1

CHAPTER 1

INTRODUCTION


Background of the Study

In this era of globalization, competition is so stiff that no businesses are
spared. The influx of communication technologies brought the world closer to
each other making opportunities for businesses to go globally.
Service industries, which include banks, messenger services, hospitals
and others, now find themselves involved in marketing activities in order to
capture more customers. Innovative products and services are being developed
so as to satisfy the needs of their respective customers.
In the banking industry, almost all of the competing banks (big and
medium size and even several small ones) have created a marketing
department, which shall oversee the implementation of banks marketing
program. This new department brings bank products and services closer to their
target clients. Marketing officers talk personally to prospective clients, individual
or company. Gone now are the days that banks wait for walk-in customers.








2
Statement of the Problem
Queen City Bank, a thrift bank, has been operating in Davao City for the
past ten years. Despite these years, however, there seemed to be some problem
besetting the Davao Branch in terms of extending loans, and lack of public
awareness. This problem has caused them to have low profit performance over
the past years. How can Queen City Development Bank Davao branch attain a
32% increase in outstanding loans for the year 2008?

Goals of the Study
The goals of this study is to increase the branchs profit performance and
improve its marketing reach in the next five years
Specifically, it has the following goals to achieve:
1. To determine the financial performance of Queenbank Davao Branch
in terms of gross income, expenses, profitability, and liquidity
2. To determine the marketing performance of Queenbank Davao Branch
in terms of public awareness and competitive position
3. To identify the banking needs of the local residents in the Chinatown
area.





3
Objectives of the Study

To increase its customer awareness on Queen City Development Bank,
Davao branch from 32% to 48% clients for the year 2008.
To increase gross profit of the branch by at least 22.18% for the year
2008.
To increase branchs current ratio from .11 to .15 in the year 2008.

Importance of the Study
Benefits of this study may accrue to the following:
Queenbank Davao Branch- results of the study will give branch
management insights on how they stand in Davao City. Findings may serve as
basis for formulating new strategies to improve its performance
Local Banking Industry Results of the study will help local banking
association of the banking needs of local residents, thus could pave way for
development of new bank product and services
Students findings from this study will make them aware of how bank
industry operates and thus could make them more knowledgeable of banking
operations




4

Scope and Limitations
This study is limited to improving the performance of Queenbank Davao in
terms of profit. This study shall confide strictly on result of branchs operational
performance during year 2007 as provided.
This study is also limited in determining the marketing awareness of the
local public on bank existence, branchs competitive position, identifying banking
needs of local residents, and planned actions that will improve the present
banking condition of the branch under study.

Methodology
Survey Design- The main instrument used in gathering information is the
used of a constructed questionnaire. It was distributed to the different
respondents within strategic areas of Davao City.
Direct interviews were conducted with respondents and branch personnel
to support the extraction of data.
Secondary data to supplement the needs of the study were provided by
the concerned branch with restrictions in order to have confidentiality of some
branch data.




5






Sampling Design- non-probability sampling specifically, convenience
sampling was used as the sampling design. This sampling design was used
because of time and financial constraints of the student researchers. Also, the
researchers would like to test ideas, or to gain ideas about the subject of interest
which is about feasibility of relocating the thrift bank in the Chinatown area.

Conceptual Framework

Figure 1 shows the conceptual framework of this study. It shows the
studys input in terms of banks programs and output whether the bank should
relocate or not
Figure 1: Conceptual Paradigm of the Study Showing Input and Output

Input Output

Queenbank Davao
Programs
- Capital Budgeting
- Survey results
- Review of related literature
- Industry analysis
- Analysis of the financial
statements provided by the
Decision of
whether to add
a new branch
or to relocate
the current
branch
6

Definition of Terms
The following definitions of terms are presented for easy understanding of
the readers.
Strategic Planning
The basic idea and process of strategic planning has been around for
many years. Strategic planning represents a paradigm shift from what is known
as long-range planning. Strategic planning was developed as a proactive
alternative to long-range planning. Formal "strategic planning," on the other
hand, is a top-down, vision-driven process that is used to develop an
organization's future value. Russell Ackoff, professor at the Wharton School of
Business and a noted strategic planning consultant, notes, "Planning . . . is
anticipatory decision-making. It is the process of deciding . . . before action is
required.
Growth Strategies
It is the most widely pursued strategy designed to achieve growth in sale,
assets, profits or some combinations. Continuing growth means increasing sales
and a chance to take advantage of the experience curve to reduce per unit cost
of products sold, resulting to increase profit. Market penetration, market
development, and product development are basic types of growth strategies that
companies adopt.
7
Market penetration strategy- this strategy seeks to increase market
share for present products or services in present markets through greater
marketing efforts. This strategy is widely used alone and in combination with
other strategies. It includes increasing the number of salesperson, increasing
advertising expenditures, offering extensive sales promotions or increasing
publicity efforts.
New product development- is a strategy that seeks increased sales by
improving or modifying present products or services. Product development
usually entails large research and development expenditures. Banks are
expanding geographically by adding branches aggressively.












8

CHAPTER 2
REVIEW OF RELATED LITERATURE

Origin of Thrift Bank Industry


A thrift bank is a bank that focuses on taking deposits from consumers
and originating home mortgages. It emerged from the British building society in
late eighteenth century and its primary purpose was to help working class men
and women save for the future and for home acquisition. Certain provisions were
promulgated for one to become a thrift member. One such provision is for the
prospective member to subscribe shares from the organization by paying the
shares in regular monthly installments. When accumulated monthly installments
of the members are big enough, members are allowed to borrow money for
purpose of buying a house. The amount of money the member can borrow is
equal to the face value of the subscribed shares thus, loans granted were
actually advances made on their unpaid shares. The member then repays the
loan and interest through regular monthly installments. The accumulated interest
and other fees less operating expenses thus would be the profit of the thrift
organization. It will be the basis for the dividend each member will receive at the
end of the year.
Few thrift institutions were organized after its first formation in 1831. The
situation only changed in the late nineteenth century where urban growth
9
became visible and demand for housing increased as an aftermath of the
Industrial Revolution as number of thrifts began to mushroom.
Although industrialization was a major factor to the growth of thrift banks,
there are other reasons that led to the boom of thrift banks in the 19
th
and early
20
th
century. These are: First, thrifts were not-for-profit cooperative organizations
that were typically managed by the members. Second, thrifts in the nineteenth
century were very small having only at least 200 members. These local
institutions serve well-defined groups of aspiring homeowners.
Also, thrift mortgages have longer term of repayment, ranging from eight
to twelve years to which a borrower can repay both the principle and interest over
time. This type of loan, known as the amortizing mortgage, was commonplace by
the late nineteenth century, and was especially beneficial to borrowers with
limited resources. Also, these home mortgages were primarily available to
working class men and women.









10
Thrift Bank Industry in the Philippines
The industry continued to grow rapidly as total assets rose anew by 12.4
percent underpinned by the sharp rise in investments, net (45.3 percent).
However, its underlying fundamentals remained weak as evidenced by sustained
overall et operating loss, by deteriorating cost efficiency, and by still increasing
proportion of distressed assets to total assets (29.2 percent). Loss provisioning
also further eroded and balance sheet leverage increased. On the positive side,
the ability to mobilize deposits remained robust as deposits rose by 14.7 percent.
Nevertheless, assessment of overall industry performance is not straightforward
as it is complicated by very wide variation in individual bank performance. In
particular, a handful of troubled banks materially tainted industry performance
indicators.

Table 1: List of players in the industry Davao Chapter ( thrift and savings
banks)

* Anchor Savings Bank * Bank Wise
* Asia United Banks * RCBC Savings Bank
* Asian Bank * Maybank
* BPI Family Savings Bank * Micro Enterprise Bank
* Banco Filipino * Queenbank
* Philam Savings * Planters Development Bank


The industry was still dominated by BPI Family Savings Bank whereas
Asiatrust Development Bank replaced Banco Filipino and Philam Savings for the
fifth slot in terms of assets and loans, respectively (table 2).
11
Table 2
TOP FIVETHRIFT BANKS
(NATIONWIDE)
Based on Published Statements as of
June 2004
(Amounts in P Billion)

ASSETS
Rank Name of Bank
Amount
1 BPI Family Savings Bank
63.3
2 Philippine Savings Bank
39.0
3 Planters Development Bank
30.6
4 RCBC Savings Bank
29.0
5 Asia Trust Development Bank
12.0
Total
173.9
%share
60.2
LOANS
Rank Name of Bank
Amount
1 BPI Family Savings Bank
39.1
2 Philippine Savings Bank
21.3
3 RCBC Savings Bank
17.1
4 Planters Development Bank
15.2
5 Asia Trust Development Bank
6.2
Total
98.9
% share
64.7

Source: Office of Supervisory Policy Department, Supervision and Examination
Sector

The industry chalked up a 7.3 percent growth in total loan portfolio.
Industrys loan portfolio is extended to the real estate, renting, business activities,
construction, other community, social, and personal services, private households,
manufacturing, agriculture, fishery, hunting and forestry, wholesale and retail
trade, repair of motor vehicles, health and social work, electricity, gas, and water,
education and automobile sectors.

