Company Profile

(Land Bank of the Philippines)

Submitted by:

To be submitted to:

March 20 , 2019
 STEP Analysis

Factors: + -

Socio-cultural 1. Increase in population

2. Changes in lifestyle
3. Literacy Rate

Technological 1. Automatic Teller

Machine (ATM)
2. Mobile Banking

Economic 1. Inflation
2. Hanjin Bankruptcy

Political 1. Graft charge filed

against former Land
Bank of the
Philippines
(Landbank) officials

Socio-cultural Factor:
Some socio-cultural factors which bring positive effects to Landbank would be
population, changes in lifestyle, and literacy rate.
With in rural areas and in urban areas, Landbank has a total of 395 branches worldwide.
The population demographic of an area affects the banks the most, because it is usually a
determinant of whether they should open a branch in a specific location or not. This belief leads
more competitor banks to open more branches around the area, securing uniform spatial
distribution.
Another positive factor would be changes in lifestyle. An article by William Tandy
(2015) had reported that millennials overtook the baby boomers as the largest living generation
in the world, as well as more technologically-adaptable. Filipinos’ wants and needs are
increasing every day; they demand more high class products, thus opening more opportunities
for Landbank. Landbank offers credit card a lower interest rate charge of 3% per month.
Compared to BDO and BPI with more than 3% charge per month, Landbank has the leverage to
gain more customers who want to maintain their lifestyle without spending more.

Lastly, literacy rate is a positive factor for Landbank because of a number of Filipinos
who are financially illiterate. Last 2017, a report (Philippines Ranks low in Financial Literacy,
2017) stated that 25% of Filipinos are financially illiterate, therefore placed at the bottom 30; in
this report, Singapore ranks the highest with 59% of its population as financially literate.
Moreover, there is a rising number of senior-dependents or those retirees who depend on their
children for financial help, due to lack of financial education. With this, financially illiterate
people tend to trust more on Landbank to depend on their money. Since Landbank caters to
Filipino farmers, fishers, and the like, it has become a dependable bank that these customers can
lean on. 
 
Technological Factor:
In technology, ATMs and mobile banking have been a big help to many Filipinos
especially those who prefer investing their cash in banks. Landbank’s development of ATMs has
made cash withdrawal efficient since Landbank caters banking everywhere, even to the
unbanked rural areas and provinces. In mobile banking, Landbank has developed a mobile
application ​provides clients convenient access to the Bank's wide array of services through their
smartphones anytime, anywhere

Economic Factor:
What seems to be inevitable in the banking industry is the inflationary condition of the
country. As inflation rockets high enough, the one who usually experiences the backlash is the
bank. To help curb the inflation in the country, Landbank helps provide advance indication of
consumer sentiments, which garnered the award ​“Outstanding Respondent in Survey of Inflation
Forecasts” in the 12th Awards Ceremony at the BSP.
 Another negative economic factor to take into consider for Landbank would be the latest
Hanjin crisis, where a South Korean shipbuilder filed for bankruptcy last week after it suffered
liquidity problems to repay its debts of over $400 million to Philippine top banks. Landbank has
a loan exposure of around $80M in the bankrupt company. In line with this, COL financial
president April Lee has stated that only BDO, BPI, and Metrobank can absorb potential losses.
This is a red flag for Landbank because they need to prepare for crisis like this in case it happens
again.

Political Factor:
Just last January 2019, Sandiganbayan ​allowed prosecutors to amend original information
stated within a graft charge filed against former Land Bank of the Philippines (Landbank)
officials in relation to an allegedly anomalous sale of its Meralco stake in 2008.

Moreover, the charge against former Landbank president Gilda Pico, former vice
president for local currency Carel Halog, former board director Margarito Teves, and 7 others
stemmed from allegations of conspiracy with the planned sale of the state-owned bank's P4.2
billion shares in Meralco.

This has a negative effect on Landbank because credibility and integrity is at stake, two
of which are the bank’s core values.
  
References:

“Philippines ranks low in financial literacy”. (2017). Finwaze. Retrieved from

https://www.finwaze.com/philippines-ranks-low-financial-literacy/

Tandy, W. (2015). Banking the millennial generation. Retrieved from

https://heritagelandbank.com/announcements/news-events/banking-millennial-generatio
n