CASE ANALYSIS
BACKGROUND:
Banco De Oro Unibank, Inc (BDO) is a full service universal bank in the Philippines that
provides variety of services, ranging from the traditional lending and deposit-taking to foreign
exchange, brokering, and corporate cash management. Through its local subsidiaries, the Bank
offers Investment Banking, Private Banking, Leasing and Finance, Rural Banking, Life
Insurance, Insurance Brokerage and Stock Brokerage services. It is currently majority owned by
the SM Group of Companies, one of the country’s largest and most successful conglomerates
with businesses spanning retail, mall operations, property development and financial services.
BDO’s institutional strengths and value-added products and services hold the key to its
successful business relationships with customers. On the front line, its branches remain at the
forefront of setting high standards as a sales and service-oriented, customer focused force. BDO
has the largest distribution network with over 1,300 operating branches and more than 4,000
ATMs nationwide.
CORPORATE MISSION
To be the preferred bank in every market we serve.
CORPORATE VISION
To be the leading Philippine bank and financial services company that empowers
customers to achieve their goals and aspirations, combining our entrepreneurial spirit,
international perspective, and intense customer focus to deliver a personalized banking
experience that is easy, straightforward, and convenient, while taking pride in building long-term
relationships and finding better ways to deliver offerings of the highest standard.
TABLE 1: SWOT ANALYSIS
Strengths Weaknesses Opportunities Threats
Advanced technology, Limited international Expansion to foreign Tight competition in
customer loyalty, presence, limited markets, merge with the market, no
strong and competent presence in the rural other banks, increase substitute for financial
management, diverse areas, inconsistencies exposure in the services, increased
and innovative in customer services Philippines amount of foreign
services, extensive banks, government
banking hours regulation, ASEAN
integration
The weaknesses and threats currently experienced by the BDO can be transformed into
opportunities and later on, become strengths of the company. BDO can expand their company to
foreign markets by taking advantage in the ASEAN integration since global tie-ups can boost the
bank’s presence abroad. Another effective option would be to merge with other banks. BDO
could also increase its exposure in the Philippines, especially to rural areas to create new and
loyal customers. Instead of focusing internationally, the bank can focus on the local level first
and strengthen the market, then gradually increase exposure afterwards. BDO can overcome its
tight competitors by continuously improving and innovating its product and services. Through
this, the bank’s market shares would progressively improve soon after.
FINANCIAL REPORT OF BDO
Chart 1: Resources
ASSET
(Amount in Millions of Philippine Pesos)
3500000
3000000
2500000
2000000
1500000
1000000
500000
0
2016 2017 2018
This graph presents that throughout the years all BDO’s economic resources are
increasing. In 2016, the total assets Php 2,189,091 (in million Php) as it escalated to Php
2,668,104 (in million Php) in the following year. Between 2017 and 2018 it increased to Php
3,022,247 (in million Php). They want to provide the best quality of services to all of its
customers for their future economic benefits. BDO has positioned itself for increased balance
sheet strength and continued expansion into the new markets.
Chart 2: Liabilities
Liabilities
(Amount in Millions of Philippine Pesos)
3000000
2500000
2000000
1500000
1000000
500000
0
2016 2017 2018
Chart 2 represents the total liabilities of BDO from three consecutive years (2016,
2017 and 2018). As of 2016, Php 1,938,578 (in million Php) the amount increased by Php
431,186 (in million Php) with a total amount of Php 2,369,764 (in million Php) in 2017. Column
2018, the total liabilities went up to Php 2,694,098. Though their liabilities are increasing
together with the asset still its net income is expanding.
Chart 3: Net Income
INCOME
Amounts in Millions of Philippine Pesos
35000
30000
25000
20000
15000
10000
5000
0
2016 2017 2018
Above chart, portrays the increasing net income of BDO from 2016-2018. As of
December 31, 2018, it was reported that BDO garnered net income of Php 32,369 (in million
Php) from Php 28,105 (in million Php) in 2017. 2017 has risen up its net income to 7% from the
previous year.
