Professional Documents
Culture Documents
By
Bryan B. Dimla
Joane Rachelle P. Santos
Juan Paolo C. Santos
Rachel Ann V. Santos
Jomar G. Sebastian
Elgie M. Sta. Ana
Kristine Angel O. Velasco
December 2021
RECOMMENDATION FOR ORAL EXAMINATION
ii
APPROVAL SHEET
REVIEW PANEL
Accepted and approved in partial fulfillment of the requirements for the degree
BACHELOR OF SCIENCE IN BUSINESS ADMINISTRATION MAJOR IN
FINANCIAL MANAGEMENT.
iii
ACKNOWLEDGEMENT
We would like to extend our sincerest appreciation and gratitude to the following
people who contributed and extended their valuable assistance in the preparation and
completion of this paper. This work would not have been possible without the support and
guidance of:
Mr. Bayani L. Pascual Jr., our Professor and Strategic Management Paper adviser
for providing us the knowledge, extensive professional guidance, support, and motivation
to complete this paper.
To Ms. Anne Mhelarie Cabaluna, Mr. Norman C. Ramon and Mr. Jonathan M.
Santiago, the panel members for their expertise, professional suggestions and comments to
further improve the quality of this paper;
To our family, friends, colleague, and classmates whose guidance and support are
with us in all the things we pursue;
Above all, to our Great Almighty God, the author of all knowledge and wisdom,
for His countless love. All glory and honor belongs to Him.
iv
EXECUTIVE SUMMARY
EastWest is working to expand its asset base, optimize its store network, create new
revenue sources, and diversify its distribution methods. Simultaneously, the bank is
working to improve its information technology, risk management, and operational
processes, as well as the professional capabilities of its personnel, in order to better serve
customers.
The Bank’s External Factor Evaluation rating is 2.55 that indicates that it is highly
responsive to the different market opportunities. Strong opportunities are in increasing
Overseas Filipino Workers (OFW) remittances, consumer lending and innovation of
banking technology. However the Bank currently faced a strong competition in the market
due to the same product and services offered.
The Bank’s Internal Factor Evaluation rating is 2.85 indicates that its weaknesses
can be addressed by their strengths. EastWest Bank weaknesses include absence of
advertising promotion and low customer satisfaction in the online banking system. To
increase the promotional advertisement and increase the customer satisfaction are the
strategies that will be the most appropriate for the company to achieve its strategic
objectives to be a strong market follower.
The researchers gathered all defining factors – the bank's strengths, weaknesses,
threats, and opportunities – that could have an impact on their current ranking. Following
the data acquired from the EastWest Bank report, the researchers focused on their given
recommendations for the whole study: improving the bank's advertising and promotional
activities, and an increase on consumer satisfaction with online banking.
v
TABLE OF CONTENTS
Title Page……………………………………………………………………. i
Acknowledgment…………………………………………………………..... iv
Executive Summary……………….…………………….…………………... v
Table of Contents……………………………………………………….…… vi
List of Figures………………………………………………………………... ix
Introduction………………………………………………………… 1
PESTLE Analysis………………………………………………...... 2
Major Players……………………………...…………………….…. 15
Opportunities……………………………………………………...… 22
Threats………………………………………………………………. 22
EFE Matrix…………………………………………………………. 23
Conclusion……………………………………………………….…. 24
Company Profile……………………………………………….…... 25
Nature of Business…………………………………………….…… 28
vi
Organizational Structure…………………………………………… 37
Strengths……………………………………………….……………. 43
Weaknesses……………………………………………….…………. 43
IFE Matrix…………………………………………………………… 44
Strategic Objectives…………………………………………………. 45
Generic Strategy………………………………….………………… 48
BCG Matrix………………………………………………………... 49
IE Matrix……………………………………………………….…... 51
TOWS Matrix………………………………………………….…... 52
7S Framework………………………………………………………. 54
SPATRES…………………….…….………………………………. 60
Financial Assumptions…………………….………………………… 64
CONCLUSION
REFERENCES
APPENDICES
vii
LIST OF TABLES
viii
LIST OF FIGURES
ix
CHAPTER 1
THE INDUSTRY
Introduction
A bank is a financial entity that is authorized to accept deposits and provide loans
to customers. Financial services such as insurance and asset management programs,
currency exchange, and safe deposit boxes are also offered. The banking industry is
responsible for handling cash, credit, and other types of financial transactions. They
primarily serve consumers by providing deposit accounts and granting loans. Deposit
accounts, high-end financial services such as home loans, and investment goods are all
available through the banking business. Credit cards, loans, and checking accounts are
among the other services given by banks.
Banks are important for individual’s personal financial management, but they also
serve a larger purpose in the larger scheme of things, particularly in the economy. The
banking sector's function in the economy is to encourage capital creation, new enterprise
investment, trade and industry promotion, agricultural development, balanced regional
development, economic activity influence, and export promotion cells. Economic growth
will result from fostering this position.
1
PESTLE Analysis
Political Factors
The political factors affecting business are often given a lot of importance. Several
aspects of government policy can affect business. All firms must follow the law. Political
environment can impact business organizations in many ways. It could add a risk factor
and lead to a major loss. It can also affect government policies at local to national level.
Companies should be ready to deal with the local and international outcomes of politics.
Changes in the government policy make up the political factors. The change can be
economic, legal or social. It could also be a mix of these factors. Increase or decrease in
tax could be an example of a political element. Government might increase taxes for some
companies and lower it for others. The decision will have a direct effect on your businesses.
Further, the government interventions like shifts in interest rate can have an effect on the
demand patterns of company.
The political environment is perhaps among the least predictable elements in the
business environment. A cyclical political environment develops; as democratic
governments have to pursue re-election every few years. This external element of business
includes the effects of pressure groups. Pressure groups tend to change government
policies.
2
Relevance:
The banking industry affects by political factors. Banks are unable to perform
independently and must provide services based on specific laws, implemented by the
government that affect their growth and offerings. Government laws affect the state of the
banking sector they can control the progress of a business because they have the power to
do it. The government can intervene in the matters of banking political influence. This
includes corruption amongst political parties, or specific legislative laws such as labor
laws, trade restrictions, tariffs, and political stability.
Economic Factors
Inflation Rate
Inflation is the rate of increase in prices over a given period of time. Inflation is
typically a broad measure, such as the overall increase in prices or the increase in the cost
of living in a country.
Source: TRADINGECONMICS.COM/PSA
3
As shown in figure above, based from Philippine Statistics Authority (PSA) as of
September 2021. The Philippines’ annual inflation rate increased to 4.9 percent in August
2021, up from 4.0 percent the previous month and above the 4.4 percent estimate. It was
the highest figure since December 2018, with consumption increasing when the Covid-19
immunizations were accelerated. From 1958 to 2021, the Philippines' inflation rate
averaged 8.17 percent, reaching an all-time high of 62.60 percent in September 1984 and
a low of -2.10 percent in January 1959.
