Republic of the Philippines

CENTRAL BICOL STATE UNIVERSITY OF AGRICULTURE

San Jose, Pili, Camarines Sur 4418
ISO 9001:2015 www.cbsua.edu.ph
TÜV-R 01 100 1934918

ASSESSMENT 1 IN

FINANCIAL

MANAGEMENT
Prepared by:
Dan Louie San Agustin

Submitted to:
Mrs. Marie France Nuñez

FINANCIAL MANAGEMENT
ASSESSMENT 1
 Financial Management Updates on Banks

Name: Dan Louie San Agustin Course and Section: BSAB 2B

Conduct a research about the history and financial management updates of one of each of the
following:

1. Commercial Bank
2. Rural Bank
3. Commercial and Savings Bank may be local or international

Rubrics adapted from:

https://www.ucdenver.edu/faculty_staff/faculty/center-for-faculty-
development/Documents/Tutorials/Rubrics/documents/ex_writing_sample.pdf
I. COMMERCIAL BANK - Banco de Oro (BDO) Commercial Bank

A. Brief Description

BDO Unibank, Inc, commonly known as Banco de Oro (BDO), is a Philippine banking
company headquartered in Makati. It is the largest bank in the Philippines by total assets and
the 15th largest in Southeast Asia as of March 31, 2016. BDO Unibank is also a member of
the SM Group. It is also the largest bank in the country by market capitalization.

The company is a full-service universal bank. It offers products and services to the retail and
corporate markets, including lending (corporate, SME, mid- market, and consumer), deposit-
taking, foreign exchange, brokerage, trust and investment, credit cards, corporate cash
management, and remittances. Through its subsidiaries, the Bank provides leasing and
financing, investment banking, private banking, bancassurance, insurance brokerage and
stock brokerage services. BDO has the largest distribution network with over 1,300 operating
branches and more than 4,000 ATMs nationwide.

BDO Unibank, Inc. (the Bank) is a banking company that offers a range of products and
services, including retail banking, lending (corporate, commercial, consumer, and small and
medium enterprise (SME)), treasury, trust, credit cards, corporate cash management, and
wire transfers. The bank operates in five segments: Commercial Banking, which handles
lending (corporate and retail), trade finance and cash management for corporate and retail
clients; Investment Banking, which provides services to corporate clients outside of
traditional lending and deposit products; Private Banking, which offers traditional and non-
traditional investment and structured products to retail and institutional clients; Leasing and
Financing, which offers direct leasing, sale and leaseback arrangements and real estate
leasing; and Other, which includes asset management, insurance brokerage, property
management, remittance, accounting services, credit card services and computer services.

B. History

Banco de Oro (or today it is also called BDO Unibank, Inc., which is its legal name) was
created in 1968 with the name Acme Savings Bank. At that time, it had only two branches.
Then in 1976 the magnate Henry Sy together with his group of Sy Group companies acquired
this bank and gave it a name of “Banco de Oro Savings and Mortgage Bank”. In 1994 bank
became commercial and in two years its name was changed to a “Banco de Oro Universal
bank” or as we used to call it nowadays- “BDO Unibank”.

BDO Unibank eventually became involved in insurance services in 1997 by establishing a

subsidiary called BDO Insurance Brokers. In 1999, BDO Unibank expanded its insurance
services through partnerships with Zamora Assurance and Assicurazoni Generali, one of the
world's largest insurance firms, and Jerneh Asia Berhad, a member of Malaysia's Kuok
Group. Later, BDO Unibank partnered up with its insurance affiliates, which are Generali
Pilipinas Life Assurance Company and Generali Pilipinas Insurance Company, in March
2000.

Merger with Equitable PCI Bank

The new BDO Unibank retained the ticker symbol of the old Banco de Oro. 1.3 billion BDO
shares was issued in exchange for 727 million Equitable PCI Bank shares, which was de-
listed on June 4, 2007.

The current bank is the product of the Banco de Oro–Equitable PCI Bank merger after the
boards of both Banco de Oro Universal Bank and Equitable PCI Bank agreed to merge on
December 27, 2006. For a while, the entity was known as Banco de Oro-EPCI, Inc., but
announced that it would go by the name Banco de Oro Unibank, Inc. starting February 2007.
Finally, in 2010 Banco de Oro changed its name to BDO Unibank, Inc. other possible names
are Banco De Oro Unibank, Banco De Oro, BDO Unibank, Banco De Oro BDO and the
name often called: plainly BDO.