12
INVESTMENTS: The industrys investments (gross0 reached P52.0
billion, a substantial increment of 43.5 percent. Huge portions of the industrys
total investments were placed in debt instruments.

DEPOSITS: The industry continued to rely on deposit liabilities for funding.
The industry mobilized additional deposits worth P26.7 billion or 14.7 percent for
funding.
Queen City Development Bank

Queen City Development Bank, a thrift bank, was established in 1981
from the success in business of its owner and founder Mr. Rogelio Florete, Sr. At
present, the Florete group owns eighty percent of the company. Its main office is
located in Iloilo City where two other branches are strategically located.
For its twenty- four years of operations, it was able to operate in ten key
cities in Visayas and Mindanao. Bacolod, Cagayan, Cebu, Dagupan, Davao and
Naga. It is one of the top thrift banks outside the National Capital Region
.
Queenbank is committed on satisfying customers needs by providing
them various products and services; and earning the clients trust and confidence
in the company, on the process. As a highly conservative and liquid company,
Queenbank continues to prosper by achieving the fundamentals of: (1) managing
risks effectively through quality loan accounts, and; (2) handling over-all
operating costs.

13
Tuesday, June 17, 2003
Search on for most SME-friendly bank

THE Davao City Chamber of Commerce and Industry (DCCCI) has announced
the start of the evaluation for the Most SME-Friendly Bank Awards of 2003.

In an interview Monday, DCCCI advocacy officer Karl Catalan said banks
deserve such recognition, being the center of the mainstream financial system
providing assistance to the small and medium enterprises (SMEs).

The contest, which is open to all banks in Davao City, has three categories -- for
commercial bank, thrift bank, development or rural bank.

Four major awards will be given away to the Most SME-Friendly Government
Commercial Bank, Most SME-Friendly Private Commercial Bank, Most SME-
Friendly Thrift Bank, and Most SME-Friendly Rural Bank.

Search and nomination committee established by the SME Resource Network of
the Davao City SME Center and the representative from the Bangko Sentral ng
Pilipinas will be responsible for evaluating all candidates.

The group will base their assessment on the following criteria: the number of
SME accounts, borrowers, the total amount lent to SMEs, employment generated
14
as a result of financial assistance to the SMEs, innovative use of collateral
substitutes to accommodate the SME borrower, and the handling of account.

Banks should be accommodating and easy to negotiate with, especially if
delayed payments, restructuring, and other loan or payment adjustments are
concerned.

Bank candidates are requested to submit documents such as certified copy of
financial statements, copy of organizational chart and others necessary for the
comprehensive deliberation of the screening and nomination committee.

Last year's Most SME-Friendly Thrift Bank was Planter's Development Bank,
while the Most SME-Friendly Rural Bank was the One Network Rural Bank of
Southern Philippines in Davao City.

The Most SME-Friendly Commercial Bank in 2002 was Rizal Commercial
Banking Corporation while the Most SME-Friendly Government Bank was the
Land Bank of the Philippines. CEU




15
One Network Bank resources hit P4.2B
By Ted P. Torres
The Philippine STAR 03/21/2006

DAVAO CITY The total resources of One Network Bank (ONB) has reached
P4.15 billion last year, or a growth of approximately 38 percent from the P3 billion
reported in 2004.

That puts the Mindanao-based rural bank (RB) in the leadership position among
the countrys rural banking system, and 14th overall among the thrift banks.

Net income, however, dropped by 33 percent from P186 million in 2004 to P125
million due mainly to provisioning for probable losses, adjustments to the new
accounting standards, higher investments in government securities and bonds,
and operating costs of new branches and automatic teller machines (ATMs).

Capital adequacy ratio (CAR) remained a healthy 18 percent while its ratio to
liabilities to capital ratio was recorded at 489 percent at the end of 2005.

"We, however, failed to meet our targets which turned out to be overly optimistic
and bullish," ONB president Alex V. Buenaventura said.

Total deposits grew to P2.98 billion last year up by 28 percent from the previous
16
year, but off target by 11 percent from its earlier targets. Loan portfolio likewise
grew by 28 percent from P2 billion in 2004 to P2.6 billion.

Past due ratio nonetheless remained at a healthy 11 percent.

Interest income from loans remained the top contributor to revenues, accounting
for more than 70 percent of gross income, followed by service charges and fees,
commissions and interest on investments.

Earning assets to total assets ratio stood at 85 percent while return on assets
(ROA) stood at five percent well above the minimum ratio of 1.8 percent required
by the Bangko Sentral ng Pilipinas (BSP).

Non-performing asset (NPA) ratio stood at 10.3 percent at the end of 2005 while
its non-performing loan (NPL) ratio was placed at 8.9 percent.

Meanwhile, ONB presently operates 61 branches Mindanao-wide making its the
widest branch network even surpassing the commercial banks in the area. By the
end of 2006, it expects to open at least four more to bring its network to 65.

Of its total branch network, 17 are located in areas that does not have a single
bank presence. Another 12 branches are located in areas where no commercial
banks operate.
17

Supporting its branch network, is the 37 ATM units integrated with the MegaLink
network located in various onsite and offsite locations in Mindanao.

In fact, ONBs Gaisano-Cagayan de Oro offsite ATM was ranked number one
within the MegaLink network with most number of transactions of the total 449
MegaLink offsite units nationwide. MegaLink has a total of 1,900 ATM units.

Major headway likewise had been achieved in the remittance business.

ONB has linked up with various bank and non-banking institutions with domestic
and overseas operations. It has alliances with Banco de Oro Universal Bank
(BdO), the Philippine National Bank (PNB), Peragram, the Rizal Commercial
Banking Corp. (RCBC), PetNet, MoneyGram, and UniTeller.

Buenaventura revealed that they are finalizing arrangements with Equitable PCI
Bank which will make ONB among the leading banking institution in the
remittance business in Mindanao.

Mindanao reportedly accounts for roughly $4 billion in remittance business of the
$8.6 billion recorded in 2004.

One Network Bank is the first rural bank to get the nod of the Philippine Clearing
18
House Corp. (PCHC) for its first-ever checking account.

Dealing directly with PCHC, instead of a commercial bank acting as clearing
bank, speeds up and expedites clearing of its own checking account. It also
unlocks two-thirds of the reserve deposit block with the commercial bank thus
allowing ONB to reallocate for lending.

ONB is a product of a historic merger between three rural banks based in
Mindanao. One Network Rural Bank is a three-way consolidation between
Network Rural Bank (Davao del Sur) Inc., the Rural Bank of Panabo (Davao del
Norte) Inc., and the Provident Rural Bank of Cotabato (North Cotabato) Inc.










19
Davao thrift banks urged to serve small firms.
(From BusinessWorld (Philippines))
DAVAO CITY - Hardly able to influence lending policies of big banks,
the Department of Trade and Industry's regional office would try to
convince smaller financial institutions in the Davao region to be more
active in the government's micro-lending and small business program.

Entrepreneurs have complained that big banks remained restrictive
with respect to loan applications including access to the P10-billion
small and medium enterprise fund, or SME fund, channeled through
government financial institutions.

Marizon Loreto, Trade assistant regional director, said most thrift
banks operating in the Davao region are accredited conduits of state-
run banks especially programs on development financing.

Ms. Loreto said other government agencies, such as the Department of
Science and Technology, are also helping the Trade department drum
up increased activities in the micro-enterprise and small business
segments of the industry. The Science department's "SME Start" drive,
she said, provides technology transfer assistance for projects that are
technology based.
20

A complementary assistance for this type of projects is also provided
to qualified proponents, she added.

Ms. Loreto also clarified that the department is not focusing its
financial assistance to just small enterprises under the P10-billion
funding program launched early this year.

She said the regional office is also strengthening its current programs
aimed at micro-enterprise development.

Based on latest feedback, the department's program has remained
slow- starting with very few project applications submitted to the
banks. This was observed notwithstanding recent efforts to convince
the banks to relax their lending policies that generally choke flow of
capital to new and expanding small- and medium-scale businesses.











21
CHAPTER 3

OPERATION REVIEW


Review of the Organizational Management


Organizational Structure- At present the, bank has seven personnel and
is headed by its branch manager, Mrs. Merlyn Emberda.

