BdO’s trust assets hit P88 billion in 2004

The trust operations of Banco de Oro Universal Bank (BdO) has recorded growth of over 35 percent last year, better than the average 30 percent registered by the top 12 banks in the country in roughly the same period.

The assets under management (AUMs) of BdO reached P88 billion last year, up by 35 percent from the P65 billion in 2003.

The country’s top 12 trust operations of commercial banks last year reached a record P707.5-billion worth of AUMs, or nearly 30 percent better than the P544.3 billion in 2003.

"Growth was definitely strong in 2004 for BdO, in particular and for the industry, in general," Ador A. Abrogena, BdO senior vice president and president of the Trust Operations Association of the Philippines (TOAP), said.

However, Abrogena paints a slightly different picture for 2005.

At best, BdO will grow practically at the same pace as last year or slightly lower due to adjustments brought about by the shift from the common trust fund (CTFs) to the unit investment trust fund (UITF).

The Bangko Sentral ng Pilipinas (BSP) ordered all trust operations of commercial banks to shift to the UITF to adopt to international banking standards. As of end 2004, banks were disallowed to open new CTFs.

Last year, BdO’s CTF portfolio accounted for more than half of its entire trust operations or P52 billion of the total P86 billion. Its trust and other fudiciary accounts (TOFA) amounted to P21.9 billion while its investment fund management accounts (IFMA) reached a little over P12 billion.

Abrogena said that growth would come from TOFA and IFMA operations if it wants to retain its fourth position overall among the top 12 banks.

At the same time, it will slowly introduce its UITF products to the market this year.

"We are seeing growth like escrow as the real estate market is growing, retirenment funds has been steady, pre-need trust funds remained strong despite problems and bad publicity, and corporate trusts like loans, and collateral agencies registered some improvements," he said.

BdO already got the nod from the Bangko Sentral ng Pilipinas (BSP) to launch its five new UITFs. These are the money market fund (peso), money market fund (US dollar), bond fund (peso), bond fund (dollar), and balanced fund.

The senior vice president explained that they have not launched formally the UITFs due mainly to unresolved custodianship issues. Likewise, banks need time to prepare its bank and trust staffs, as well as prepare marketing materials.

"It takes time to set it up. Only after it has been approved by the BSP can the mechanism get moving," Abrogena clarified.

The BSP reportedly approved a large number of UITF applications of majority of the commerical banks. But the formal launching of the same are still limited for the same reason.

Another area of optimism is the strong performance of dollar-denominated funds.

In the past two years, the dollar CTFs had reflected huge growths, and trust asset managers expect the same exceptional performance in the next few years.

"People will continue to convert their pesos to US dollars."