As of 2020, BDO has the largest distribution network with over 1,400 operating branches and
more than 4,400 ATMs nationwide. It is also currently the country's largest bank in terms of
consolidated resources, customer loans, deposits, assets under management and capital, as
well as branch and ATM network nationwide.

BDO Unibank, Inc's main competitors are major Philippine banks like Metrobank and BPI.

II. RURAL BANK – Lifebank Philippines

A. Brief Description

LifeBank Rural Bank offers deposit products such as regular Philippine peso and kids
passbook savings accounts and foreign currency deposit unit (FCDU) account; loan products
like business loan, microfinance program loan (Ikabuhi Microfinance Program), mortgage
loan, agri/crop loan, auto loan, salary loan, and Teacher's Salary loan; and money transfer
service via Western Union. LifeBank MFI on the other hand, offers savings and loan
products like Ikabuhi Microfinance Program (IMP), house repair loan, salary loan (exclusive
for its employees), education loan, and housing sanitation loan for poor people. LifeBank
envisions itself to be the number one rural-savings bank and microfinancial institution in the
Philippines.
LifeBank MFI (LBMF) as a non-governmental organization (NGO) and non-profit
microfinance company arm of LifeBank, is the third largest microfinance institution in the
Philippines. Except for products that it offers for its 300,000+ clients across the Philippines,
it played a role in providing socially responsible and sustainable programs with significant
high societal impact vital in nation building for the benefit of people in the marginalized
sector.
B. History

LifeBank, formerly Rural Bank of Maasin (Iloilo), Inc. was established on March 21,
1970 by the Perlas Family (Familia Perlas) and other prominent members of the
community of the Municipality of Maasin, Iloilo. The objective of the bank was to extend
financial services in areas where access to credit was limited.

In 1993, the Board of Directors held its first planning and visioning session where the
bank’s vision and mission were defined. This was when the Sustainable Development
Investment Unit (SDIU) was set up. This was a unit to be developed that would
institutionalize lending for sustainable development projects, the objective of which is the
development of the human potential.

In June 1995, a branch was established in the Municipality of Santa Barbara, Iloilo. The
branch experienced phenomenal growth as its deposits, loan portfolio and resources
increased beyond expectations while recognizing and affirming trust within the
community. It was also in 1995 that the Ikabuhi Microfinance Program (IMP) was
established. The program aims to activate savings and provide credit to enterprising poor
women.

In 1998, the bank adopted the Grameen methodology for its micro-finance program,
which initially produced positive results. Later on, weaknesses in the management
information system and program policies were observed prompting management to look
for a better alternative. It was in November 2000 where the bank became a program
partner of the Microfinance Support Program (MSP) of the United Nations Development
Programme (UNDP where the bank was introduced to the Association for Social
Advancement (ASA) (pronounced as ASHA, a Bangladeshi word meaning HOPE). Since
then, the bank has been implementing the Association for Social Advancement (ASA)
methodology with incredible results as proven by its almost 100% repayment rate, early
sustainability and rapid expansion.

After covering most of Iloilo, the Board created the LifeBank Foundation, Inc. (LBF) in
January 2003 to carry the expansion of the program outside the province. At the time, the
Bank did not have the required capital to operate outside Iloilo province. While LBRB
continued to grow in assets and capital, LBF’s microfinance operation grew to cover
Panay and other parts of the country (Luzon, Visayas and Mindanao). In 2008, LBRB,
having reached the required capitalization to operate in other parts of the country, started
purchasing microfinance portfolio from LBF in the provinces of Iloilo, Guimaras,
Antique, Aklan and Capiz.

LifeBank RB expanded with a head office in Santa Barbara, Iloilo, three (3) branches and
fifteen (15) BLUs. The branches are located in Maasin, Iloilo (since March 1970;
formerly the Head Office), Iloilo City (since May 2011) and Roxas City, Capiz (since
May 2013). In addition, thirty-one (31) Branch Lite Units (BLUs) were established.
These are operating in the Provinces of Iloilo (Municipalities of Barotac Nuevo, Miag-ao,
 Sara, Balasan, Oton, Pototan, Iloilo and Passi City), Guimaras (Municipality of Jordan),
Capiz (Municipality of Mambusao), Aklan (Municipalities of Kalibo, Altavas and
Caticlan, Malay) and Antique (Municipalities of San Jose, Bugasong and Culasi).