Queen City Development Bank
Davao Branch




Mrs. Merlyn G.
Emberda
Branch Manager
Katherine Fillone
Teller
Everley Mahinay
New Accounts
Clerk
Pharida T.
Ocampo
Branch Accountant

Dennis Sulamin
Loans Clerk
Jennifer Turtoga
Accounting
Clerk
Vacant
Casa Bookkeeper
22
Review of Marketing Aspect

Product line- presently Queenbank has variety of product and services
offered to the public. They offer deposit, loans and other relevant banking
services. Please see exhibit 1.
Product loan policies- the bank strictly follows loan policies set by the
Bangko Sentral ng Pilipinas
Marketing strategy- The Davao branch has no dedicated marketing
officer but instead relies on the marketing activities that the branch manager can
squeeze in her schedule. Marketing expenditures are subsidized by the main
company, the outlets of which are the BOMBO radyo and Star FM, both sister
companies of Queen Development Bank. Aside from this, the branch also relies
heavily on referrals and walk in clients.
This current setup has its advantages and disadvantages: the advantage
is that the branch no longer spends for its own marketing activities since this is
already provided for by the main company through its sister companies in the
radio broadcasting business. The disadvantage is that very few people are
actually informed of the presence and services offered by the bank, specifically,
the only people who actually listen to BOMBO radyo and Star FM. It has been
determined in the survey that we conducted that very few people actually rely on
the Radio ads as a basis for their decision in choosing a bank. The marketing
activities being done by the branch manager is also limited as compared to what
a dedicated marketing officer can do.
23

Review of Financial Aspect
Demand Projection
Projection method using the formula
For minimum demand requirement for savings and checking account:
Dd= Le x P x M
Where:
Dd= future demand on the expected amount that will be deposited
Le= Labor employed in Davao City
P= percentage of those that would avail the savings/time deposit reserve
M= minimum amount to be deposited

1-Savings Deposit
Year
Working
Population x
Percentage
Target x Min.Req.Bal = Demand

2007 470,000 0.50% 500 1,175,000.00

2008 475,000 0.50% 500 1,187,500.00


2- Checking Account

2007 470,000 0.50% 2,000 4,700,000.00

2008 475,000 0.50% 2,000 4,750,000.00


3- Time Deposit

2007 470,000 0.50% 1,000 2,350,000.00

2008 475,000 0.50% 1,000 2,375,000.00



24
For minimum demand requirement for savings and checking account:
Dd= Le x P x M x F
Where:
Dd= future demand on the expected amount that will be deposited
Le= Labor employed in Davao City
P= percentage of those that would avail the savings/time deposit reserve
M= minimum amount to be deposited
F= frequency or the number of borrowing from a thrift bank per year

4- Credit Services
Working
Population X
Percentage
Target X Min.Req.Bal. x Frequency = Demand

2007 470,000 0.50% 5,000 1 11,750,000.00

2008 475,000 0.50% 5,000 1 11,875,000.00

Gross income- branch gross income is erratic as shown by it gross
income generation for four years (from present 2007- down to 2004) as follows:
3,228,000; 2,835,000; 3,032,000; and 955,000
Expenses- the branchs expenses run down as follows (2004-2007):
3,943,000; 3,604,000; 3,237,000; 2,828,000. Bank incurs high cost of operations.
Profitability- branch profitability ratio is decreasing in the past four years:
(1.00),(1.47), (1.55), and (1.02). This suggests that bank has some income
problems. (Please see exhibit 3)
Liquidity- branchs liquidity is decreasing as shown by its computed
liquidity for four- year period- 0.12, 0.11, 0.12, 0.15. This may suggest of a
deteriorating financial condition
25

Review of Human Resource Aspect
The branch starts the recruitment and selection process by advertising
vacant spots in schools (Ateneo de Davao University, Holy Cross, Etc.). When
respondents apply, they must pass their resumes. After the collection of resumes
is an exam in order to choose at least top 20 of those respondents, 20 will be cut
to ten. The next step is the interview session wherein they will choose potential
employees. The last step is that several tests will be conducted in order to
measure the stability and psychological aspects of the respondents.
Review on Operations
This review is based on the comparative study done by the group on
selected items of the financial statements (Exhibit 1.7)
Assets
Loans
Although the loan where rather low on 2004 for it was increase by
538.02% from 2004 to 2007 although it had a minor decline in 2006. Although the
company was able to increase commercial loan, it has only deposit to loan ratio
of .06:1 peso compared to the industry leader of 1:75 deposit to loan ratio.
Past Due
The past due of the company was reduced to zero on year 2007
presumed due to the good efforts of the management.
Liabilities

26
Deposit
There is an average increase of deposit of 10% from 2004 to 2007
showing that the efforts of the Manager of marketing Queen Bank is highly
effective.
Income Statement
Income
Although there was a net loss for the past 4 years there is also a
substantial increase in interest income and other income. We assume that this is
due to the efforts of the branch manager to increase deposits of the company.
Expenses
Based on our comparative study there was a decrease in most of the
operating expenses of the branch, we assume that these is due to the cost
cutting measures of the branch, but there are some items such as light and
power which is uncontrollable
Items in Litigation (Asset and Expenses)
During our deliberation we were able to find out that the items in litigation
was not improved for the past four years yet the litigation expenses keeps on
increasing for the these years. We assume that there may be a problem in the
legal department due to the high expense but no output is produced.




27
Technical Aspects
Office equipment- bank has enough office equipments to cater their
office needs and operations
Management information systems- bank has just enough management
information applications for banking operations
Internal factor Analysis Summary

Internal Strategic Factors

Weight

Rating
Weighted
Score

Comments

Strengths
Experienced top
management
Employee relations
Variety of product
Access to radio broadcast
Well-trained employees

Weaknesses
Weak financial position
66% of our respondents
are unaware
No parking space for
client
Technology use

Only few avail of the loan
services



.10

.05
.15
.10
.05


.10

.15


.10

.05

.15


3

3
5
4
4


4

5


4

3

5


.30

.15
.75
.40
.20


.40

.75


.40

.15

.75



Good but conservative

Shows good relations
At par with other banks
Sister company Star FM
New batches of employees that has
undergone trainings


Low financial ratio
Not known to most of the people in
the city

One way street, limited parking

Sub par in terms of technology
acquisition
Only 57% out of the budgeted loans
were disposed

Total

1.00

4.30







28
CHAPTER 4
ENVIRONMENTAL ANALYSIS IN DAVAO CITY

Davao City Profile
Population
Davao City is home to over a million people. Daytime population (which
includes transients) is estimated to reach almost 2 million since it is the center of
trade, commerce, and services in Southern Philippines. Its population growth rate
is 2.83% while density is at 469 persons per square kilometer. Urban density
however is higher at 2,262 people per square kilometer.
Labor Force
About 48% of the total population is of working age. Of this, a little over
88% are employed. Davaoeos like their fellow Filipinos, are English-speaking
and highly trainable. Most are known to have a natural inclination towards arts
and creativity, the reason why many have been successful in design and related
enterprises.
Geography
Davao City is the capital of the Davao Region (or Region XI). It is
strategically located at the Southeastern part of Mindanao with latitude of 658 to
7 34 North and a longitude of 12514 to 12540 East.
29
Its boundary line passes through the top of the countrys highest peak, the
Mt. Apo. On the north, Davao del Norte bound it, while on the east, partly by
Davao del Norte and the Davao Gulf.
The citys strategic location makes it the center of trade not only in the
Southern Mindanao region or the whole of Mindanao but also in the East ASEAN
Growth Area (EAGA).
Accessibility
Davao City is very accessible. As your gateway to the Philippine South, it
has regular air, sea, and land linkages to major points in the country. It is one (1)
hour and 40 minutes away from Manila (the countrys capital) by plane and only
40 minutes away from Cebu City. It has 4 times weekly flights to Singapore and
twice weekly flights to Manado Indonesia
Physical Infrastructure
The presence of basic infrastructure within the City such as airport,
seaports, roads, bridges, and telecommunications has sustained the economic
growth in the last 10 years.
Due to the Citys unprecedented growth, a clamor for higher capacity
infrastructures resulted to a number of modernization projects now ongoing to
meet the demands of the new millennium.


30
Airport
The Davao International Airport is the busiest airport in Southern
Philippines. Expansion and modernization began in 1998. Today, the DIA has
begun accommodating wider-bodied jets such as Boeing 747s.
Banks
Currently, there are around 60 banks (excluding branches), 22 financing
companies, and 9 lending firms operating in the city. These can handle
financial/monetary transactions from the most basic to the most complicated
The Economy of Davao City
Like the rest of the country, Davao City operates on an economic system
that is market-oriented, although pricing mechanisms remain regulated in a few
sectors (particularly on basic commodities) to protect consumers.
http://www.davaocity.gov.ph/theeconomy/Images/a1.jpgThe competitiveness of the
market has been enhanced through the dismantling of protection for "infant
industries" and the breakdown of industries with monopolistic or cartel
tendencies. On the international front, the economy has been opened up to
global competition, through a tariff reduction program and the loosening of
restrictions on inward foreign investment. The result is a diverse economy,
featuring a sound mix between the agricultural (roughly 45%), industrial (15%)
and service (at around 35%) industries. Poverty reduction has become the main
goal of the local government which is being addressed through programs and
projects one of which is the encouragement of inward investments to industries
31
that are labor-intensive. Fortunately for Davao, private investments has Davao
Citys economy is steadily growing in the last two decades. The City has shifted
counting investments from millions in the 80s to billions in the 90s and up to the
present millennium. Among Asian cities, Davao has maintained its competitive
position in attracting investments and in penetrating new foreign markets owing
to its resilient exports base, peaceful business climate, better quality of life, and
rich pool of skilled workforce.

