Mindanao Total Branches 1, ,241 As of 29 October

6 Business Franchise Market-leading positions in almost all business lines #1 #1 #1 Assets #1 Customer Deposits Under Remittance Loans Managemen s t #1 Credit Cards 1 Leading Trade Services Provider 2 Major Player in Cash Management 3 #1 Investme nt Banking 4 #1 Private Banking #1 Rural Banking #2 Leasing & Finance #1 Insurance Brokerage 5 Notes: 1 In terms of cardholder base, merchant acquiring gross billings, and credit card receivables 2 According to Asian Banking and Finance, Global Finance 3 According to The Asset, The Asian Banker, Alpha South East Asia 4 In terms of corporate issuances 5 Among insurance brokers in terms of premiums produced and commissions earned 6

7 Industry Ranking No. 1 among Philippine banks Total Assets 2,846 2,190 1,895 1,706 (in PHP billions) BDO Market Share 19% Gross Customer Loans 1,903 1,324 1,239 (in PHP billions) BDO Market Share 22% MBT BPI LBP PNB CHIB SECB UBP DBP RCBC MBT BPI LBP PNB CHIB SECB RCBC UBP DBP Customer Deposits Assets Under Management (in PHP billions) (in PHP billions) 2,323 BDO Market Share 20% 1,032 BDO Market Share 34% 1,560 1,537 1, MBT BPI LBP PNB CHIB UBP SECB DBP RCBC Source: Company data, consolidated statements of condition (SOC). Ranking as at 30 June 2018 BPI MBT LBP CHIB SCB RCBC PNB UCPB SECB Note: Financials prepared by banks under BSP s SOC requirements differ slightly from reported financials under SEC guidelines due to certain differences in accounting rules requested by the two authorities 7

8 Full Service Bank Complete range of financial products and services Corporate & Institutional Banking Corporate and middle market lending Trade finance Specialized lending Financial Institutions Cross-border financing Leasing & Finance Direct lease, sale and leaseback arrangements Installment paper purchases Receivable discounting and factoring Consumer Banking Auto Mortgage Credit cards Personal loans Merchant payment processing Rural Banking Salary loans Agricultural & business loans MSME loans Branch Banking Deposit & related products Over-thecounter transactions Cross-selling distribution platform Treasury Services Fixed income dealership Foreign exchange transactions Portfolio management Liquidity management Trust Banking Private Banking Investment Banking Stock Brokerage Insurance Transaction Banking Investment management Unit investment trust funds Living trusts Retirement funds Special trusts / custodianship Wealth advisory Customized portfolio management Underwriting & distribution of fixed income & equity securities Fin l advisory Project finance Loan syndication Equities trading Online stock trading Brokerage (property & casualty) Bancassurance (individual & group life insurance) Cash management Electronic banking ATMs Prepaid cards Merchant acquiring Remittances 8

9 VIEWS FROM THE PRIVATE SECTOR

10 How We See The Economy We are in agreement with the government, ADB, IMF of slower but still robust growth but we still believe 6.4% for 2018 and 6.8% in the medium term is realistic. Near-term headwinds include faster inflation, rising real borrowing rates, and reform execution risk. Nonetheless, the elections next year should provide a boost to the economy. We believe inflation will already peak in November 2018 and the full year inflation will be around 5.4%. We believe inflation next year will go back to around 4%. Base effects, liberalization of rice imports, stabilizing oil prices and currency, as well as tighter monetary policy all point to slower inflation in

11 How We See The Economy (cont d) As our monetary authorities have already increased rates several times this year, we believe there might be another basis points increase coming the next few months. We nonetheless believe the economy is well-positioned in a rising interest rate environment given very low public and private debt levels. As the BSP has turned more hawkish, our Philippine Peso exchange rate has already stabilized and we anticipate it to remain range bound at P53-54/USD 1 by end of We believe the country s low external debt, rising FDI inflows, and the prospect of rate hikes should support the currency. Nonetheless, a tighter Fed policy outlook amid wider CA deficit projections should continue to exert pressure on the PHP. 11

