An Empirical Study on OFW Lending of EastWest Bank

Submitted To: Sayo, Maria Katrina Alyanna Padlan

Submitted By: Group 3
Leader: Sanchez, Zhynna Kizz
Members: Reyes, Lorrie Jane
Estrella, Krisha Anne
Tujon, Mark Wesley
Apilado, Jewel Vianne
Lazaro, Kim Cyril
Dela Cruz, Owyn
Olaco, Precious
 Introduction

The Philippines financial environment has experienced a big increase in the Overseas Filipino
Workers (OFW) industry in recent times. This sector serves as a crucial supplier of foreign exchange
for the nation. The banking industry has evolved in response to the expanding OFW sector in
order to accommodate their distinct financial requirements. EastWest Bank, a notable
establishment in this context, has formulated customized lending products. This empirical study
examines EastWest Bank's practices regarding lending, providing insights into their efficacy,
borrower characteristics, and the consequences for the bank's portfolio.

A significant part of the Philippine economy is comprised of remittances from Overseas

Filipino Workers (OFWs), highlighting the criticality of the financial services extended to this
demographic. As a major participant in the Philippine banking industry, EastWest Bank has been
actively engaged in the provision of financial products tailored to the needs of OFWs. The
present empirical inquiry is committed to conducting a thorough examination of OFW lending
at EastWest Bank. It will specifically concentrate on the performance of the loan portfolio,
borrower attributes, and the requirements for the bank and its OFW clients. Filipinos who work
abroad (OFWs) are extremely important to the Philippine economy because sending money
home to their family while also boosting the country's foreign exchange reserves. As a result,
several financial institutions in the Philippines have realized that the OFW market has the
potential to be quite large. EastWest Bank, a significant player in the Philippine banking sector, is
not an exception when it comes to marketing financial services and products to OFWs.

The notion of conducting an empirical investigation on EastWest Bank's lending policies for
overseas workers is presented in this concept paper. The purpose of the study is to provide
information about the type of lending to OFWs, how it affects the bank's financial performance,
and how lending to OFWs affects borrowers in general. Understanding the mechanics of this
particular situation is crucial. Additionally, it supports the national objective of advancing
Filipinos who are employed overseas and utilizing their contributions to maintain the nation's
economic progress.

The methodology, literature review, and research questions will all be covered in the next
sections of this concept paper, which will establish the framework for EastWest Bank's thorough
empirical study on lending to overseas workers.
These are the goals of this empirical study:

• Examine the lending options and support provided by EastWest for overseas
workers.
• Bank.
• Analyze EastWest Bank's profitability and financial performance in relation to its
• Lending portfolio to OFWs.
• Review the procedures for loan applications and approvals, as well as the interest
rates and payback schedules.
• Analyze the effect of these loan practices on the stability and well-being of OFWs'
finances, as well as the economies of their families and the Philippines as a whole.
• Determine the difficulties, dangers, and opportunities related to lending to
overseas workers and make suggestions for improvement.

• It advances knowledge about OFW financial inclusion and the efficiency of

EastWest Bank's lending initiatives, this study is significant. It will offer helpful
information that can be enlightened.

Background of the Study

OFWs typically seek financial support for a variety of reasons, including home purchases,
business startups, or emergency situations. Since they receive payments in foreign currencies,
they generally have a higher prospective loan repayment capacity than locals. Because of this,
OFWs represent a valuable business sector for banks. Prior to 2021. According to Statista
Research Department, hundreds of thousands of Filipinos work in a variety of jobs abroad and
make a major contribution through remittances, which make up a sizable portion of the nation's
GDP. Despite making a considerable economic contribution, OFWs confront particular financial
difficulties. Since they are transient and far from their homes, they necessitate individualized
financial plans, particularly for borrowing. OFWs typically seek financial support for a variety of
reasons, including home purchases, business startups, or emergency situations. Since they are
paid in foreign currencies, they frequently have a higher prospective loan repayment capacity
than locals. Because of this, OFWs represent a valuable business sector for banks. EastWest Bank
has made a name for itself in the Philippine banking industry since its founding in 1994.

It is recognized for taking an active approach when identifying market segments and
developing goods to fulfill them. The bank launched financing solutions made especially for the
OFW community after evaluating their financial potential and needs. EastWest Bank is one of the
rapidly growing banks in the Philippines. Since OFWs have a significant economic impact,
EastWest has expanded its loan services to meet the needs of this particular group. While
studies on OFW remittances and their effects on the Philippine economy have been conducted,
there is a shortage of research concentrating on the loan services specifically designed for
OFWs, particularly regarding certain banks like EastWest. Through this empirical approach, the
research aims to support prospective policy changes, offer OFWs a better grasp of their financial
possibilities, and offer actionable insights for financial institutions.

This study seeks to explore the nature, achievements, and difficulties associated with
EastWest Bank’s loan services for OFWs evaluating their effectiveness, relevance, and any
opportunities for development. it also aims to shed light on whether EastWest Bank's loan
offerings are truly aligned with the needs of the OFW community by taking into account factors
like their potential higher repayment capacity, transient status, and the inherent risks of their
overseas jobs. Furthermore, it's critical to make sure that the services provided by banks remain
responsive and pertinent in a constantly changing financial landscape where technology,
regulations, and global events can have a significant impact on remittance behaviors and needs.
With its dedication to the OFW community, EastWest Bank must be ready to adapt and
innovate.
https://www.statista.com/statistics/1243681/philippines-deployed-overseas-
workers/#:~:text=In%202021%2C%20about%20745%20thousand,to%20the%20COVID%2D19%
20pandemic.