With over 1.2-Million people as primary market base, the city is conducive
to business as evidenced by the presence of the countrys top 200 companies.
Inflow of investments has been remarkable in the last ten years. Export in the
City is now billion dollar industry with a growing niche market for its products.
http://www.davaocity.gov.ph/theeconomy/Images/2.jpgThe stable banana and
flourishing pineapple industries are among the countrys leading export
commodities. A net exporter since 1987, Davao City largely contributed in
making the Philippines as the worlds top 3 banana exporter.
Primarily an agricultural area, almost all kinds of fruits thrive in Davao including
the exotic Durian. Other major agriculture-based exports are pomelo, mango,
coconut, papaya, mangosteen, and even flowers.

The productive linkages between established businesses and Davao City
community reinforced the competitive quality of life in a city that has consistently
maintained single digit inflation rate since 1993.
32
Along with flourishing investments and exports, the low inflation rate serve
as concrete illustration of the remarkable gains from Davao Citys sustained
competitiveness nurtured by high level of responsiveness of the local
government which put priority focus in facilitating business-friendly initiatives and
in ensuring a peaceful and prosperous environment
Statistical Records of Davao City
Refer to Exhibit 1.2
Analysis of the Key Environment Variables
Industry Analysis
Davao City is home to 146 Banking Institution and 28 of them are thrift
banks. The ne portfolio for thrift Banks is 1,229 billion, 1,419 billion, 1,237 billion
from 2004 to 2006 respectively.
Based on the Review of related literature the leading thrift bank is
Mindanao is One Network Bank therefore we will use ONB as a model for our
analysis. According to our source that ONB has a loan interest of 18% to 22%.
The Minimum amount of Loan is 5,000 and maximum of 500,000 per person. The
Bank uses a Loan to Deposit Ratio of .75:1 which the group will use for
comparison.
The researcher conducted a survey on the probability that the
establishments located at the Chinatown area would open an account with
Queen City Development Bank and the results are as follows. As for the main
factors that the respondents look for in a bank, they ranked security as the
highest (82%), followed by accessibility(63%), customer service(39%),
33
convenience(36%), attractive services(13%), bank layout(7%), and other factors
unspecified(2%).Among the offered services of a thrift bank, 61% would like to
open a savings account, 49% prefer to have a checking account, 36% ATM, and
28% would like to avail of the loans. As for the importance of an established bank
name, 88% said they would trust a bank with an established bank name, while
12% said that they do not really care. As for the factors that make a thrift bank
reliable, service ranked the highest with a rating of 56%, followed by policies
(47%), years in the industry (44%), and popularity got an 18% rating. The
respondents also consider the following attributes of the banks employees:
approachability (62%), competence (46%), knowledge in the field (45%), and
friendliness (39%). Sixty-eight percent of the respondents in the area answered
that they use a private vehicle in going to a bank, while only 32% commute.
Before opening an account with a branch, they rely information from
friends(52%), relatives (39%), newspaper (30%), television (18%), radio (6%),
others unspecified (1%). Regarding the respondents awareness on the
existence of Queen City Development Bank, 66% said they are not aware of its
existence while 32% are already aware. Fifty-three percent of the respondents
are willing to open an account with the branch while 40% are not willing. Some
are still unsure about opening an account with the branch. They account for 7%
of the total respondents in the Chinatown area. The external factors are also
being considered.


34
The evaluation on the branchs opportunities and threats is shown in the table of
external strategic factors below:
External Factor Analysis Summary



External Strategic Factors

Weight

Rating
Weighted
Score

Comments

Opportunities
City becoming highly
urbanized
61% of the respondents
are interested to open a
savings account
Center for regional
development
53% of the respondents
are willing to patronize
the services of the bank
Moderate industry
attractiveness
Wide market
E-Banking development
Strong industry
relationship
26 out of 28 are willing to
avail business loans

Threats
Rising competition
Potential new
players/entrants
BSP/Government
regulations
66% of the respondents
are not aware of the
existence of Queen Bank
88% view an establish
bank name as important


.10

.10


.05

.10


.05

.10
.05

.05

.10



.05
.05

.05

.10


.05


4

5


3

5


3

4
3

3

5



3
3

3

4


3


.40

.50


.15

.5


.15

.40
.15

.15

.50



.15
.15

.15

.40


.15


Top cities in the Philippines

Potential clients


Trade center for Southern
Mindanao
Potential clients


Less power for supplier, buyers

One of most populated city
Residents are technology users

Davao Bankers association

Big Potential Clients



New product offerings
Rising number of banks

Strict banking policy




Since the respondents are
unaware of the bank an
established bank name ill be a
threat for the company

Total

1.00

4.10


35
CHAPTER 5
SUMMARY, ANALYSIS, CONCLUSIONS AND RECOMMENDATIONS
This chapter presents the summary, conclusions, and recommendations
for this study.
Summary of Findings
1. The banks financial performance is not doing well as indicated by its
financial ratio results for profitability, liquidity and solvency and negative
income statements for the year 2007.
2. The level of marketing awareness of public on existence of Queenbank is
low with only 32 counts out of 100 respondents. Main sources of
information are from friends and relatives since they trust these people
more than ads. Billboards/signage, newspapers radio and television may
do but they are only secondary in terms of their decision to open an
account with the branch. (Please see exhibit 3).
3. Its present location along San Pedro Street, which is a one way street, can
be considered as a factor contributory to its identity crisis.
4. Queenbank is a niche in the thrift bank industry in Davao City.
5. Savings accounts and checking accounts are the main banking needs of
the respondents from the Chinatown area. However, the medium-sized
establishments would prefer to loan from commercial banks since these
banks allow clients to loan at lower interest rates as compared to thrift
banks.

36
Analysis
Internal Factors
(IFAS Table)




External
Factors
(EFAS Table)

Strengths
Experienced
top
management
Employee
relations
Variety of
product
Access to radio
broadcast
Well-trained
employees
Weaknesses
Weak financial
position
66% of our
respondents are
unaware of the
existence of the
bank
No parking space for
client
Technology use

Only few avail of the
loan services

Opportunities
City becoming highly
urbanized
61% of the
respondents are
interested to open a
savings account
Center for regional
development
53% of the
respondents are
willing to patronize
the services of the
bank
Moderate industry
attractiveness
Wide market
E-Banking
development
Strong industry
relationship
26 out of 28 are
willing to avail
business loans

Engage in a
better
marketing
strategy to
capture well its
target and
potential
market
Develop
companys
reputation to
attract
customers and
to gain higher
market share.
To maximize
radio
advertising to
capture those
who are willing
to avail
business loan
Offer variety of
products to
compete in a
highly
competitive
industry

Expand Queen City
Development Bank,
Davao branchs
presence in the
region through
constant
advertisement and
reducing its
unnecessary
expenses.
Make use of the
53% respondents
who are willing to
avail the branchs
service by giving
excellent c
Customer service.
Provide more
parking areas to
accommodate more
clients

37
especially in a
wide range of
market

Threats

Rising competition
Potential new
players/entrants
BSP/Government
regulations
66% of the
respondents are not
aware of the
existence of Queen
Bank.
88% of the
respondent view an
establish bank name
as important.

Making a
bigger and
better signage,
allocating
enough parking
space and do
enough
marketing to
keep up with
the competition.
Make use of
experienced
top
management to
penetrate wide
market
considering
BSP/
Government
regulations
Apply the cost
leadership
theory.


Queen Bank Davao
branch must be
competitive.
The branch must
also apply some
cost reduction
methods










38

SPACE Matrix
Internal Strategic Position
Financial strength +5 +1 best to +6 worst Y-axis
Competitive Advantage -4 -6 worst to -1 best 5 + (-4) = 1

External Strategic Position
Environmental stability -3 -6 unstable to -1 stable X-axis
Industry Strength +2 +1 best to +6 worst 2 + (-3) = -1

Figure 3 Space Matrix
Conservative




(1,-1)
Aggressive





X-Axis





Defensive







Competitive


Analysis:
Queen City Development bank is currently in the conservative stage.
They must develop their markets, penetrate new markets, and develop new
products and services that would satisfy customers needs.







39



Figure 4: Grand Strategy Matrix



Rapid Market Growth
Quadrant II



Queen City
Development
Bank


Quadrant 1





Weak
Competitive
Position







Quadrant III





Quadrant IV
Strong
Competitive
Position
Slow Market Growth

Suggested strategies:

Market development, market penetration, and new product development.