The strong fundamentals provided us with the monetary and fiscal room we needed
to get through the first month of the crisis. When Covid-19 began, our government
responded by declaring a state of emergency to save lives and assist the public sector and
local governments in properly responding to the health disaster. Unfortunately, the
lockdowns had a negative impact on our economy. After 84 straight quarters of contraction,
the Philippines economy contracted in the first three quarters of 2020, with a real average
GDP decrease of 10%. Due to the toughest lockdown period, the unemployment rate has
reduced to 8.7% in October 2020 from a high of 17.7% in April.
Meanwhile, the banking sector in the Philippines has remained resilient and stable,
with sufficient capital buffers to survive stock market volatility. As of the end of June 2020,
the capital adequacy ratio of universal and commercial banks was 16.3 percent on a
standalone basis and 16.7 percent on a consolidated basis. The rate of increase in existing
loans at Universal and Commercial banks decreased to 1.9 percent in October, down from
2.6 percent in September. The bank's lending growth is slowing due to the effect of poor
company confidence and the banks' tougher credit standards, which are causing major
disruptions in corporate operations.
Relevance:
When the pandemic started last 2020 and our country faced lockdown, The
Philippines’ economy negatively affected. But the banking industry has remained stable,
it has sufficient capital to survive. Some banks offer a loan to the people. The Inflation rate
here in the Philippines increased. It was the highest since the year 2018. Some consumer
prices have increased for the last seven months.
4
Growth Rate
Growth rates refer to the percentage change of a specific variable within a specific
time period. For investors, growth rates typically represent the compounded annualized
rate of growth of a company's revenues, earnings, dividends, or even macro concepts, such
as gross domestic product (GDP) and retail sales.
Table 1
5
The population of the Philippines is equivalent to 1.41% of the total world
population. Philippines ranks in number 13 in four (4) consecutive years in the global list
of countries by population. The population density in the Philippines is 368 per Km2 (952
people per mi2).
The total land area is 298,170 Km2 (115,124 sq. miles) 47.5 % of the population
is urban (52,008,603 people in 2020). The median age in the Philippines is 25.7 in 2020.
Data expected that people are working at the age of 25 earning their income and familiar
with the products and services of banking institutions.
Based on 2015 census data, the population in 2016 in the Philippines was
100,981,437. Based on the 2015 census results, the population increased by over 8 million
people when compared to the 2010 census results. The growth rate has slowed slightly
from the previous census, down to 1.72% from 1.89%. The notable rate of population
increase in the Philippines is projected to slow in the future, but should still be substantial.
The current growth rate of 1.52% is projected to halve by 2050. The population is forecast
to hit 110 million by 2020, and 125 million by 2030.
Relevance:
Employment Rate
6
Table 2
Labor Force
60.5 63.5 65.0 63.2 64.6 65.0
Participation Rate (%)
The table shows the Philippines unemployment rate in June 2021 remained the
same as the 7.7 percent reported a month ago. This is lower than the unemployment rates
in April (8.7%), February (8.8%), and January (8.7%) of the same year, but higher than the
7.1 percent reported in March 2021. In terms of magnitude, 3.76 million Filipinos 15 years
old and over were unemployed in June 2021, compared to 3.73 million in May 2021. The
labor force participation rate (LFPR) in June 2021 was registered at 65.0 percent or about
48.84 million Filipinos 15 years and over who were either employed or unemployed. This
is higher than the LFPR reported in May (64.6%), April (63.2%), February (63.5%), and
January (60.5%) of the same year.
Employment rate in June 2021 remained unchanged at 92.3 percent from May
2021. This means that 45.08 million were employed out of 48.84 million Filipinos in the
labor force in June 2021. This employment rate is higher than the rates reported in April
2021 (91.3%), February 2021 (91.2%), and January 2021 (91.3%), but lower by -0.6
percentage point from the March 2021 estimate. Employed persons reported with job but
not at work was down to 1.2 percent in June 2021 from 1.4 percent in May 2021.
7
Underemployment rate went up to 14.2 percent in June 2021 from the estimated
12.3 percent in the previous month. This is translated to an increase of 918 thousand
underemployed persons, from 5.49 million in May to 6.41 million in June 2021.
Relevance:
Based on the latest survey of Philippine Statistics Authority (PSA) presented, the
employment rate in the Philippines is getting higher despite the pandemic we are facing.
This means that even if there is a Pandemic the economy will continue to run. High
employment rate has a positive effect on banking institutions, most of the entrepreneurs
have bank transactions for their business and majority of the labor force are taking their
salary in banks through automated teller machines (ATM) or through online banking
transactions.
Social Factors
Socio-cultural factors can have a deep impact on the banking industry. Changing
social trends and people’s preferences can affect the business and growth of the banking
brands. Consumer demographics and people’s attitudes towards financial services have
also changed a lot. The millennials whether students or professionals make use of credit
cards for small and big transactions.
Businesses whether small or big are more open to taking financial assistance from
the banks. Several things have changed in the twenty-first century. The millennials want
great customer service and convenience and that is why the banks have focused on
providing a whole range of services online combined with round the clock customer
assistance.
In this way, the banking industry has taken an entirely new direction for customer
satisfaction as well as customer orientation has become important for them just like other
big businesses. Socially other small and big changes to affect the banks like growing use
of banking services in the rural sector, among the women and the growing income of the
middle class consumers.
8
Relevance:
The society and the peer group can influence the decision on making bank
transactions such as savings, taking loans, investment etc. A number of demographics such
as age, gender, income level, location and employment status. It means that banks function
therefore in line with the market scenario. The purchasing power and accordingly the
supply and demand in the market influences the buying behaviors and necessities, affect
how people see and use banking options.
Technological Factors
The technological revolution of the 21st century has brought banking in new ways
such as mobile and online or internet banking. This technology has made the services much
easier for the customers’ reach. Every bank has an online and mobile application, which
you can use either to transfer funds or pay your bills. Today, almost all financial
transactions are carried out through online and mobile banking, not only transactions, but
customers can also choose and avail various banking services like insurance, cards, and
loans through online.
This regulation is agreeable to push towards digitalization. With the new generation
becoming more technologically proficient than the previous ones, the shifts are becoming
more open to utilizing digital platforms for their financial needs. Especially the ongoing
Covid-19 Pandemic has accelerated this shift towards digital channels. As social distancing
and limited physical or face-to-face transactions measures became the new norm,
contactless technologies and digital experience became must-haves. In many ways, this
may have served as a trial test for the Philippine banking industry’s digital infrastructure
9
and cybersecurity framework. Which can help the digital transformation within the
financial services industry be more apparent in the years to come.
Relevance:
Amidst the Covid-19 Pandemic there was still a positive effect in embracing new
technology like to improve existing digital platforms or to accelerate the development of
new ones. Today, banking institutions have a good number of their customers conducting
their banking transactions through contactless technologies. This digital transformation is
an opportunity to welcome the reinvention. It could begin with a radical reflection on their
plans and streams to better understand how they will carve their own path towards
digitalization. There should even be a reexamination of any technological gaps and
recalibration of long-term strategies so as to stay relevant and retain growth during this
new landscape.
