BPI, BDO eye QAB status under Asean framework

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BANCO de Oro Unibank Inc. and Bank of the Philippine Islands (BPI), the two biggest banks in the country, are interested in becoming Qualified Asean Banks (QAB) under the Asean Banking Integration Framework
“We are running the bank the way that we could qualify to be a QAB. So that when the integration happens, we could automatically qualify,” BPI President and Chief Executive Officer Cezar Consing said in a press conference on Thursday.

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In a separate press briefing, BDO President Nestor Tan said the bank is also considering a QAB status but stressed that the bank’s priority is the domestic economy.

QABs are well-managed banks headquartered in the region and majority owned by Asean nationals. Banks that apply for QAB status must be endorsed by the home country regulator and may be accepted by the host country regulator based on bilateral agreement.

Qualified banks can enter a host jurisdiction only as a subsidiary of the parent bank in line with the principle of reciprocity.

Earlier this month, the Philippines and Malaysia took the final step to allow qualified banks to operate subsidiaries in each other’s markets. The Bangko Sentral ng Pilipinas (BSP) and Bank Negara Malaysia signed the Declaration of Conclusion of Negotiations (DCN) on QABs.

Future plans

On top of the 10 BanKO branches, BPI plans to open 90 more branches of its microfinance unit before the end years to focus more on small business clients.

Consing said the bank has identified locations for the branches, mainly in the provinces.

The bank is comfortable with its current financial standing, saying the additional capital of P25 billion it raised last year was not needed at the moment.

In the first quarter of 2017, BPI reported its net income rose by 25.6 percent to P6.25 billion.

Revenue reached P17.96 billion, up 17.6 percent with non-interest income rising 22.6 percent to P6.46 billion on higher trading gains, service charges, underwriting fees and income from asset sales.

Operating expenses rose 11.2 percent to P8.73 billion in the first quarter, driven by additional manpower, regulatory costs and spending on operational infrastructure.

BDO said big-ticket infrastructure projects of the government provide a huge upside potential for operations.
“We remain positive about the economy … The higher fiscal spending is positive because it creates jobs, and jobs create more consumption,” BDO’s Tan said.

In the first quarter of 2017, BDO said customer loans accelerated by 21 percent to P1.5 trillion, with all market segments turning in robust expansion rates.

Deposits grew by 13 percent to P1.9 trillion, backed by a 17 percent jump in low-cost current account/savings account deposits.

The bank made a net income of P5.8 billion, up 6 percent year-on-year. Net interest income remained the major earnings driver, up 19 percent at P18.4billion.

In 2016, BDO posted a record net income in 2016 of P26.1 billion, matching the earnings guidance.

Tan attributed the financial performance on strong results across core businesses as well as efforts at building recurring and diversified income streams, supplemented by the branch expansion in key provincial areas and initiatives to tap new markets and underserved sectors.

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