Market development through market penetration
The branch may increase market awareness through the following:
- Advertising through Bombo radio and Star FM regularly
- satisfy current clients through excellent services. The survey results
show that friends and relatives referrals would be a big factor in the
respondents decision to open a new account with a bank branch.
- The branch head and other officers
40
Product Development

The branch must improve current product and service offerings or coming
up with new and innovative products to satisfy the customers needs by making
the best of what it has. The branch may introduce to membership cards with
rewards system for its clients, extend their banking hours and days, give
incentives to loyal clients, and reach out more to the masses rather than to
medium enterprises. Efficiency of transactions must be monitored. Moreover, the
branch may also lower the amount required to open a new account like 100
pesos, for example. If a client could recommend a client who would be accepted
by the branch, then they client could also be given points or rewards.













41
Conclusion

It is possible to increase the customer awareness on Queen City
Development Bank Davao branch by introducing reward systems for its clients
and employees. It is advisable to relocate the branch to a more visible location.
In our Deliberation the company it is improbable for the company to add up a
branch (Base on Exhibit 1.8) since it still has a negative rate of return after 5
years and rather concentrate on the relocation of the branch.
The gross profit of the bank would by at least 22.18% by increasing the loan
portfolio by 5 million pesos.
The branch liquidity is important for the branch to be able to perform well
financially. This shows that there is a need for them to increase their assets by
increasing outstanding loans.










42

Recommendation

The deteriorating financial performance of the branch may be the result of a low
marketing effort exerted by the branch in terms of public awareness. Its present
location can be a factor for the sub par performance but can be overcome if a
strong marketing activity were made. However, a relocating to a more spacious
and strategically location is advantageous subject for viability.

Based on the above findings and conclusions, the following
recommendations are strongly recommended to address banks short and long
term problems

The group recommends a relocation of the branch to a more spacious
and highly visible area. The branch should relocate to a more spacious and
highly visible area which was earlier proposed to be located at the LYR building
located corner of Villa Abrille St., and J.P. Laurel Avenue, Davao City.
The branchs appearance should be improved. Along with the
improvements, the branch should also improve its signage (if possible electronic
signage) so that the passersby would take notice of the existence of the branch.
We also recommend that the branch implement a reward system for both the
clients and the employees to motivate them to invite more clients to avail of their
services especially the loans, that is, if the branch accepts the application, since
43
the results of the survey showed that they usually rely on information from friends
and relatives rather than from ads (since they think advertisements are not so
reliable). The branch may also consider extending credit lines to students,
young professionals, and to micro businesses (e.g., sari-sari stores, farmers,
public market vendors). Micro businesses are the main target of thrift banks.
The branch should aggressively campaign about the loan services
they are currently offering so that more clients would come to hear about it and
avail of the service. We should target for an increase of five million pesos in
loans to be availed by clients. This might help in improving the negative income
level of the branch.
The branch should also monitor its litigation expenses since it is
increasing every year yet, the items in litigation are not improving. If expense in
litigation would be lowered then it would help put the branch in a profitable
position, and therefore, the branch would now be improving its liquidity.
In addition since Bombo Radyo is their sister company they may request
for an additional air-time for Queen City Development Bank advertisements.
They may also perform checklist/monitoring on proper execution of the activities
planned to increase customer awareness.
The branch may increase revenue generation by actively marketing big
accounts and marketing possible source of income from services rendered. They
may also follow the strategy employed by ONB (One Network Bank) one is to
locate their branches in mass market area like Bankerohan Market and Agdao
Market. Another strategy is to allow an opening account/minimum balance of
44
P100 for their savings accounts. They may also increase revenue by minimizing
controllable cost by not only monitoring their litigation expenses but to reduce it
to the least possible cost. The branch may also engage in aggressive deposit
generation campaign, develop & introduce new deposit products like the P100
opening account to meet the changing needs of its clientele, implement a loyalty
program for valued deposit clients (e.g. birthday greeting cards, birthday gifts,
free dinner, etc), and establish a customer care center which will formulate and
rollout strategies on customer acquisition, retention, and satisfaction. And with
their current financial standing of the branch, the branch should really minimize
their expenses by reducing power consumption by turning on the air-conditioner
at 8:45am or 9:00am and turn it off at 2:45pm or 3:00pm. They may also do little
things like recycling supplies (e.g. bond papers, envelops, and other supplies) or
difficult things like bargaining with the owner of the building to suspend the yearly
increase of office building rental or reduce the monthly building rental and invite
GSIS (Government System Insurance Services) to allow the branch to encash
pensioner claims. The branch may also culture the relationship with the client
especially those with high average daily balance by giving them special
accommodations as long as it does not violate bank policy and government
regulations. The manager may monitor the quarterly target of the branch and be
strict with the attainment of internal targets.



45







APPENDICES















46

Exhibit 2.1 Matrix of Objectives
Objective
1 2 3 4
1. Attain 32%
increase in
outstanding
loans for the
year 2008.

2. Increase its
customer
awareness on
Queen City
Development
Bank, Davao
branch from
32% to 48%
for the year
2008..

3. Increase
gross profit of
the branch from
by at least
22.18% the year
2008.

4. To increase
branchs
current ratio
from .06 to .15
in the year
2008.









47




1999 2002 2003 2004 2005 2006
INVESTMENTS (in Billion Pesos)
Mayor's Permit (New) 1,235.64 958.11 1,520.30 1,557.97 2,858.42 3,962.00
Davao City Investment
Promotion Center NR 880.90 1,206.34 1,321.56 1,747.78 1,813.88
Board of Investments (in
millions) 123.50 307.87 98.81 236.79 345.48 2,384.15
PRIVATE BUILDING
CONTSTRUCTION
No. of Building Permits 2,425 2,821 4,044 6,367 3,274 3,266
Value (in millions) 1,110 1,481 1,682 7,397 3,317 32,896
INFLATION RATE 4.5 3.9 3.7 7.9 9.9 5.9
BANKING AND FINANCE
Banks 146 141 140 140 141 149
Other Financial
Institutions 930 710 798 871 926 1,096
FOREIGN TRADE (in US$ million)
Exports FOB 293 738 848 993 584 651
Imports FOB 170 258 318 408 337 230
Balance of Trade 123 480 530 585 246 421
LABOR & EMPLOYMENT
Labor Force (in '000) 466 519 522 524 Na na
Participation Rate 66.6 66.9 66.8 66.3 Na na
No. of Employed (in
'000) 417 462 465 465 Na na
Employment Rate 89.6 89 89.1 88.8 Na na
No. of Unemployed (in
'000) 49 57 57 59 Na na
Unemployment Rate 10.4 11 10.9 11.2 Na na
LITERACY RATE 98.24 96.98 n/a
TOURIST ARRIVALS (in '000)
Region XI 586 541 596 691 716 763
Davao City 359 431 496 568 573 574
AVE. MONTHLY CRIME VOLUME
(per 100,000 pax)
8.33 7.80
6.49 8.75 11.81 10.30
CRIME SOLUTION EFFECIENCY 95.23 92.23 90.25 89.16 88.55 83.06
NUMBER OF MOTOR VEHICLES 74,592 81,375 80,161 89,540 90,008 107,777
UTILITIES
Power Consumption (in
million kilowatt hrs) 857 937 994 1,092 1,093 1,112
Water Consumption (in
million cu. m.) 41 45 46 49 51 51
Telephone Subscribers
(PLDT & Bayantel) n/a 63,770* 65,000* 73,326 71,637
* PLDT subscribers only
na- data not yet available
48
Exhibit 1.2 Davao City Statistical Record

EXHIBIT 1.3
SERVICES OFFERED BY QUEEN CITY DEVELOPMENT BANK










Deposit Services Loan Services Other Services
Peso Savings Queenbank All-Purpose Loan Fund Transfer (on-line)
Dollar Savings Business Loan Business Payroll Services
Peso Time Deposit Business Line of Credit Safety Deposit Box
Dollar Time Deposit Commercial Loan SSS Payments
Platinum Savings Depoit Real Estate Loan Collection Services
Business Checking Account Term Loan Pick-up Deposit Services
Business International Checking Account 1:1 Loan Gift Checks
Automatic Transfer Account Domestic Bills of Purchase Visa/ Mastercard
Speedcard ATM Receivable Rediscounting Automated Teller Machine
Foreign Remittances Gas Dealership
Car Financing
Consumer Personal Loan
Industrial Loan
Agricultural Loan
Housing Loan
Specialized Lending Programs
Business Letters of Credit
49

Exhibit 1.4 Sample Questionnaire
Good day! We are students of Ateneo de Davao University conducting a research about
the feasibility of relocating or opening of a particular thrift bank. The proposed area is at
LYR Building, near Chicken Ati-Atihan, Villa Abrille St. Davao City. We would like to
inform you that the information generated will be kept confidential. God bless!