Legal Factors
The rules implemented are embodied in the Manual of Regulations for Banks
(MORB) issued by the Bangko Sentral ng Pilipinas (BSP), the Philippine central bank.
From time to time, additional circulars and other issuances are promulgated by the BSP to
cover new matters, if not to amend, repeal, supplement or otherwise modify existing rules.
10
Table 3
Republic Act
Description
Number
R.A. 8791 Operations of Banks, Quasi-Banks, Trust Entities and for other
Purposes.
11
An Act Defining The Crime Of Money Laundering, Providing
R.A. 9160
Penalties Therefor and for other Purposes.
R.A. 9238 excluding several services from the coverage of the value-
added tax and re-imposing the gross receipts tax on banks and
non- bank financial intermediaries performing quasi-banking.
R.A. 11469 President of the Republic of the Philippines for a limited period
and subject to restrictions, to exercise powers necessary and
proper to carry out the declared national policy and for other
purposes.
Relevance:
Banks play a big part in the country's economic growth and development. The
government and Bangko Sentral ng Pilipinas (BSP) has developed rules and regulations
that banking industry and other financial institutions are required to follow, to protect the
personal data of their clients.
12
Taxation Imposed on Banks
The Republic Act 10963, also known as the Tax Reform for Acceleration and
Inclusion Act (TRAIN Act), was signed into law by President Rodrigo Duterte in 2017.
The TRAIN Act adjusted four (4) taxes. First, the documentary taxation was increased by
100 percent except on loans with a solely 50% increase, however not for savings, property,
and non-life insurance. Second, the increase from 7.5% to 15% of interest income of the
final tax on Foreign Currency Deposit Units (FCDU). Third, capital gains tax of non-traded
stock was accrued from 5% to 10% of ultimate final net gains. Finally, the increase from
0.5% to 0.6% total transaction worth of the stock dealings tax.
In addition, the Republic Act (RA) No. 11534, otherwise known as the Corporate
Recovery and Tax Incentives for Enterprises (CREATE) Act was created by the Philippine
Congress in response to the COVID-19 pandemic as a fiscal relief to domestic and foreign
corporations doing business in the Philippines. The CREATE Act lowers the corporate
income tax rate from 30% to 25% beginning July 01, 2020.
This two Tax Act aims to eradicate extreme poverty, to create inclusive institutions
that will offer equal opportunities to all, and to achieve higher income country status. It
also aimed toward creating a tax system simpler, fairer and efficient.
Relevance:
The Bank must comply with these regulations, if applicable. Failure to comply with
the existing or future rules and guidelines issued by different regulatory authorities within
the Philippines, could have a material adverse effect on the bank's business, financial and
earnings position. Any failure by the bank to go with the prevailing and future amendments
of the relevant regulations or guidelines, its business permits, licenses, approvals, consents,
or listing status could also be cancelled, revoked, suspended or terminated. In addition, the
bank can face significant penalties for non-compliance.
13
Environmental Factors
The Philippine banking system is on a par with the majority of financial institutions
in the region and the world in navigating the effects of the global health crisis, an
international credit watcher said. In its recent research publication on banks worldwide,
Moody’s Investors Service said prospects of an economic upturn and adequate credit
reserves support stable banking outlooks worldwide. In particular, two thirds of banking
systems around the world are now assigned a “stable” outlook.
The Philippines is among those whose outlook was reverted from negative to stable
this year. Just earlier this month, Moody’s Investors Service put the Philippine banking
system outlook back to stable. Despite the stable outlook in most banking systems,
Moody’s warned that rising non-performing loan (NPL) ratios and potential under-
provisioning are the key downside risks for banking systems worldwide.
The BSP will issue a second-phase regulation for sustainable financing in the
second quarter of 2021. Through this, the central bank will gauge climate change risk in
the assessment of credit and operational risk management of the banking industry. In April
2020, the BSP unveiled the sustainable finance framework and gave banks a three-year
transition to adopt its provisions.
Relevance:
14
Major Industry Players
Every business owner needs to be very familiar with the concept of the industry
they are associated in. Industries are categorized by businesses or corporations of similar
trades so it’s easy to identify the main players and the products or services that the industry
offers directly.
In terms of assets, BDO Unibank Inc. is the largest bank in the Philippines. With
1,472 branches and 4,439 ATMs around the country, the full-service universal bank leads
in consolidated resources, deposits, and consumer loans. It employs approximately 38,800
people.
Metropolitan Bank & Trust Company, or Metrobank, is one of the country's most
prestigious financial companies. With a network of more than 1,774 ATMs, 706 local
branches, 32 overseas branches, and representative offices across the world, it now offers
a diverse range of banking goods and services. It has a total of 13,718 employees listed.
Metrobank was created in 1962, and its first branch opened the following year. Its
first overseas branch was established in Taipei in 1970. It opened a representative office in
Hong Kong three years later. Metrobank was also the first Philippine private bank to open
in the United States, opening a branch in Guam in 1975.
15
3. Bank of the Philippine Island (BPI)
The Bank of the Philippine Islands (BPI), formerly known as El Banco Espanol
Filipino de Isabel II, was established in 1851, making it the Philippines' and Southeast
Asia's oldest bank. It was the beginning of the Philippine banking and financial industry.
The Land Bank of the Philippines, which is owned by the government, is the
country's largest formal credit institution in rural areas. It is also one of the Philippines'
largest commercial banks in terms of assets, loans, and deposits.
Land Bank was founded in 1963 with the goal of assisting farmers and fishermen
with profits from its commercial banking operations. It enables the universal bank to
achieve a balance between financial viability and assistance for rural development
initiatives. The universal bank operates a robust rural branch network with 365 locations
and over 1,600 ATMs. It employs approximately 7,062 people.
The Philippine government founded the Philippine National Bank (PNB) during
the American occupation in 1916, and it was completely privatized in 2007. The bank is
regarded as one of the country's largest private universal banks. It collaborates with the
Philippine government, agencies, local government entities, and government-owned and
controlled enterprises to provide a broad range of banking and financial products.
In the Philippines, the firm has 716 branches and 1,710 automated teller machines,
as well as 70 branches worldwide. It employs roughly 9,000 people.
16
6. Security Bank Corporation (SBC)
Security Bank was the first private and Filipino-controlled bank in the post-World
War II era, having opened its doors in 1951. It provides a comprehensive range of products
and services to large corporations in the retail, commercial, and financial sectors. The bank
employs over 5,900 people and operates a network of 313 online locations and 804 ATMs.
China Banking Corporation, founded in 1920, was the country's first privately held
local commercial bank. Its first clientele consisted of Chinese-Filipino merchants. It also
manages subsidiaries and affiliates that offer insurance brokerage and banking services.
China Bank has roughly 10,000 workers and operates through a network of 634
locations and 1,002 automated teller machines.
