MANILA, Philippines - The BDO Unibank Inc. (BDO) is targeting a 20-percent growth in its remittances business this year.
Total remittances from overseas Filipinos, coursed through the formal sector or the country’s banking system, amounted to $20.1 billion from $18.9 billion in 2010. It is expected to slow down to a little over five percent this year.
Based on estimates from the Bangko Sentral ng Pilipinas (BSP), BDO accounted for a market share of 27.8 percent of total remittances, or roughly over $5 billion.
Initial reports indicated that remittances in the first five months of the year grew 17 percent in terms of volume and 14 percent in terms of transactions.
According to BDO first vice president and head of remittance operations Genie T. Gloria, the original target growth rate for 2011 was between six to seven percent.
Gloria, however, expressed concern over external conditions that may thwart its full year target.
“We have reports that the Singapore government is tightening entry of foreign workers, the economic crisis in the euro zone and the employment conditions in the US,” she added.
The domestic distribution infrastructure is however expanding at a faster pace. It has grown to 5,000 this year, from about 3,000 at the start of the fourth quarter of 2011.
The increase was the alliances forged with Cebuana Lhuillier and MLhuillier, two of the largest pawnshops in the country. That resulted in the expansion of the network by another 2,000 outlets.
At the start of October last year, the existing infrastructure often referred to as the BDO Remit Cash Pick-up network, was composed of nearly 800 BDO branches, 144 SM outlets, at least 600 branches of rural banks, and 179 Prime Asia pawnshop.
BDO has also been able to distribute over a million BDO Remittance Cards, a prepaid card designed to facilitate money transfers from migrant Filipinos to beneficiaries in the Philippines. It likewise serves as an automated teller machine (ATM) and point-of-sale (POS) card.
In 2011, BDO reportedly accounted for a market share of nearly 28 percent of total remittances coursed through the formal banking sector.
The Bank of the Philippine Islands (BPI) accounted for 25 percent of market share, followed by the Philippine National Bank (PNB) with a market share of 15 percent, the Metropolitan Bank &Trust Co. (Metrobank) with a market share of 11 percent, and the Rizal Commercial Banking Corp. (RCBC) with six percent.
Remittances passing through the BDO distribution network generally emanated from the Middle East countries, the United States and Canada, Europe and Asia.
In Asia, the major sources of remittances are Singapore, Australia, Hong Kong, Macau and Taiwan.
The remittance market translates to fee-based earnings and a robust foreign currency market for BDO.
Last year, fee-based earnings grew 18 percent while trading and foreign currency gains slipped by four percent. Nonetheless, non-interest income managed to expand by 17 percent in the same period.