Name (Optional): ________________________
Name of Company (Optional): _____________________________________

Location: R. Magsaysay Villa Abrille Monteverde
Sta. Ana Ave. Obrero Banggoy
J.P. Laurel Others (please specify): __________

Type of Business: Auto Parts Hardware Boutique Grocery
Restaurant Assorted goods
Others (pls. specify): _________

1. What is/are the main factors that you look for in choosing a bank?

___ Security ___ Convenience
___ Accessibility ___ Attractive services
___ Customer Service ___ Bank layout
___ Others (pls. specify) _________________

2. Among the offered services of a thrift bank, what product is/are you most interested
in?

___ ATM
___ Loans (car, home, business)
___ Savings
___Checking Account
___ Others (pls. specify) _________________

2.1 If you are interested in Loans, What Kind of Loan

___ Car Loan ___ Home Loan ____ Business Loan
___ Others (pls. specify) ________

3. Does an establish Bank name Important to you?

___ Yes ___ No
50





4. What are the factors that make a thrift bank reliable?

___ Policies ___ Popularity
___ Services ___ Years in the industry
___ Others (pls. specify) __________________


5. What certain attribute of the bank employee matter to you most?

___ Approachability ___ Competence
___ Friendliness ___ Knowledge in the field
___ Others (pls. specify) ____________________

6. What is your means of transportation in going to a bank?

___ Public Utility Vehicle (Jeepney, taxi) ___ Private Vehicle


7. In opening an account in a thrift bank, from where or to whom do you usually rely for
information?

___ Friends ___ Television
___ Newspaper ___ Relatives
___ Radio
___ Others (pls. specify) ___________________


8. Are you Aware of the Existence of Queen City Development Bank in Davao City

___ Yes ____ No


9. If Queen City Bank will open a branch in LYR Bldg, near Chicken Ati-Atihan, Villa
Abrille St. Davao City, would you consider patronizing their services?

___ Yes ___ No




-Thank You very much for your cooperation! -
51
Exhibit 1.5 Survey Result
Type of Business
R Magsaysay Villa Abrille Monteverde Sta. Ana Obrero Banggoy
Jp
Laurel Others Total Percentage
Auto Parts 17 3 5 3 28 0.28
Hardware 1 3 3 1 8 0.08
Boutique 1 1 1 2 5 0.05
Grocery 1 1 1 3 0.03
Restaurant 1 2 2 1 6 0.06
Assrted Goods 3 3 1 2 1 1 11 0.11
Others 10 2 8 1 5 2 3 8 39 0.39

1. What is/are the main factors that you look for in choosing a bank?
R Magsaysay Villa Abrille Monteverde Sta. Ana Obrero Banggoy
Jp
Laurel Others Total Percentage
Security 10 22 14 11 8 4 6 7 82 0.82
accesibility 9 17 11 3 6 5 4 8 63 0.63
customer srvc 5 15 8 1 2 3 3 2 39 0.39
Convinience 6 8 7 3 3 1 1 7 36 0.36
Attractive
services 0 5 1 4 1 0 2 13 0.13
Bank layout 1 3 2 1 7 0.07
Others 1 1 2 0.02

52

2. Among the offered services of a thrift bank, what product is/are you most interested in?

R Magsaysay Villa Abrille Monteverde Sta. Ana Obrero Banggoy
Jp
Laurel Others Total Percentage
ATM 7 7 5 3 4 1 2 7 36 0.36
loans 4 9 5 3 2 2 3 28 0.28
savings 14 10 14 2 6 3 4 8 61 0.61
Checking
account 8 15 6 8 4 3 3 2 49 0.49
others 0 0

2.1 If you are interested in Loans, What Kind of Loan

R Magsaysay Villa Abrille Monteverde Sta. Ana Obrero Banggoy
Jp
Laurel Others Total Percentage
Car Loan 3 4 1 1 9 0.321429
Housing Loan 2 5 1 1 1 4 1 15 0.535714
Business Loan 3 11 4 2 1 2 3 26 0.928571
Others 1 0 1 0.035714


3. Does an establish Bank name Important to you?
R Magsaysay Villa Abrille Monteverde Sta. Ana Obrero Banggoy
Jp
Laurel Others Total Percentage
Yes 15 21 15 13 9 3 3 9 88 0.88
No 2 1 1 4 3 1 12 0.12
53

4. What are the factors that make a thrift bank reliable?

R Magsaysay Villa Abrille Monteverde Sta. Ana Obrero Banggoy
Jp
Laurel Others Total Percentage
policies 6 10 8 3 5 2 3 10 47 0.47
popularity 3 3 1 3 3 2 3 18 0.18
service 7 17 9 4 9 3 5 2 56 0.56
Years in industry 8 5 9 7 2 2 5 6 44 0.44
others 0 0 0 0

5. What certain attribute of the bank employee matter to you most?

R Magsaysay Villa Abrille Monteverde Sta. Ana Obrero Banggoy
Jp
Laurel Others Total Percentage
approachability 6 15 13 7 6 2 8 5 62 0.62
friendliness 8 13 4 2 6 1 1 4 39 0.39
compitence 7 15 5 7 3 1 3 5 46 0.46
knowledge in
field 9 17 5 1 2 3 2 6 45 0.45
others 1 1 0.01







54
6. What is your means of transportation in going to a bank?
Public Utility
Vehicle 10 3 3 1 6 5 4 32 0.32
Private Vehicle 6 18 11 11 10 3 5 4 68 0.68


7. In opening an account in a thrift bank, from where or to whom do you usually rely for information?
R Magsaysay Villa Abrille Monteverde Sta. Ana Obrero Banggoy
Jp
Laurel Others Total Percentage
friends 6 11 13 6 6 5 5 52 0.52
newspaper 10 5 4 4 1 3 3 30 0.3
Radio 5 0 1 0 0 0 6 0.06
Telivision 4 3 1 2 3 2 0 3 18 0.18
relatives 3 13 5 2 6 3 5 2 39 0.39
others 1 1 0.01

8. . Are you Aware of the Existence of Queen City Development Bank in Davao City
R Magsaysay Villa Abrille Monteverde Sta. Ana Obrero Banggoy
Jp
Laurel Others Total Percentage
Yes 4 6 7 1 6 3 5 32 0.32
No 13 14 11 5 8 3 6 6 66 0.66

9. If Queen City Bank will open a branch in LYR Bldg, near Chicken Ati-Atihan, Villa Abrille St. Davao
City, would you consider patronizing their services
R Magsaysay Villa Abrille Monteverde Sta. Ana Obrero Banggoy
Jp
Laurel Others Total Percentage
Yes 6 5 10 6 9 3 5 9 53 0.53
No 11 11 4 5 4 1 3 1 40 0.4
not sure 6 1 7 0.07
55

Exhibit 1.6- Financial ratio
Liquidity
2007 2006 2005 2004
Current Assets 1,919,968.48 1,585,343.81 1,795,136.16 1,102,285.85
Cureent
Liabilites 16,566,578.18 14,101,934.87 14,410,724.81 7,532,884.83
0.115894089 0.112420304 0.124569457 0.146329842


Solvency
Debt ratio 2007 2006 2005 2004

Total Liabilities 16776047.34 14916302.87 12092234.74 7515531.67
Total Assets 16060788.63 14147136.9 12919751.73 5686061.6
1.04453447 1.05436902 0.935949467 1.321746439


Total Liabilities 16776047.34 14916302.87 12092234.74 7515531.67
Total Owners -715258.71 -488224.07 -131902.78 -1829630.07
-23.45451667 -30.55216608 -91.67535923 -4.107678264

Total Owner -715258.71 -488224.07 -131902.78 -1829630.07
Total Assets 16060788.63 14147136.9 12919751.73 5686061.1
-0.04453447 -0.034510451 -0.01020939 -0.321774606

Profitability 2007 2006 2005 2004

Rate of Return

Income -715000 -721000 -205000 -1873000
Investment -715258.71 -488224.07 -131902.78 -1829630.07
0.999638299 1.476780938 1.554174976 1.023704207



56

liquidity Ratio
Current Ratio = Current Asset/Current liabilies

Current Asset Current Liabilities Current Ratio
2004 1,443,546.79 Php7,532,864.83 0.191633173
2005 1,795,186.16 Php14,410,724.81 0.124572926
2006 1,102,206.05 Php14,101,934.87 0.078159916
2007 1,919,968.48 Php16,566,578.18 0.115894089


Profitability Ratios

Net Profit Margin = Net profit after taxes/Net sales

Net Profit After taxes Net Sales Net Profit Margin
2004 (Php1,873,000.00) Php955,000.00 -1.961256545
2005 (Php205,000.00) Php3,032,000.00 -0.067612137
2006 (Php769,000.00) Php2,835,000.00 -0.271252205
2007 (Php715,000.00) Php3,398,000.00 -0.210417893














57
Return on Investment = Net Profit after taxes/ Total Asset

Net Profit After taxes Total Asset Return on Investment
2004 (Php1,873,000.00) Php7,629,073.81 -0.245508177
2005 (Php205,000.00) Php14,327,851.06 -0.014307798
2006 (Php769,000.00) Php14,147,135.90 -0.054357292
2007 (Php715,000.00) Php16,060,788.63 -0.044518362