Union Bank, which was founded in 1968, was the first bank in the Philippines to
offer internet banking. Aside from launching the Philippines' first bank website, it also
established the EON Cyber Account, the country's first electronic savings account, as well
as the country's first electronic checking account.
The bank's online facility allows customers to conduct transactions and obtain
information through a variety of channels, including a nationwide branch network of 388
locations, 389 on-site and 96 off-site ATMs, internet banking, and a call center. It also
17
provides local and multinational organizations in the country with corporate cash
management and business-to-business banking services.
According to Moody’s Investor Services, in March 2021 they revised the outlook
for the Philippines Banking System. The 1st on the ranking is The BDO UniBank (BDO),
the 2nd is Metropolitan Bank & Trust Company (Metrobank), the 3rd is Bank of the
Philippine Islands (BPI), the 4th is Landbank of the Philippines (LBP), the 5th is Philippine
National Bank (PNB), the 6th is Security Bank Corporation (SBC), the 7th is China
Banking Corporation (CBC), the 8th is Development Bank of the Philippines (DBP), the
9th is Union Bank of the Philippines (UBP), Lastly, the 10th in the rank is Rizal
Commercial Banking Corporation (RCBC).
18
Industry Analysis Using the Five Forces Model
Threats of New Entrants (Low). In the financial services like banking industry,
the threats of new entrants are considered low due to the following effects that barriers may
enter:
Capital Requirements (High). Putting up a Bank requires a large capital and must
comply with strict regulatory requirements of the Bangko Sentral ng Pilipinas (BSP) and
other government regulatory agencies.
19
Access to distribution channels (High). As there are numerous universal and
commercial banks and other financing institutions catering to the same segment of
customers, it is challenging for new entrants to determine where to position its branch and
be able to capture the target market.
In summary, key determinants show that the threat for new entrants in the banking
industry is low.
For the banking industry, the available substitutes are those non-banking financial
institutions that are increasing rapidly. Entities that engage in financial services but may or
may not have quasi-banking functions are categorized as non-banking financial institutions
(NBFI). These are financing companies, dealers/brokers, investment companies, lending
investors, pension funds, non-stock savings, loan associations and pawnshops. Also, NBFI
includes credit and multipurpose cooperatives and microfinance.
For this segment, the majority of suppliers are depositors. These are the people who
have money who want to save to use in future needs.
20
Not obliged to contend with other substitutes for sale in the industry (Low).
Banking industry services do not heavily contend with substitute products/services such as
those in non-banking financial institutions (NBFI) facilities in order to boost their
profitability in the industry.
Banking industry is subject to BSP rules and regulations. They must behave the
way BSP wants them to. Also, BSP makes all decisions regarding the rates of interest that
may reduce the supplier’s bargaining power.
Bargaining powers of buyers (High). Banking industry buyers are those who take
loans, deposit and use the services of banks that exert force by bargaining for lower prices,
higher quality, more services and stiffer competition. The said actions often have a direct
effect on overall industry participants to lower profitability. The bargaining power of
buyers is analyzed according to the following effect in the industry:
Face switching cost (High). It is the power of buyers to switch sellers that meet
their needs. The switching cost locks the buyer to a particular seller or vice versa. Based
on the observations, buyers can easily switch to other banking institutions that offer
financial services that suit their preference.
For this segment, the banking industry or even non-banking financial industries
provide similar services. In tendency, bargaining power of buyers is really increasing.
21
This section outlines the major opportunities and threats facing by banking
industry in view of increasing challenges.
Table 4
Opportunities
A bank should stay at the epicenter, embracing
technologies that satisfy customer needs. With a
1. Banking Technology Innovation
new level of online, mobile, and new-channel
services.
Cross-border digital payments services provider
WorldRemit sees remittances OFW’s bouncing
2. Increasing Overseas Filipino
back, with growth of 6 to 7 percent this year after
Workers (OFW) Remittance
slumping by 0.8 percent in 2020 amid the Covid-
19 pandemic.
Chamber of Automotive Manufacturers of the
Philippines, Inc. (CAMPI) reported that vehicle
3. Increasing of Auto Loans sales from January to March this year was higher
by 8.9 percent compared to January and February
2020 despite being pre-pandemic months.
Threats
1. Tight Competition to Market Having the same products and services means big
Due to Same Products and competition so it is one of the things to study how
Services Offered to better enjoy and retain customers.
The rise in the inflation rate is connected to the
2. Increase of Inflation Rate
slowdown in the economy and affects businesses
The emergence of non-bank financial institutions
3. Reasonable Money Transfer like pawnshops or remittance centers is affecting
Existence the banking industry by offering the same products
and services.
Climate change or unexpected changes of weather
like strong storms, floods also affect the run of the
4. Climate Change Effects
economy. Like, today the pandemic we are facing
has brought down the course of our economy.
22
External Factors Evaluation (EFE) Matrix summarizes and evaluates economic,
social, cultural, demographic, environmental, governmental, legal, technological, and
competitive information.
Table 5
Weighted
External Factors Weight Rating Score
Opportunities
1. Banking Technology Innovation 0.15 4 0.56
2. Increasing Overseas Filipino Workers (OFW)
0.12 4 0.48
Remittance
3. Increasing of Auto Loans 0.12 4 0.48
4. Expansion to Market due to Growing Cities 0.10 3 0.30
Threats
1. Tight Competition to Market Due to Same
0.15 1 0.15
Products and Services Offered
2. Increase of Inflation Rate 0.14 1 0.14
3. Reasonable Money Transfer Existence 0.12 2 0.24
4. Climate Change Effects 0.10 2 0.20
Total 1.0 2.55
Note: The ratings refer to the strengths and weaknesses. Where 4 – major strengths, 3 – minor
strengths, 2 – minor weaknesses, and 1 – major weaknesses.
Analysis
The EFE matrix shown above is a strategic analysis for EastWest Bank to help
assess the opportunity and threats on its competitors. Data revealed that Banking
Technology Innovation, Increasing OFW Remittance and Increasing Car Loans are the
external opportunities of the company with rating of 4 as major strengths. Further, the
Expansion to Market due to Growing Cities with a rating of 3 as minor strengths.
While Reasonable Money Transfer Existence and Increase of Inflation Rate has a
rating of 1 as major weakness, Climate Change Effects and Tight Competition to Market
Due to Same Products and Services Offered has a rating of 2 as minor weaknesses, are the
external threats of the company.
23
Conclusion of Industry Analysis
Innovations in the internet and mobile banking technologies, the new channel of
distribution has become vigorous. Many banks see that they have the capacity to adjust to
the changes and advancement in the banking system.
To stay on track, bigger banks can be a big help to stay in the long run in the banking
industry, and cater to the increasing number of demands of consumers through on-line
banking and increased services, such as a greater involvement in the remittance business
for overseas Filipino workers (OFWs).
24
CHAPTER II
THE COMPANY
Beginning
EastWest Bank has made its presence known in the banking industry through steady
growth. With the opportunity of the millennium, they began a thorough computerization
effort and implemented online banking services to provide a more efficient way for
delivering bank products and services.
