BDO looks to Japan to expand global reach

By Luis Leoncio 

Banco de Oro (BDO) Unibank, the country’s biggest, with total assets of P1.86 trillion is looking toward Japan to expand its overseas reach.

BDO has formed a partnership with leading Japanese brokerage Nomura Holdings and other Japanese regional lenders and is now talking with Japanese companies for new projects at home and abroad.

Nikkei Asian Review said the expansion efforts are being led by BDO Unibank Chairwoman Teresita Sy-Coson, eldest daughter of SM Group founder Henry Sy; her business acumen has won the admiration of Tadashi Yanai, chairman and president of Fast Retailing, the Japanese holding company that operates the Uniqlo chain of casual clothing stores.

Yanai praised Sy-Coson in one of his books, and Fast Retailing has formed a joint venture with SM Retail, an SM Group company.

BDO Unibank has more than 900 branches throughout the Philippines. In recent years, it has taken various measures to improve the quality of its services and has extended its opening time by two hours — until 5 p.m.

Sy-Coson said the bank is eyeing more Japan-Philippine business transactions. Already, BDO Unibank has forged partnerships with a number of Japanese regional lenders, including Joyo Bank, based in Mito, Ibaraki Prefecture. In addition, the Philippines bank is set to open a money remittance center in Tokyo in December.

With the economy growing, the number of securities trading accounts being opened has increased raising the prospect of more pesos in circulation to further boost the country’s economic growth.

Last June, BDO Unibank and Nomura set up a joint stock-trading venture in which the Philippines lender has a 51-percent stake and the Japanese securities house holds the remaining 49 percent.

BDO Unibank says it manages around 7 million bank accounts. What’s more, the SM Group operates large shopping malls across the country that can attract tens of thousands of visitors a day. As such, the bank is well positioned to raise the new brokerage’s profile through ads and other platforms.

Sy-Coson expects synergies from BDO Unibank’s countrywide network and Nomura’s investment banking expertise.

“In the future, we hope to offer our clients more services, to include cross-border investments,” she said. “This will provide a wider choice of opportunities to investors, particularly in the context of Asean integration.”

BDO’s parent, SM Investments Corp. (SM), reported a 7-percent growth in consolidated net income to P19.4 billion for the first nine months of the year.

Excluding extraordinary items, recurring net income grew 12 percent. Consolidated revenues grew 7 percent to P206.2 billion for the period.

“Our strong results year-to-date reflect our ongoing focus on delivering footprint expansion across the country and on driving cost competitiveness in all our core businesses,” SM President Harley Sy said.

BDO Unibank recorded net interest income growth of 12 percent to P41.8 billion in the first nine months, with net income up 5 percent to P17.6 billion.

Gross customer loans grew 19 percent to P1.2 trillion and total deposits rose by 12 percent to P1.6 trillion.

The third -results reflect the completion of BDO’s acquisition of One Network Bank, the largest rural bank in Mindanao, in July, adding over P20 billion to BDO’s total loans and deposits.

SM’s underlying earnings expansion was driven by a 21-percent growth in retail earnings and a 15-percent growth in property recurring net income. For the first nine months, banks accounted for 40 percent of SM’s consolidated earnings, property 39 percent and retail 21 percent.

Retail operations under SM Retail Inc. reported sustained growth in total sales of 6.5 percent to P145.3 billion, while net income rose 21 percent to P4.6 billion.

The SM Food Retail Group (SM Markets) continued to expand in both urban and rural communities in various parts of Luzon, the Visayas and Mindanao. The group added 20 new stores, most of which are stand-alone Savemore stores. From historically operating anchor stores based in malls, SM Markets today follows a multi-format growth strategy to address the lack of organized retail in many parts of the country. SM Markets also recently invested in the minimart business with Alfamart, a highly successful minimart operator in Indonesia, and forged partnerships with WalterMart and Citymalls to further facilitate its provincial growth. Acquisition of existing chains of stores is another part of its growth strategy, the latest of which was the acquisition of three stores of Cherry Foodarama.

The SM Store will maintain its strategy of growing as an anchor store in SM Malls, which are targeting expansion in the provincial areas. The SM Store continues to be the leading player in the country’s department-store business, enjoying a wide-reaching and loyal customer base. It competes on the basis of providing the widest assortment of products and services, complemented by well-designed stores.

At end-September 2015, SM Retail had a total of 294 stores, comprising 51 THE SM STORES, 41 SM Supermarkets, 43 SM Hypermarkets, 130 Savemore stores and 29 WalterMart stores.

As of the first nine months, the total gross selling area of all 51 SM STOREs stood at 682,997 s qm.

Consolidated net income of SM Prime Holdings, Inc. (SM Prime) increased 70 percent to P22.9 billion in the first nine months of 2015.

Excluding P7.4 billion of one-time trading gains in the first quarter of 2015, recurring net income increased by 15 percent to P15.5 billion in the nine-month period.

Consolidated revenues increased 9 percent to P52.2 billion in the period ending September 30. Rental revenues from retail and commercial spaces increased by 11 percent to P29.4 billion in the period. The housing group’s reservation sales grew by 19 percent to 10,297 units, reflecting a 22 percent increase in value to P28.4 billion from P23.3 billion in the same period last year.

As of end-September 2015, total assets of SM grew 7 percent to P735.5 billion. SM maintains a healthy balance sheet with a conservative gearing ratio of 38 percent net debt to 62 percent equity.

SM Investments has evolved into one of the most highly respected companies in the country owing to its progressive approach in business and its comprehensive sustainability programs for its host communities through SM Foundation and SM Cares.

SM’s retail operations enjoy a strong brand franchise consisting of THE SM STORE and its food retail chains namely SM Supermarket, SM Hypermarket, Savemore and WalterMart stores. SM’s property arm, SM Prime Holdings, Inc., is among the largest integrated property developers in the Philippines with interests in mall, residential, commercial and tourism development. SM’s interests in banking are in BDO Unibank, Inc. (BDO), the country’s largest and in China Banking Corp. (China Bank), the fifth-largest private bank. Combined, these two banks have a network of over 1,000 branches nationwide.