Return on Equity = Net Profit after taxes/Shareholders Equity

Net Profit After Taxes Shareholders Equity Return on Equity
2004 (Php1,873,000.00) Php1,873,109.63 -0.999941472
2005 (Php205,000.00) Php204,348.18 -1.003189752
2006 (Php769,000.00) Php769,168.77 -0.999780581
2007 (Php715,000.00) Php715,258.71 -0.999638299

Activity Ratios

Asset Turnover = Sales/total asset

Sales Total Asset Asset turnover
2004 Php955,000.00 Php7,629,073.81 0.125179022
2005 Php3,032,000.00 Php14,327,851.06 0.211615823
2006 Php2,835,000.00 Php14,147,135.90 0.200393919
2007 Php3,398,000.00 Php16,060,788.63 0.21157118






58



Fixed Asset turnover = sales/Fixed Asset

Sales Fixed Asset Fixed Asset turnover
2004 Php955,000.00 Php7,646,874.59 0.124887624
2005 Php3,032,000.00 Php7,468,849.84 0.405952732
2006 Php2,835,000.00 Php6,435,536.31 0.440522726
2007 Php3,398,000.00 Php6,365,849.84 0.533785761

Days of Cash = Cash/(net sales for year /365)

Cash Net Sales for year Days of Cash
2004 Php380,837.63 Php955,000.00 146
2005 Php317,755.64 Php3,032,000.00 38
2006 Php316,493.52 Php2,835,000.00 41
2007 Php889,405.30 Php3,398,000.00 96

Leverage Ratios

Debt to Asset Ratio = Total Debt/Total Asset

total Debt total Asset Debt to Asset Ratio
2004 Php7,629,183.70 Php7,629,073.81 1.000014404
2005 Php14,612,235.24 Php14,327,851.06 1.019848348
2006 Php14,916,302.87 Php14,147,135.90 1.054369095
2007 Php16,776,047.34 Php16,060,788.63 1.04453447



59



Debt to Equity Ratio = Total Debt/shareholders Equity

total Debt Shareholders Equity Debt to Asset Ratio
2004 Php7,629,183.70 Php1,873,109.63 4.073004365
2005 Php14,612,235.24 Php204,348.18 71.50655925
2006 Php14,916,302.87 Php769,168.77 19.39275677
2007 Php16,776,047.34 Php715,258.71 23.45451667

Currrent Liabilities to Equity = Current Liabilities/Shareholders Equity

Current Liabilities Shareholders Equity Current liabilities to Equity
2004 Php7,532,864.83 Php1,873,109.63 4.021582458
2005 Php14,410,724.81 Php204,348.18 70.52044608
2006 Php14,101,934.87 Php769,168.77 18.33399303
2007 Php16,566,578.18 Php715,258.71 23.16165878
60
Exhibit 1.7 Comparative Study
Assets 2004 2005
Increase
(Decrease) 2006
Increase
(Decrease) 2007
Increase
(Decrease) Average
Cash 380,837.83 317,755.64 Decrease 316,493.52 889,405.30 Increase
Due from PCHC courters 14,592.52 33,883.75 Increase 14,400.00 Decrease -
Due from other banks - CA/SA 706,367.90 1,443,546.79 Increase 1,254,450.29 Decrease 1,030,563.18 Decrease

Commercial Loans and Others 150,000.00 142,500.00 1,980,598.12 Increase 957,030.00 Decrease
Past due Loans 1,500,000.00 1,500,000.00 142,500.00 Decrease - Decrease
Items in litigation 4,026,638.51 4,026,638.41 4,026,638.41 4,026,638.41

Due from (to) branches (7,027,408.93) 1,148,290.63 Increase (145,430.86) Decrease 3,278,703.06 Increase
Net Bank and furniture and fixture
(Owned/Aquirred) 155,630.55 284,953.45 Increase 1,137,510.48 Increase 998,473.72 Decrease
Real Property 7,629,903.59 7,451,878.84 Decrease 6,418,567.31 Decrease 6,348,878.84 Decrease
Other Asset 865,795.83 289,187.28 Decrease 271,522.14 Decrease 322,324.31 Increase
Total 8,402,357.80 16,638,634.79 Increase 15,417,249.41 decrease 13,825,378.41 Decrease

Liabilities
Demand 2,097,711.88 2,322,232.36 Increase 4,144,189.57 Increase 5,143,681.05 Increase
Regular Savings 4,538.055.33 4,266,597.13 Decrease 6,072,705.94 Increase 7,116,837.87 increase
Time/Platinum Savings 897,097.72 7,329,395.42 Increase 3,857,999.99 Decrease 4,096,769.66 Increase
Other liabilities 96,318.77 113,510.33 Decrease 814,367.80 Increase 209,469.16 decrease
Total Deposit 7,629,183.70 14,031,735.24 Increase 14,889,263.30 Increase 16,566,757.74 Increase

Equity
Unwined Profit (1,873,109.93) (204,384.18) Decrease (769,116.77) Decrease (715,258.71) Increase


Deposit to Loans Ratio 0.02 0.01 0.13 0.06 0.06
Percentage change (deposit) 0.456290789 0.05759372 0.101256653 0.205047054
Indusrtry recommended Deposit to loan
Ratio 5,721,887.78 10,523,801.43 11,166,947.48 12,425,068.31
61
Exhibit 1.8 Relocation/add up a branch
Project: Relocation of Present Branch Site
A. Cost
1. Relocation Cost P100,000.00
2. Renovation Cost New Site 300,000.00
3. New Acquisition
a. Furniture and Fixtures P100,000.00
b. Cost to remove Vault door 100,000.00
c. Cost to install Vault door to new site 100,000.00
d. Construction of Vault Area 100,000.00
e. Installation of New computers 200,000.00 600,000.00
Total Cost to Relocate P1, 000,000.00

Expected Cash Inflow after Relocation
Years Cash Inflow* Rate** (20%) Present Value Net Present
Value
1 P287,995.00 .833 P239,900.00 P39,900.00
2 331,194.00 .694 229,849.00 29,849.00
3 380,873.00 .579 220,525.00 20,525.00
4 438,004.00 .482 211,118.00 11,118.00
5 503,705.00 .402 202,489.00 2,489.00
Total P1,921
,771.00
P1,103,881.00 P
103,881.00***

*15% increase in current assets basing on the survey that deposit base will
increase by 15-20%
**Rate/ Cost of Capital/ Required Rate of Return (20% banking industry
standard)
*** maximize shareholders wealth amounting to P103, 881.00
Average Cash Inflow= P1, 921, 771.00 /5 years= P 384,354.00
62
Payback Period= P1, 000, 000.00/ P384, 354.00=2.6 yrs.


Years Cash Inflow* Rate**
(20%)
Present Value Net Present
Value
1 P383,994.00 .833 P319,867.00 P119,867.00
2 460,792.00 .694 319,789.00 119,789.00
3 552,951.00 .579 320,159.00 120,159.00
4 663,541.00 .482 319,827.00 119,827.00
5 796,249.00 .402 320,092.00 120,092.00
Total P2,857,527.00 P1,559,734.00
P559,734.00***

*20% increase in current assets basing on the survey that deposit base will
increase by 15-20%
**Rate/Cost of Capital/Required Rate of Return (20% banking industry standard)
***maximize shareholders wealth amounting to P559, 734.00
Average Cash Inflow= P2, 857,527.00/5 yrs= P 571, 505.40
Payback Period= P 1, 000, 000.00/571, 505.40= 1.7 yrs.









63
Analysis: Since the present value of 10% increase in current assets is only P691,
312.00 or a net present value of P-308,688.00 which is smaller than the amount
invested of P1, 000,000.00, the project is not acceptable. An increase of 15%
increase in current assets will have a present value of P1,103,881.00 or a net
present value of P103,881.00 which is bigger than the amount invested of P1,
000, 000 which will maximize shareholders wealth by P103,881.00. And an
increase of 20% increase in current assets will have a present value of P1, 559,
734.00 or a net present value of P559, 734.00 which is also bigger than the
amount invested of P1, 000, 000.00 which will maximize shareholders wealth by
P559, 734.00. The company should target an increase of 15-20% increase in
current assets specifically cash on hand, which is feasible basing on the survey
proving an increase in deposit base of at least 15-20%.






















64
Expected Cash Inflow after adding a branch
Year Cash Inflow* Rate** (20%) Present Value Net Present
Value
1 P 598,646.17 .833 P 498,672.26 P-301,327.74
2 785,304.05 .694 545,001.01 -254,999.00
3 1,030,161.85 .579 596,463.71 -203,536.29
4 1,351,366.00 .482 651,358.41 -148,641.59
5 1,772,722.33 .402 712,634.38 -87,365.62
Total 5,538,200.40 3,004,129.77 -
995,870.23***

*31.18% increase in current assets (16.18% increase in current assets of the
branch for the past 3 yrs. + 15 % increase in current assets basing on the survey
that deposit base will increase by 15-20%)
**Rate/ Cost of Capital/ Required Rate of Return (20% banking industry
standard)
*** minimize shareholders wealth amounting to P995, 870.23
Average Cash Inflow= P5, 538, 200.40 /5 years= P 1, 107, 640.08
Payback Period= P4, 000, 000.00/ P1, 107, 640.08=3.6 yrs.