25
EastWest Bank is a subsidiary of Filinvest Development Corporation (FDC), one
of the Philippines' largest conglomerates, with interests in banking and financial services,
real estate, hotel and tourism, power generating, and sugar production. EastWest also owns
50% of East West Ageas Life Insurance Corporation, a life insurance firm formed with
Ageas Insurance International N.V., through its wholly-owned subsidiaries East West
Rural Bank Inc., East West Insurance Brokerage Inc., East West Leasing and Finance
Corporation, Quest Marketing and Integrated Services Inc., and Assurance Solutions
Insurance Agency Inc.
A Renewed Brand
26
Green, purple, and magenta have been chosen as new corporate colors for their
originality in the banking business, as well as the enthusiasm and out-of-the-box thinking
that these colors imply.
Core Values
Integrity
Excellence
Mutual Concern
Teamwork and Individual Initiative
Corporate Pride
Sense of Urgency
Leadership
Bank Recognitions
EastWest Bank has been recognized for its continuous performance, having been
named Credit Card Initiative of the Year - Philippines by Asian Banking & Finance in
2014. They also took home two (2) trophies for their Auto Loan Company at the 2019
Asian Banking and Finance Retail Banking Awards, which were hosted at the Shangri-La
Singapore. For the Philippines category, EastWest Auto Loan won the Automobile
Lending Initiative of the Year and Consumer Finance Product of the Year awards. These
awards demonstrate EastWest's dedication to providing the best services to consumers by
offering innovative loan solutions that help them realize their objectives and goals.
27
Fast Forward
Today, EastWest Bank is dignified to build on its solid basis and optimize its
capabilities in order to improve customer service and produce long-term value for its
customers, investors, and communities. EastWest is committed to continuously investing
in people, process, product, and service enhancements, and embracing new ideas to
enhance the EastWest experience as it looks to the future with confidence, driven by big
aspirations to eventually become a world-class bank anchored on service excellence in its
chosen markets.
Nature of Business
EastWest Bank offers financial services to consumer and corporate clients through
traditional and alternative delivery channels, and opened more branches to make banking
accessible and convenient for its clients. Then later introduced an internet banking facility
to expand delivery channels for its products and services.
Table 6
Peso Savings
28
Peso Savings
Peso Checking
29
Credit Cards
30
Credit Cards
Hyundai Mastercard
Earn 5% rebate on fuel purchases at any gasoline station
and enjoy exclusive 10% discount on PMS parts & labor,
and select accessories.
DLSAA Mastercard
Earn rewards points on your purchases which you may
redeem for cash rebates, annual fee waiver, or donate to
DLSAA projects.
Debit Cards
31
Prepaid Cards
Loans
Let EastWest Bank be a financial partner in purchasing a Brand New Car or Second Hand
Vehicle. Enjoy simpler and faster loan processing and avail low interest rate.
32
Table 7
Interest
TYPE 12 Mos. 18 Mos. 24 Mos. 36 Mos. 48 Mos. 60 Mos.
Payment
In Arrears 5.99% 8.35% 11.86% 17.32% 24.13% 31.00%
Brand New
In Advance 5.20% 7.54% 10.93% 16.36% 23.05% 29.85%
*Rates are not applicable for ALL-IN promos of dealers, accounts referred by agents
with premiums and accounts which require a dealer’s premium.
Own a dream home with rates that are lower than ever at flexible loan terms. Start living
the dream with EastWest Bank and apply TODAY!
Table 8
33
Fixed Term Rate Option
Enjoy total flexibility with our competitive interest rates. Choose your own fixed term rates
beginning at 1, 3, 5, 10, 15, up to 30 years and protect yourself against frequent rate
fluctuations.
Payment Schemes
EastWest Bank Home Loan gives you the longest payment option. Make your amortization
light and easy by stretching your loan term up to 30 years.
Loan Purpose
Top-up Loan
Availment of the paid-off portion of the existing loan for any purpose
Home Equity
A multi-purpose loan for personal consumption such as, but not limited to, travel, medical
treatment, education, business loans, etc.
Home Construct
A type of loan used for home construction
Reimbursement
A loan used to reimburse the borrower for his/her purchase of a residential property bought
within 1 year based on the transferred TCT/CCT
Home Acquire/ Condo Acquire
A loan used to finance the acquisition of a house, townhouse, condominium, or a residential
apartment (with a maximum of four doors)
Lot Acquire
A loan used to finance the purchase of a residential lot
Personal Loan
Whatever the dreams and desires are, EastWest Bank Personal Loan is the quick
and easy financial solution that helps get the cash needed. EastWest Bank Personal Loan
is an unsecured and non-collateralized consumer loan that is granted to qualified
individuals for their personal use. This loan facility is multi-purpose and comes in
affordable fixed equal monthly installments.
34
Enjoy the following benefits of EastWest Bank Personal Loan:
No Co-maker, No Collateral Requirement – Cash solution for all your needs. Increase
your financial flexibility through loanable amounts ranging from Php25,000 to
Php2,000,000 (subject to our approval).
Flexible Terms – Choose among our payment terms 12, 18, 24 and 36 months to make
your installments very affordable.
Competitive Interest Rates – Manage your cash flow and enjoy low interest rates. See
table of Interest Rates below.
Convenient and Fast Processing – Apply within the comfort of your home or office. In
addition, get your loan proceeds via Manager's Check or credit to your EastWest Bank
nominated account.
Pick up at the Head office – The bank will release the loan proceeds by issuing a
Manager's Check. The client is required to pick up the check from the head office
of EastWest Bank.
Delivery and Deposit to Account – A messenger will deliver the loan documents
to the client's delivery address for sign-off and pick up the Post-Dated Checks.
Requirements will be returned to the head office. If all requirements are complete,
the loan proceeds will be deposited to the client's account.
*Delivery option is available for selected areas with a minimal delivery fee.
35
Table 9
*Based on Loan Amount of Php100,000 and Processing Fee of Php1,900. Per BSP Circular No.730, EIR is
the rate that exactly discounts estimated future cash flow through the life of the loan to the net amount of
loan proceeds. It is the rate that best measures the true cost of credit.
Processing of application will take 5 to 7 banking days. Release of loan proceeds to the client will take
another 2 banking days for pick up and 2 to 4 banking days for the delivery and deposit to account option.
36
Organizational Structure
Board of Directors
Antonio C.
Jonathan T. Moncupa Jr.
Gotianun Vice Chairman,
Chairman President & CEO
un
Atty. Francis H.
un Jardeleza Gregorio U. Kilayko
un
Independent Director Independent Director
Atty. Armando L.
un un
Jerry Ngo Suratos
Director Independent Director
Atty. Benedicto M.
un Wilson L. Lee un
Valerio Jr.
