Bankers are the richest pinoys...

“The richest Filipino, Henry Sy Sr., owns two banks—Banco de Oro, the biggest bank, and China Bank, both listed companies. The second richest, according to Forbes magazine, is Lucio Tan. He also owns two banks—Philippine National Bank and Allied Bank. Third richest is John Gokongwei Jr. He is also a banker, being the owner of Robinsons Bank. Fourth richest is Jaime Augusto Zobel de Ayala. His family controls Bank of the Philippine Islands. Ninth richest, per Forbes, is George SK Ty. His family owns 70 percent of Metrobank, the second biggest lender. The 10th richest is Eduardo Cojuangco Jr., the chairman of SMC, owner of Bank of Commerce.”

Bankers are the richest pinoys...

By Tony Lopez

During the second decade of the 21st century, banking won’t be much different from the practices of the past. Banks will continue with their old practice. They will get the money of depositors and lenders and relend that to borrowers and other users of funds at a very good margin.
The only difference perhaps is that many banks will be a little more judicious and conservative considering the bankruptcy of Lehman Brothers in September 2008. And they will be subjected to a lot of regulatory compliance and reforms.

BPI’s Gigi Montinola sees a trend towards inclusive banking, regional integration and greater use of the Internet and mobile banking. ÒAdvances in technology will make it possible for people to view their account balances through cell phones or even do banking transactions through cell phones,Ó says Joe Sio, the CFO of SMIC.

Consumer lending offers awesome opportunities to the banks. With expat Filipinos sending remittances at the level of $20 billion a year, consumer spending will remain robust and the mainstay of the economy as banks outbid each other to hoard the OFWs’ P900 billion yearly cash income. Remittances’ share of GDP will keep rising, from the present 10 percent to as high as 17 percent.

However, President Benigno S. Aquino 3rd’s Public-Private Partnership (PPP) program to modernize the country’s infrastructure will probably force a rethinking by the banks on lending to big-ticket items, and the Bangko Sentral to relax its single borrower limits (SBL).

Usually, a bank can lend to a borrower no more than 20 percent of the lender’s net worth. Only four banks have net worth of more than $1 billion—Banco de Oro with P84.79 billion, Metrobank P84 billion, Bank of the Philippine Islands P77.43 billion and Land Bank P60.52 billion.

The biggest amount BDO or Metrobank can lend is P17 billion ($386 million), not even enough to build a decent power plant, which costs from $1 million to $1.5 million per megawatt. A 500-MW power plant will need from $500 million to $750 million, though coal-fired generating units are cheaper. Thankfully, the Bangko Sentral applies a more liberal SBL rule on power plants.

Present SBLs may not be enough considering the expansion tendencies of three major business groups—SM Investments Corp., the controlling owner of BDO; the San Miguel Corp. group which this year will chalk up more than $12 billion in revenues; and the PLDT-Metro Pacific group of Manuel V. Pangilinan.

Despite constraints, the banking business will remain hugely profitable. This explains why among the country’s richest individuals are also the biggest bankers. Or the biggest bankers are among the country’s richest people.

The richest Filipino, Henry Sy Sr., owns two banks—Banco de Oro, the biggest bank, and China Bank, both listed companies. The second richest, according to Forbes magazine, is Lucio Tan. He also owns two banks—Philippine National Bank and Allied Bank.

Third richest is John Gokongwei Jr. He is also a banker, being the owner of Robinsons Bank. Fourth richest is Jaime Augusto Zobel de Ayala. His family controls Bank of the Philippine Islands. Ninth richest, per Forbes, is George SK Ty. His family owns 70 percent of Metrobank, the second biggest lender. The 10th richest is Eduardo Cojuangco Jr., the chairman of SMC, owner of Bank of Commerce.

Banking returns on equity will exceed yields shareholders can get from other businesses.

In the first nine months of 2010, publicly listed Security Bank posted a return on equity of 22.8 percent, up from 21 percent in the same period in 2009; the venerable Bank of PI 17.6 percent, up from 15 percent; China Bank 16.13 percent, up from 15.53 percent; BDO 11.16 percent, up from 8.8 percent; PNB 10.2 percent, up from 9.2 percent; and the Metrobank Group 7.92 percent, up from 6.65 percent.

Metrobank doubled its market capitalization from a low of P73.69 billion in February 2010 to a high of P175 billion by November 2010. BDO also doubled in market value to P151 billion.