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Manila
Thursday, December 02, 2021
MANILA

Bunye: Board room talk - ‘Normal-gility’

Speaking Out

I HAD the privilege recently of hearing BPI Family Savings Bank (BFSB) President and CEO Ma. Cristina L. "Ginbee" Go as she gave the board a very clear roadmap towards transitioning to One BPI.

As has already been widely reported, BFSB -- which for a long time has been the premier thrift bank in the country -- will soon be merged with its mother, the Bank of the Philippine Islands -- the first bank in the Philippines and Asia.

Here is Ginbee in her own words:

"At the onset of the pandemic, terms like ‘new normal’ and ‘next normal’ have emerged but with the long-drawn pandemic -- that is in danger of becoming an endemic -- what really is normal?

"The sense of normalcy is constantly changing and perhaps the new term that we should begin to embrace is 'normal-gility' -- the realization that the new norm is one that requires rapid adaptation. This is why we have made the organization to be change-ready. Our agility to be onsite or remote. Our agility to be defensive or offensive. Our agility to be 'risk on' or 'risk off' as the circumstances call for.

"Two things: What we don't know, we cannot manage. Number Two -- what we do know, we need to challenge. What we don't know -- we don't know how long this pandemic will last. What we do know -- Our predictions and economic outlook have been changing. The period of recovery may take longer than originally anticipated so we need to manage our business for resilience and relevance -- the two strategic themes around which our plan for 2021 was built. And so far, this has been working well for us.

"Resilience and relevance are manifested by the continued strength in our financial position and performance. Even with the P576 million impact of the CREATE Law, our year to date NIAT is now 27 per cent better than plan, 45 per cent better than last year. Adjusting for CREATE, NIAT would have been 85 per cent better than last year.

"Let us talk about relevance. Our core revenues continue to grow, primarily due to wider spreads due to lower cost of funds. Our ability to defend our deposit volume, despite lower interest rate, is proof of our clients' trust. Given the 'risk off' sentiment, clients prefer to be liquid. Casa ratio is higher at 53 per cent, 600 bps better than a year ago.

"Our releases are gaining more ground -- higher than planned. Regular housing loans are 60 per cent better than last year, though 80 percent of pre-pandemic levels. Auto loans are 47 percent better than last year (though 85 per cent of pre-pandemic levels). Dealer-generated releases are already back to pre-pandemic level. Loan processing fees are up year-on-year.

"Our asset quality also continues to improve. NPL rates are still coming down both for auto and housing. Because we have stayed ahead of the delinquency curve, loss provisions are now lower than last year's, due to aggressive provisions in 2019. This has allowed us to maintain a comfortable reserve buffer over ECL, reflective of our defensive stance.

One BPI merger

"The team has formed work streams responsible for planning and organizing for the critical aspects of the business -- regulatory and financial, employee integration, client integration, product migration, branch integration. Suffice it to say, we have been progressing as scheduled.

"In the last 6 months, we have made sure to communicate to our clients. We have secured and have been securing regulatory approvals. We have been designing the migration and integration plans.

"We adopted a three-pronged approach.

"First one is conversion to BPI which simply requires migrating pure BPI Family Savings Bank clients (which number around 780 thousand). Migrating and rebranding high performing BPI Family Savings Bank branches and migrating and rebranding unique-to-BPI Family Savings Bank products such as our 5-Year Plan Ahead, our auto loans, our housing loans and our Ka Negosyo credit loan product.

"The second approach is the consolidation with BPI, which basically requires:

* Integrating common BPI and BPI Family Savings Bank clients, numbering to about 454 thousand, with one customer record to be managed by one RM-BM or branch.

* Consolidating or combining or rebranding of about 79 BPI Family Savings Bank branches. Branch consolidation will necessitate a change in account numbers for about 375 thousand clients corresponding to the surviving branch code.

* Migrating and rebranding of common deposit and SME loan products.

"The third strategy is optimization and rationalization which will require managing the migration of unibanker DOSRI loans, discontinuance of products that will no longer be migrated to BPI, such as the BPI Family credit card, passbook deposit products and inactive loan product variants. We will also continuously review our branch network in view of the digitalization.

"This pandemic has been a major disruptor. Digitalization has been changing the banking landscape. 'Normal-gility' is the new definition of normalcy. This means we should always be ready to pivot the business anytime."

Very well-said, Ginbee!

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