Director Corporate Secretary
37
un un
Senior Management
Rafael S. Algarra Jr. – SEVP, Head of Treasury, Markets and Off-Balance Sheet
Manuel Joey A. Regala – FVP & Chief Information Security and Data Protection Officer
Alessandro L. Villaraza – FVP & Head, Bank Marketing & Corporate Communications
38
Organizational Chart
39
Analysis Using Value Chain
Primary Activities
Inbound Logistics
40
Operation
Outbound Logistics
It includes the activities that deliver the product and services to the customer by passing
through different intermediaries. When outbound activities are timely managed the
processes put a minimum negative effect on the quality, it maximises the customer
satisfaction and increases growth opportunities for the bank.
Marketing Sales
Amid the frenetic pace of activities in the banking industry, EastWest Bank managed to
increase its share of voice by achieving several milestones in its marketing and
communications campaigns. Among the major initiatives in 2011 was the launching of the
new brand identity – new logo, new corporate colors and new tagline, “Your Dream Our
Focus”. The rebranding exercise involves the rollout of tangible applications in the form
of new branch signages, product and promo advertising campaigns and uniforms. Another
milestone was the launch of the EastWest Visa Debit card, which can be used to pay for
items at point-of-sale (POS) and online sites, receive funds from anyone worldwide, and
withdraw cash from ATMs.
Service
Customer satisfaction will play an important role in developing customer loyalty. It is also
considered as important marketing and promotional activities. EastWest Bank must
analyze its support activities to avoid damaging brand reputation, and instead use it as a
tool to spread positive word of mouth due to quick, timely and efficient support services.
41
Support Activities in the banking value chain are as follows:
Firm Infrastructure
The firm infrastructure denotes a range of activities, such as- quality and risk management,
legal matters handling, accounting, financing, planning and strategic management.
Effective infrastructure management can allow the bank to optimise the value of the whole
value chain to strengthen the competitive positioning in the market.
EastWest Bank recognizes the important role our people play in the Bank’s success and
strives to create a working environment that fosters their optimal performance, thus
delivering excellent service to our customers and benefiting all stakeholders. In recent
years, a great deal of energy has been devoted to transforming the culture of the Bank.
Skills training and talent management initiatives have been aligned to support the
development of our employees, and rewards and compensation remain competitive
ensuring the attraction, retention and motivation of employees.
Technology Development
The role of technology has grown increasingly important in the banking world.
Specifically, several of the most important developments have taken place during this
current situation that physical transaction is limited. Digital technology can also be a source
of competitive advantage for the banks since it helps deliver services more efficiently.
Technology has made banking easier and also improved the bank’s productivity. Today,
banks are using technology is every aspect of business including sales, marketing, customer
service and other functions. The bank websites play an important role in driving brand
awareness, sales, marketing as well as customer acquisition and retention.
Procurement
The procurement in value chain denotes the processes involved in purchasing the necessary
materials, equipment and supplies in producing advance or innovative product and
services. The goal of each procurement function is to provide customers with quality
products and services at the best overall value to the Bank.
42
To have a deeper insight about what makes EastWest Bank stay strong in the
industry, here is the qualitative analysis of the internal factors that help its continuous
progress and challenges its survival.
Table 10
Strengths
EastWest Bank is the eleventh largest bank in
the Philippines in terms of assets. EastWest has
1. Named Among the Strongest
consistently been included in the Asian Banker 500
Philippine Banks
list of strongest and largest banks in the region
since 2011.
2. Tied in Filinvest Corporation, EastWest Bank, the banking arm of the Filinvest
country's leading conglomerates in Development Corporation, was named eighth
the Philippines strongest bank in the country.
EastWest Bank’s Trust Unit has recently been
recognized by the CFA Institute, a global
association of investment professionals, for having
3. Competent Management complied with the Asset Manager Code, the highest
standards of ethical and professional behavior
expected of firms that manage assets on behalf of
clients.
They embarked on a full computerization program
4. Innovative Products and and has implemented its online banking facilities
Services for a more efficient system to deliver bank products
and services.
Weaknesses
EastWest Bank is rarely seen in TV commercials
1. Absence of Advertising and printed ads, especially on social media
Promotion platforms which is an advanced way to promote
their products and services.
EastWest Mobile Application has only a 2.3 star
2. Low Customer Satisfaction in
rating in Google Play Store, and the frequent
Online Banking
complaint is the app is slow and hangs sometimes.
At present, the bank has 228 branches, 141 of
which are located in Metro Manila and 87 in key
3. Presence in Rural Areas
provincial areas. Some 20 branches are now in
various stages of construction.
43
Internal Factors Evaluation (IFE) Matrix summarizes and evaluates the major
strengths and weaknesses in the functional areas of the business, and it also provides a basis
for identifying and evaluating relationships among those areas.
Table 11
Weighted
Internal Factors Weight Rating
Score
Strengths
1. Named Among the Strongest Philippine
0.18 4 0.72
Banks
2. Tied in Filinvest Corp., country's leading
0.17 4 0.68
conglomerates in the Philippines
3. Competent Management 0.15 3 0.45
4. Innovative Products and Services 0.13 3 0.39
Weaknesses
1. Absence in Advertising Promotion 0.14 1 0.14
2. Low Customer Satisfaction in Online
0.13 2 0.26
Banking
3. Presence in Rural Areas 0.10 2 0.20
Total 1.0 2.85
Note: The ratings refer to the strengths and weaknesses. Where 4 – major strengths, 3 – minor
strengths, 2 – minor weaknesses, and 1 – major weaknesses.
Analysis
The major strengths of the company with rating of 4 are EastWest Bank is Named
Among the Strongest Philippine Banks, according to The Asian Banker and Tied in
Filinvest Corporation, country's leading conglomerates in the Philippines which is
managed by Gotianun Family. Competent Management and Innovative Products and
Services has a rating of 3 as minor strengths.
The company also has internal weaknesses; Absence of Advertising Promotion has
a rating of 1 as major weakness. While Limited Presence to Rural Areas and Low Customer
Satisfaction in Online Banking has a rating of 2 as minor weaknesses.
44
Strategic Issues Facing the Firm
EastWest Bank has low customer satisfaction in their mobile application and online
banking services. And the company has a limited promotion through Television
and Written advertisement also in new way of promotion through social media
platform.
More non-bank financial institutions now operate in the countryside, this could be
a substitute products and services with relatively lower cost. These entities may
acquire portions of the market.
EastWest Bank continues to operate in a challenging environment due to Covid-19
Pandemic.
Present Strategies
EastWest remain focused on the important things and remain competitive. The bank
concentrates in major market segments and offer practically all the mainstream products.
In addition, EastWest Bank focuses in new ways to enhance their products and services
offered to the community.
Strategic Objectives
45
CHAPTER III
STRATEGY ANALYSIS
A Mission Statement defines the company’s business, its objectives and its
approach to reach those objectives. A Vision Statement describes the desired future
position of the company. Elements of Mission and Vision Statements are often combined
to provide a statement of the company’s purposes, goals and values.