12 How We See The Economy (cont d) The government has an ambitious target to boost infrastructure spending and we appreciate and see it. Admittedly, it is more back ended and we will see the roads, bridges and airports in the next few years. Government has spent P437 Bn in infrastructure and other capital outlays during the first 7 months of the year, or roughly 40% of the P1.1 Tn infrastructure budget. We believe the government's other tax reform measures under TRAIN 2 (tax reform for acceleration and inclusion) can still be passed, although the window is narrowing fast because of the upcoming elections. These revenue measures will ensure the government retains its credit rating and we have no major concerns on the fiscal deficit widening or increased borrowings, given that the country's external debt has roughly halved since The 3% budget deficit cap for 2019 is still manageable. 12

13 How We See The Economy (cont d) Loan growth within the Philippine banking system is still strong at around 15-18% y/y, while non-performing loans remain low at less than 2%. A lot of this are also new borrowers who previously did not borrow from the banking system. These loans are productive and will help many companies. The PSE Index is now very competitive trading at around 16.5x 2018 earnings and 14.6x 2019 earnings. It is already roughly at a 5 year low. We recommend that investors look at conglomerates, banks and real estate companies with strong balance sheets, as these are the ones that stand to benefit in a rising interest rate environment. 13

14 How We See The Economy (cont d) There is a lot of M&A happening but it seems local families or conglomerates buying into other Philippine companies. Japanese investors need to show that they not only bring in financial support but have to make potential targets realize they can open up markets and bring strategic value. The Duterte administration has announced their preference for ODA and we appreciate that most of the ODA to date has come from Japan. There are a lot of pledges from other countries like China but we are waiting for actual signings and disbursements. 14

15 WHAT CAN WE DO FOR YOU

16 What Can We Do For You BDO is the largest bank in the Philippines with the largest distribution network. We would be happy to help you in your various needs as we can assist you in the following: Identifying and introducing you to potential local partners (whether alliance, JV, acquisition, PPP, unsolicited bid, etc) Assisting you in your partnership from due diligence, structuring, negotiations and funding Helping you lever your investment by providing possible acquisition finance (Yen, USD, PHP short term or long term financing via bilateral or syndicated loans) 16

17 What Can We Do For You Helping you hedge your investments in the country Providing permanent financing via corporate notes or bonds Refinancing debt at the target company level Tapping the capital markets by issuing SEC Registered Bonds in the country on our Philippine Dealing Exchange (PDEX) or listing in the Philippine Stock Exchange (PSE) 17

18 What Can We Do For You INVESTMENT OPPORTUNITIES Philippine corporates are cash rich and looking for investments abroad or brands to bring into the country. Possible tie ups even for Japanese SMEs would be welcome specially in food and retail. Filipinos love Japanese cuisine and fashion. BDO PARTNERSHIP WITH JAPAN BDO has Japan Desk as a fully-staffed, functional lending unit in the Bank's Institutional Banking Group. Japan Desk is dedicated to market and service Japanese corporate companies operating in the Philippines and retail needs of Japanese customers. Japan Desk is comprised of 34 personnel, of whom 5 are Senior Officers and 13 are Japanese-speaking. 18

19 Eduardo V. Francisco l evf@bdo.com.ph PLATINUM AWARDS (PAST 20 YEARS) Best Domestic Investment Bank Best Domestic Equity House Best Investment Bank in the Philippines: & 2017 Best Equity House in the Philippines: 2006, 2007, 2009, 2010, 2013, & 2017 Best Bond House in the Philippines: 2007, 2008, 2010, 2012, & 2015 Best Investment Bank in the Philippines: Best Bond House in the Philippines: , & 2016 Best Equity House in the Philippines: 2008, 2013 & 2016 Best Domestic Investment Bank in the Philippines: Best Corporate & Institutional Bank in the Philippines: 2015,2016 Project Finance bank of the Year in the Philippines : 2015 Best Debt House in the Philippines: Best Equity House in the Philippines: , 2010 Outstanding Local Underwriter : 2006 Best Investment Bank in the Philippines : 2013, 2014, 2018 Top Investment Bank, Philippines 2016 Best Investment Bank: Best Advisory House: 2017 Best Fixed Income House: Best Equity House: Best Project Finance House: Best Equity House in the Philippines: 2008, 2010 & 2015 Best Loan House in the Philippines : Syndicated Loan House in the Philippines : 2013, 2014 Top Corporate Issue Manager/Arranger :

20 Thank you. BDO Capital & Investment Corporation