BDO’s major problem and how they managed to resolve such issue/s
BDO vs FRAUDS
BDO has face in fraud attacks in 4 th quarter of 2017. They had already apologized for the
said issue. In order to prevent or at least to lessen the fraud incidents they had tapped one of the
world's leading analytics and decision management software firms for a technology. This would
help BDO to detects frauds occurrences and raise the level of security of the clients with their
purchase and payment transaction. A software solution that can analyze thousands of cardholder
account transactions against fraud profiles on a real-time basis by FICO's Falcon Fraud Manager.
"Our goal is to be the retail bank of choice in the Philippines. Part of our success will
depend on our ability to allow our customers to increase their use of cards, both online and in
stores, while ensuring that these transactions are safe and secure," said Narciso (BDO senior
Vice President).
The BDO ATM Debit Card allow clients to withdraw cash through any BDO,
Expressnet, MegaLink and BancNet ATMs nationwide and through MasterCard/Cirrus and
Visa/Plus ATMs worldwide (for MasterCard and VISA ATM Debit Card); access their accounts
to view balance, transfer money, pay bills and buy prepaid mobile load anytime, anywhere using
BDO’s electronic channels; and, pay without cash for purchases, goods and services at major
establishments nationwide and abroad (for MasterCard and VISA ATM Debit Card).
BDO VS UNAUTHORIZED TRANSACTION
There has been an increased number of clients that have experienced suspicious bank
account transactions involving withdrawals and purchases done without their knowledge.
Unauthorized transaction happens when the clients’ bank account had been decreasing its
amount without their consent.
BDO are currently running a thorough investigation process that involves tracing
individual transactions, checking any irregularities and identifying signals of fraud from millions
of valid transactions every day. This challenging task is done to ensure that all cases are
addressed accordingly, and that a resolution is served for all valid cases.
They remind their clients to keep their account information private, as well as to be
mindful of people requesting for their personal account details through phone, SMS, email, or
websites. Unscrupulous individuals and groups are constantly preying on unsuspecting clients to
collect their bank information through skimming, phishing, social engineering, and other devious
ways.
Eventhough there are some certain issues had existed they still manage to increase the
number of their financial performance which mean it doesn’t affect their stock price.
Is the company has evidence of market efficiency? Yes, or No? why?
Yes, based on its prices it reflect all available information about the particular stock or
market at any given time. Since BDO is using advance technology to provide their services
which made the market to become more efficient.
Describe the two ways in which financial intermediaries help lower transaction costs in the
economy
Financial intermediaries play a very important role in the economic development of the
country. They play even bigger role in the developing countries, including helping the
government to eliminate poverty and implement other social programs. Financial
Intermediaries also bring borrowers and lenders together, thereby increasing the liquidity for
both of them. The availability of opposite trade leads to lesser transaction costs. Question has
been formulated, what its ways to help lower its transaction cost in the economy?
First, when there is a presence of a large number of borrowers and lenders, there is
more information in the market and economies of scale. This availability of the information
leads to the closing of the spread which leads to reduced transaction costs. Economies of scale
lead to bundling investments which reduce costs for the investors. Moreover, the deals are
matched more closely, once again, decreasing the transaction costs. Then, financial
intermediaries also have expertise in assessing the risk of the applicant for funds that reduces
adverse selection and moral hazard. They have easy access to various databases that provide
information on both individuals and businesses, and they have expertise in doing their own
research and monitoring.
In conclusion, the ways that could help the economy lower its transaction cost is
through economies of scale and the financial intermediaries expertise in assessing through
present risk.
CONCLUSION
BDO’s primary focused is on meeting the customers needs and by this they improve and
used advance technology to connect efficiently and effectively with their clients. As the premier
universal bank in the country, they had utilized its strengths in building customer loyalty
throughout the years by sustainable their business performance. They always develop and keep
on innovating their services to provide the needs of their clients. “We Find Ways”, BDO’s
slogan that captures the customers trust and build a strong base to the extent of operating in
extensive banking hours.
BDO is doing well and improving as all the figures are increasing. Furthermore, this
made them as one of the largest banks throughout the country.
What happens to BDO if one person withdraws 1M of cash and another person deposits
500k of cash? Use t accounts to explain your answer.
If Php 1 million cash will be withdraw to BDO and another person will deposit Php
500,000 in cash this means that would give a negative balance result to BDO’s reserves. The
deposited cash would be withdrawn will be deducted with the amount being deposit.
Reference/s:
BDO’s financial report and statement of condition from 2016 to 2018