Vision
Mission
To create value:
For our chosen markets, by providing them with excellent service in the delivery of
integrated and innovative products, responsive to their current and future financial needs,
at the best value.
For our employees, by continuously providing them with opportunities to develop their
full potential and by giving recognition and rewards commensurate to their contribution.
For our community, by committing ourselves to improving the quality of life of those
around us through the support for various charities and involvement in outreach activities.
For our shareholders, by managing the bank professionally and prudently to consistently
achieve optimal possible returns.
46
Proposed Vision
Proposed Mission
To create value:
For our chosen markets, by extending our field and providing our customers with
excellent financial services, driven by improved technological resources, and to meet their
financial needs at their best value.
For our employees, by hiring competitive people, shaping and developing their full
potential, constantly engaging them to perform at their utmost level, and giving reward,
recognition on behalf of their hard work.
For our community, by continuously committing ourselves to help the people in our
community by providing support to charities and implementing outreach activities.
For our regulators, by not allowing loosening the highest standard of the business ethics
and the corporate governance.
For our shareholders, by continuously managing the bank professionally and achieving
our goals. To provide the best possible return.
Analysis
As one of the leading banks in the industry, the recommended vision statement
suggests EastWest Bank’s continuous operation and independence, improving their
services as what they should, and meeting the needs and expectation of their clients to
maintain their high profitability record.
The corporate mission indicated above is the one we’ll propose. The following
mission is for those who trust our bank, who manage to keep it expanding and for those
who support us in achieving our objectives. This mission is created for the individuals who
will become a part of this expanding bank, as well as the people who will be behind it.
47
Generic Strategy
Porter identified 4 generic strategies that can be used to both classify company
behavior and drive company behavior. A generic strategy is a general way of positioning a
firm within an industry. Focusing on one generic strategy allows executives to concentrate
on the core elements of firms’ business-level strategies and avoid competing in the markets
better served by other generic strategies.
The Bank was able to consistently compete and register good trading results
through the years. With the drop in interest rates in the latter part of 2019, it was able to
position itself to profit. It is poised to have one of its most fruitful trading year in 2020.
The Bank reported that its record profits were due to their unique strategy.
48
BCG Matrix
49
These are Peso Savings, Peso Checking, Peso Time Deposit, Foreign Currency
Deposit, Auto Loans, Home Loans, Personal Loans and Credit Cards. These bank services
are usually preferred by customers. A Question Mark shows rapid growth but lower profit
margins. It has a low market share in a high growth market. It needs a great deal of cash to
increase market share. Items placed in question mark quadrants such as Payroll Services,
Disbursement Services, Collection Services, Liquidity Management, and Government
Payment (eGov) are services that have a potential for success. But requires a strategy on
how to make it more recognizable by customers.
Cash cows are products with low market growth but a high market share. Under the
cash cows are Investment Trust Fund, Investment Products and Trust Products. These
products generate a substantial amount of cash, which is used to finance the life-cycle of
the other goods and is invested in questionable products for improvement. A Dog has a low
market share in a low growth market. Most dogs eventually leave the marketplace. Based
on EastWest Bank 2020 annual report the bank has no products and services under the dog
quadrant, it means that all of the company's products and services contribute to its profits
and has a potential for growth and development.
50
I-E Matrix
Table 12
Analysis
Based on the previously conducted External and Internal Analysis, EastWest Bank
got a weighted score of 2.55 on its EFE matrix and 2.85 on its IFE matrix. Plotting the
scores, EastWest Bank falls into cell V, which represents the “Hold and Maintain” stage.
The recommended strategies for this division is to preserve the technique and ought to
concentrate on market infiltration and product advancement.
51
TOWS Matrix
Table 13
52
Analysis
A TOWS is a commonly used strategic planning tool and can add real value to a
company, helping to take strategic planning one step further. The result of EastWest Bank
TOWS analysis are as follows:
Under the Strengths-Threats factors, the strategy is for the bank to develop a
competitive wage structure to secure a good reputation in the banking industry. Under stiff
competition, the bank should strategize to create a good working environment to address
the issues of climate change. Staff career development is a good strategy for staff to gain
new knowledge on developing new products/services and managing the bank
competitively.
Under the Weakness-Threat factor, the strategy is to reduce the bank’s weakness in
terms of limited advertising promotion and to minimize the threat of money transfer
existence. The bank should continuously promote its existing products and services to draw
new possible clients’ interests. The bank should advertise their services to obtain their
trusts and with an assurance of safe and legitimate transactions between the client and the
company.
53
CHAPTER IV
IMPLEMENTATION
McKinsey’s 7S Framework
54
Strategy
Through meticulous and intentional activities, EastWest Bank has been able to
maintain their aggressive expansion and great performance over the last five years. They've
increased the number of branch in their network, which is now more than double what it
was two years ago. EastWest continues to be one of the most consumer-focused universal
banks among the local banks, with its consumer portfolio accounting for more than half of
its total loans. Their primary strategy is as follows: We are a universal bank with a distinct
retail orientation, catering to small and medium-sized enterprises as well as consumers. As
a result, the bank needed to broaden its distribution network.
Structure
EastWest Banks take place in many different processes and operations throughout
the organization. The board of directors is ultimately responsible for the governance of risk
management while the senior management ensures that there is a common and efficient
process in place. Parts of the board requirements are clear and transparent information
about our enterprise risk ls and mitigating activities from all parts of our business
operations. The bank is consistent with corporate governance best practices, the board
established committees to assist it in discharging its responsibilities. Each committee has a
mandate outlining the authority delegated to it by the board. Minutes of the committee
meetings are available to all directors and are included in the board meeting documents.
Systems
EastWest Bank installed one HP 3PAR StoreServ T400 Storage System in its
production data center and another at its disaster recovery location to assure business
continuity. The organization can easily handle the increased workload and sustain future
development because to its ability to condense hundreds of virtual machines onto a single
storage system. EastWest Bank was able to meet its primary goal of reducing end-of-day
processing time by 40% by implementing HP 3PAR StoreServ. All operation systems' data
recovery time was decreased from up to four hours to just one hour.
55
online banking and mobile banking, EastWest Bank use a wide variety of security
protection and monitoring methods to protect the client’s confidentiality of the information
and the security of every transaction when using the online and mobile banking facilities.
Skills
Staff
During the lockdown, HR leaders had to navigate unfamiliar territory and take
unprecedented measures to prevent the virus from spreading, such as allowing more than
a third of our workforce to work remotely, implementing business continuity plans, and
enforcing emergency communication policies, all while preventing the virus from
spreading.
Style
The management style of EastWest Bank is centralized. All decisions are made by
the Board of Directors, however they distribute certain implementation authority to their
subordinates, such as senior management and vice presidents. A centralized organization
is one in which the head office retains decision-making authority and all subsidiary offices
receive orders from the main office.
56
Shared Values
Table 14
Aligned Aligned
Present Strategy (Yes or No)
Proposed Strategy (Yes or No)
Innovate strategies
in support of the
current effective
strategies to promote
the products and
services.