Year Cash Inflow* Rate** (20%) Present Value Net Present
Value
1 P 694,644.60 .833 P 587,638.95 P -212,361.05
2 945,967.02 .694 656,501.11 -143,498.89
3 1,288,217.88 .579 745,878.15 -54,121.85
4 1,745,295.11 .482 841,232.24 41,232.24
5 2,388,999.09 .402 960,377.63 160,377.63
Total 7,063,123.70 3,791,628.08 -
208,372.00***








65
*36.18% increase in current assets (16.18% increase in current assets of the
branch for the past 3 yrs. + 20 % increase in current assets basing on the survey
that deposit base will increase by 15-20%)
**Rate/ Cost of Capital/ Required Rate of Return (20% banking industry
standard)
*** minimize shareholders wealth amounting to P 208, 372, 00
Average Cash Inflow= P7, 063, 123.70 /5 years= P 1, 412, 624.74
Payback Period= P4, 000, 000.00/ P 1, 412, 624.74= 2.8 yrs.


Analysis: Since the present value of 15% increase in current assets is only
3,004,129.77 which is smaller than the amount invested of P4, 000,000.00 and
with a net present value of -995,870.23, the project is not acceptable. And an
increase of 20% increase in current assets will have a present value of
3,791,628.08 which is also smaller than the amount invested of P4, 000, 000.00,
and with a net present value -208,372.00 which will minimize shareholders
wealth by P208,372.00. The company should target an increase of 25%(as
shown below) increase in current assets specifically cash on hand, which is not
feasible basing on the survey proving an increase in deposit base of at least 15-
20%.






66
Year Cash Inflow Rate Present Value Net Present
Value
1 P 802, 738.82 .833 P 668,681.44 P -131318.56
2 1,133,306.67 .694 786,514.83 -13,485.17
3 1,600,002.36 .579 926,401.37
126,401.37
4 2,258,883.33 .482 1,088,781.77
288,781.77
5 3,189,091.49 .402 1,282,014.78
482,014.78
Total 8,984,022.67 4,752,394.19
752,394.19

*41.18% increase in current assets (16.18% increases in current assets of the
branch for the past 3 yrs. + 25 % increase in current assets basing on a projected
target to reach a positive net present value)
**Rate/ Cost of Capital/ Required Rate of Return (20% banking industry
standard)
*** maximize shareholders wealth amounting to P 752, 394.19
Average Cash Inflow= P8, 984,022.67 /5 years= P 1,796,804.53
Payback Period= P4, 000, 000.00/ P 1,796,804.53= 2.2 yrs.









67
Exhibit 1.9 Financial Study

FINANCIAL STUDY

The financial study explores the availability of funds needed to finance the

operation of the proposed project, and it determines the financial capability to

withstand critical periods in the implementation proper.

There are three (3) necessary and important factors in the evaluation of
the project; to wit:

1. The amount of the investment;
2. The expected returns from the investment; and
3. The rate of return in the investments that would be acceptable to the
business.

Investment and Sources of Equity
The proposed thrift bank operation will be a stock corporation with an
initial investment of P 5,720,000.00 only. The total cost of the project is broken
down as follows:


Building P 100,000.00

Vehicle 100,000.00

Equipment 2,000,000.00

Vault

Computer

ATM

Typewriter

Furniture and Fixtures 1,000,000.00

Tables

Chairs

68
Lightings

Pre-Operation Training of Officers& Key Personnel 20,000.00
(P2, 000.00/day X 10 days)

Funds Reserved for Loans 500,000.00

Working Capital 2,000,000.00

Total P 5,720,000.00




________________________________________________________________

The sources of the financial requirements are the following:

Incorporators: P 720,000.00
Government Counterpart 5,000,000.00

-Land Bank of the Philippines

-Development Bank of the Philippines
Total P 5,720,000.00


General Assumptions:
The following assumptions were used in the preparation of the study:

1. Revenue. It is the expected total income of the operation and includes
the Interest Income of 7.7% per annum based on the loaned amount
during the period. Service Charges/Fees of _% per transaction,
additional interest income on Past-Due Loans and penalties of __%
per annum.

2. Operations Expenses. These are the interests on savings deposits and
time deposits, salaries and wages, staff benefits, directors and
committee members fees, SSS and Medicare premiums, professional
fees, supervision and examination fees, taxes and licenses, insurance
on deposits, insurance of buildings & vehicles,
depreciation/amortization and other expenses related to the operation
of the project.


69
3. Depreciation/Amortization of Banks Properties. The following matrix
captures the depreciation of bank properties including the amortization
of the Pre- Operating Training of key personnel:


Estimated Life
Salvage Value
Building
Vehicle 10 years P 20, 000.00

Equipment 10 years 200,000.00

Furniture and Fixtures 5 years 100,000.00

Pre-Operating Training 2 years 10,000.00


The depreciation and amortization are computed using the straight

line method except for the vehicle which used the double declining

method due to the projected lower maintenance cost in its first few years.


4. Past-Due Loans. Part of the loaned amount disposed during the period
will

remain outstanding, since it will be due the following period. It is
assumed

that 20% of this amount will be treated as receivable or past-due loans.
The

following are further assumed:

a. About ten (10) percent or one half (1/2) of the past due loans will be
paid after six months the following year;

b. About ten (10) percent or one half (1/2) of the past due loans will be
settled after one year.
Projected Financial Statements

The projected income statement for year 1-5 is shown in Table FS1. The

project post a net income (loss) of (P795, 000.00) in the first year considering the
70

income trend, the project would accumulate a net income (loss) of

(P5, 440,000.00) in five years.

The projected balance sheet is presented in Table FS 2. After five years,

the total assets shall amount to P90, 648,900.38.

The projected cash flow schedule is shown in Table FS3. The project will

generate a minimal cash position at year end due to maximization of cash

revenues for the operation to minimize interest expense and improve net

income.


















71
Curriculum Vitae

Philip Gentiles
#57 Molave Corner Lauan Street, Davao City
Tel. No.: 227-7544
Cellphone No. 0917-705-3783
Email address: andre_amacio@yahoo.com

EDUCATION
Ateneo de Davao University, 2008
Bachelor of Science in Business Administration
Major in Entrepreneurship

AFFILIATIONS
League of Young Entrepreneurs (L.Y.E.) Member (2006-2007)
League of Young Entrepreneurs (L.Y.E.) Member (2007-2008)


SKILLS AND QUALIFICATIONS
Hardworking, determined, assertive, well-rounded and flexible.
Computer literate (MS Word, MS Excel, MS PowerPoint)
Fluent in Visayan, Filipino and English








72
Iva Jessica Porticos
#19 Mahogany Street, Roldan Village Maa, Davao City
Tel. No.: 224-0533
Cellphone No.: 0918- 217-0768
Email address: ishi_suyen@yahoo.com

EDUCATION
Ateneo de Davao University, 2008
Bachelor of Science in Business Administration
Major in Entrepreneurship

AFFILIATIONS
BA-SEC Energy Committee Member (2006-2007)
BA-SEC Programs Committee Member (2007-2008)
League of Young Entrepreneurs (L.Y.E.) Member (2006-2007)
League of Young Entrepreneurs (L.Y.E.) Member (2007-2008)

SEMINAR
Mindanao Business Management Youth Congress (MBMYC)
Cagayan de Oro City, (2005)

SKILLS AND QUALIFICATIONS

Computer literate in basic computer programs. (MS Word, MS Powerpoint,
MS Excel)
Good in Communication and Writing Skills
Good in dealing people
Hardworking




73
Venetia Ruth Uyking
#39 Nicasio Torres St., Bo. Obrero, Davao City
Tel. No.: 221 -7768
Cellphone No.: 0926-618-4568
Email address: princesshera2004@yahoo.com

EDUCATION
Ateneo de Davao University, 2008
Bachelor of Science in Business Administration
Major in Entrepreneurship

AFFILIATIONS
BA-SEC Energy Committee Member (2006-2007)
BA-SEC Programs Committee Member (2007-2008)
League of Young Entrepreneurs (L.Y.E.) Secretary (2006-2007)
League of Young Entrepreneurs (L.Y.E.) Secretary (2007-2008)

WORK EXPERIENCE:

2005 (2 months) Assistant Manager Farmacia Sta Ana
I have worked in one of the branches of Farmacia Sta. Ana as an
assistant manager. I have handled sales to customers, employee and supplies
supervision, and daily cash flows.

SKILLS AND QUALIFICATIONS
Computer:
- Microsoft Word, Excel, Access and Power Point
Language:
- Visayan, Filipino, English, and Chinese (Fookien)
Personal:
- I am confident that I would be able to work under pressure. I am
dedicated to work and easily adapts to any given environment.
74