In 2018, LifeBank's NGO microfinance arm was officially renamed from LifeBank
Foundation, Inc. to LifeBank Microfinance Foundation, Inc. (LifeBank MFI or LBMF)
but was later rolled out in 2019 to all its units. In the said same year, due to its rolling of
company decentralization plan, LifeBank MFI has been re-organized into zones and
districts with branches in lieu of units.
The LifeBank MFI on the other hand as of September 2021, has 520 branches, 22
area/district offices, and 12 zonal offices in Luzon, Visayas and Mindanao, covering
300,000+ clients as the 3rd largest microfinancial institution in the country after ASA
Philippines (Philippine arm of ASA, the largest microfinancial institution in the world)
and Card Bank.

C. Corporate Administration

The LifeBank's two corporate arms, the LifeBank RB (LBRB) and LifeBank MFI
(LBMF), are both managed by the same board of directors/board of trustees. LifeBank
MFI is headed by Vicente "Vince" P. Perlas, a medical doctor by profession, while the
LifeBank RB's president is his wife, Rosario "Charrie" Perlas, also a medical doctor.
Perlas family have long been the one who manages the LifeBank since it was founded on
March 21, 1970 as Rural Bank of Maasin (Iloilo), Inc.

The Perlas family which manages LifeBank, are Spanish/European-Filipino family like
the Ayala and Zobel, Aboitiz, Lopéz, and Razon families. Through Perlas Group
(LifeBank Group), the 2 companies have other sister, affiliate or related companies
owned by any member of the said family which include: Seaboard Insurance, Bluefields
Hypermart and Bluefields Hardware, Lolo Jose Kitchen and Liv Healthy Kitchen.

Notable member of corporation's Board of Directors/Trustees is Nicanor Perlas (Nick

Perlas). A renowned activist and one of the notable alumni of Ateneo de Manila
University (ADMU) and Xavier University (Ateneo de Cagayan), he ran as an
independent Presidential candidate during the 2010 Philippine National Elections.
Nicanor Perlas serves as the Vice-Chairman of LifeBank Microfinance Foundation's
(LBMF) Board of Trustees. He is also a laureate of the Right Livelihood Award in 2003,
an award referred as an alternative Nobel Prize.[13][14][15]

III. SAVINGS BANK- Citystate Savings Bank

A. Brief Description
Citystate Savings Bank (PSE: CSB) is a publicly listed thrift bank listed in the Philippine
Stock Exchange. The bank was a partnership between a group of Filipino businessmen
led by Ambassador Antonio Cabangon Chua and a Singaporean investment holding
company. It was granted the thrift bank license by the Monetary Board of Bangko Sentral
ng Pilipinas in 1997. City State offers banking services, such as deposit products and
services, cash management, onsite/offsite ATM facilities, corporate and retail banking,
and treasury services. The bank caters to the needs of corporate, middle market and retail
clients. The bank operates a total of 24 branches nationwide and employs 276 employees
at the end of 2009. As of December 27, 2010, Citystate has a total market capitalization
of P2.03 billion and share price of P28.00.

B. History

Citystate Savings Bank started its banking operations a day after the Monetary Board of
Bangko Sentral ng Pilipinas approved its thrift bank license on August 7, 1997. On
January 2, 2002, the company went public and was formally listed in the Philippines
Stock Exchange under the stock symbol CSB.

To sustain its expansion in terms of setting up more branches complemented with the
development of new products and enhanced services, the bank ventured into a stock
rights offering of 22 million which increased its capitalization to P670 million to P450
million.

In November 2006, Citystate Bank obtained its Trust and Foreign Currency Deposit
license from the Bangko Sentral ng Pilipinas to accept dollar and other foreign currency
denominated deposits and manages funds, securities, and properties.

C. Products and Services

For its credit and financing business, City State accepts jewelry for instant cash loan. It
also offers other lending activities of servicing commercial loans, real estate and
development loans, auto-financing, salary loan, agricultural loans, and others.
City State is also included in the list of Government Securities Eligible Dealers (GSEDs)
and is allowed to participate in the electronic auction of government securities through
the Automated Debt Auction Processing System (ADAPS).
The bank also operates foreign currency deposits and performs trust and fiduciary
business.
D. Financial highlights

City State incurred a net loss of P3.713 million at the end of the third quarter of 2010. It
was lower by P8.510 million from a year ago. Accumulated net loss after three quarters
amounted to P8.24 million as compared to last year’s income of P6.33 million. This was
a result of the required loan loss reserves as directed by BSP.

`Total resources after three quarters netted a loss of P145 million from P2.50 billion to
P2.36 billion. This was attributed to the decreases in loans and receivables, cash and, due
from other banks, financial assets at Fair Value through profit or loss, and investment
properties.

E. FINANCIAL MANAGEMENT UPDATES/PRACTICES