Structure Competent and Yes Sustain the Yes
functional competent and
management functional
structure. management
structure where each
department of the
company group
according to their
purpose.
57
System HP 3PAR StoreServ Yes Sustain using the Yes
T400 Storage current system, this
System enables the company
to easily handle the
increase in workload
and support further
growth. It also
reduces end-of-day
processing time by
40 percent.
Innovate on training
program with prior
to the online banking
transaction that will
help the company to
improve its online
performances and
acquire more clients.
Staff Employees with Yes Keep and continue Yes
expertise and on hiring staff with
competencies in the years of experience
bank industry. in the same industry.
Have an employee
recognition scheme
to boost employees’
motivation and
productivity.
58
Review employees’
compensation
package due to tight
competition to the
market.
Style Centralized Yes Retain current Yes
Management Style centralized
management style,
wherein the owner
and top management
has control all over
decisions but gives a
degree of latitude to
the subordinate in
carrying out their
task.
Shared High standard of Yes Set and maintain Yes
Values customer’s service. high standard of
service to achieve
customer loyalty.
Analysis
59
SPATRES
Table 15
Responsible Resource
Strategies Program/s Activities and Task Person/ Requirements
Department (Budget)
60
Analysis
EastWest Bank will purchase server software through Server Clustering and Vitro
Server Colocation to help speed up the company’s online system. Currently, EastWest
Bank has (one) 1 Vitro Server located in Pasig City, if the company acquires another server
located in Clark Pampanga, it will speed up their online banking transactions and avoid the
down time.
The intensification of advertising promotion through social media will be a big help
to better recognize the services offered by the company, especially in their target market.
Further, people development programs through seminars, research and development can
boost employee’s competency, potential and readiness for banking technology innovation.
61
CHAPTER V
FINANCIAL ANALYSIS
Current Ratio
The current ratio is a liquidity ratio that measures a company's ability to pay short-
term obligations or those due within one year. It tells investors and analysts how a company
can maximize the current assets on its balance sheet to satisfy its current debt and other
payables. We can get the current ratio by dividing current asset to current liability.
Table 16
Current Ratio
2020 2019
Analysis
As presented in table above, EastWest Bank has a 0.55 current ratio in 2019 and a
0.66 current ratio in 2020 to measure if the company can cover its current liabilities. It can
be concluded that the bank is currently in a situation where it won't be able to meet its
short-term obligations for over a year. However, increasing the current ratio to 0.11 percent
would mean that the bank is working on ways to increase their current assets.
62
Debt to Equity Ratio
Table 17
2020 2019
Analysis
Table shown above, EastWest Bank has Debt to Equity Ratio of 7.28 lower by 0.92
percent in 2020 with a ratio of 6.36. The drop of the ratio is a sign that the Bank is over-
relying on equity to finance the business, which can be costly and inefficient. It also
indicates that EastWest Bank leverages at minimal risk.
63
Net Profit Margin
Net profit margin, also known as net income margin or net margin, is the ratio of
profit a company or business unit earns to the total amount of revenue (net sales) the
company or business unit generates. Net profit margin is expressed as a percentage. Net
profit margin equals a company's net income either listed as such in its financial statement
or can be calculated as revenue minus the cost of goods sold, operating and other expenses,
interest, and taxes divided by revenue. That result is multiplied by 100 to convert the net
margin ratio into a percentage.
Table 18
2020 2019
Analysis
Presented in the table above the Net Profit Margin of EastWest Bank, data revealed
it goes down to 21.02% in 2020 compared to the previous ratio of 27.56% in 2019. The
decrease is due to credit losses from the effect of Covid19 Pandemic. But it is safe to say
that EastWest Bank’s Net Profit Margin is in a good condition, the ideal ratio is 20% and
above, but it still depends and varies on different industries.
64
Financial Assumptions
Financial assumptions and projections are critical components of all business plans.
They include income and expense assumptions, as well as the inventory and accounts
receivable in the balance sheet. Assumptions for balance sheet presentations should be
conservative and based on reasonable expectations of asset acquisitions in the coming five
years. These will help to construct the assumptions in the cash flow statement.
1. EastWest Bank will allocate ₽ 2.5 Million in acquisition of new server and it will
increase by 10% yearly to cover the maintenance expense.
2. Compensation and fringe benefits will increase by 10% to fund the employee’s
enhancement program in research and development through training and seminars.
3. Advertising cost will increase by 10% due to promotional and advertising activities
through short-term sales promotions, placements of ads through tarpaulin, flyers
and others. Also the marketing and corporate communication department will
intensify the social media and telemarketing promotion.
4. Interest expense will increase by 7% and operating expenses will increase by 5%
yearly.
5. There will be a 10% to 20% increase in sales in this projection upon the
implementation of the proposed strategies.
65
Projected Income Statement
Table 19
Analysis
The projected income statement shows an increasing net income for the next three
(3) years. Which indicates that the implemented strategy is effective to perform
the business operation well in the long run. All computations are based on EastWest Bank
Financial Statement 2020 and from Financial Assumptions.
66
Return on Sales
Return on sales, often called the operating profit margin, is a financial ratio that
calculates how efficiently a company is at generating profits from its revenue. In other
words, it measures a company’s performance by analyzing what percentage of total
company revenues are actually converted into company profits. The return on sales formula
is calculated by dividing the operating profit by the net sales for the period. The result is
multiplied by 100 to convert the net margin ratio into a percentage. Income tax expense
and interest expense are not included in the equation because they are not considered
operating expenses.
Table 20
Analysis
The table above shows the projected return on sales for EastWest Bank. The 2022
ratio is 17.39%; the ratio is less than the average ratio of return on sales, which is 20% and
above because of the increase in operating expenses due to implemented strategy.
In 2023 the ratio is 23.45% EastWest Bank’s return on sales ratio has increased due
to the effect of implemented strategies. And in 2024 the ratio is 32.23%. It can be presumed
that when EastWest Bank’s return on sales is significantly increasing, the company
becomes more profitable and manages their expenses well.
67
CONCLUSION
The EastWest Bank Corporation faces more strengths than weaknesses, also the
threats are inevitable but the opportunities seen can help to further strengthen the company.
Embracing the banking technology innovation can help the bank to satisfy the needs of
their customers’ with new level of online, mobile and new-channel services.
The acquisition of a new software will improve the transaction of both local and
Overseas Filipino Workers (OFW) customer’s so that the sending of money or remittances
will be more real time. Also, the improved online and mobile banking application will
increase the customer’s satisfaction and can gain customer’s loyalty to EastWest Bank.
1. The strategy that will be implemented will cause an increase in net income for the
next three (3) years.
2. The strategy will increase the return in sales ratio. Therefore the EastWest Bank
will be profitable and will manage its expenses well.
68
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https://www.reuters.com/companies/EW.PS
https://www.worldometers.info/world-population/philippines-population/
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APPENDICES
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71
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Appendix B: Computation on 3-Year Projected Income Statement
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