City Savings Bank
City Savings Bank
City Savings Bank
CEBU CITY
Submitted by:
Date Submitted:
December 3, 2020
CERTIFICATE OF ORIGINALITY
This is to certify that we assume full responsibility over the work entitled
De Oro City, that the work is our own, that this is original except as specified in the
acknowledgements, footnotes, or in the references and that this has never been
submitted to this or any other school for the degree or other requirements.
Aileen M. Quiapo
MBA Student
ACKNOWLEDGEMENTS
We would like to express our special thanks of gratitude to the persons who have
helped us in completing this project. Dr. Anthony Ly B. Dagang, our professor, we are
very grateful for the knowledge and support. To our family and friends, thank you for the
encouragement. Most especially, to our Almighty God, for His graces and abundant
I Introduction 1
D. Organizational Chart 7
V Financial Statements 12
A. Liquidity 15
C. Leverage 21
D. Profitability 23
IX Bibliography 32
X Curriculum Vitae 34
1
Chapter I
INTRODUCTION
A bank is a financial institution licensed to receive deposits and make loans. Banks
may also provide financial services such as wealth management, currency exchange,
and safe deposit boxes. Banks are a very important part of the economy because they
provide vital services for both consumers and businesses (Barone, 2020). Banks collect
the savings of the individuals and lend them out to business - people and manufacturers
(Nipun, n.d.). Banks provide loan services to cater different needs, may it be a capital for
a business expansion, starting up a new business, personal loans, housing loans, or car
loans. The bank, aside from its own capital, uses deposits in order to cater different loans.
In return, a depositor will earn an interest for their deposits (subject to withholding tax).
However, the interest is lower compared to the interest earned by the bank from the loans
they provide.
which are universal and commercial banking groups, rural and cooperative banking
groups, and thrift banking groups. Universal banking which is the largest banking group
provides all kinds of services in terms of loans, credit, investments, deposits, and
securities transactions. The thrift banking group, on the other hand, is composed of
savings and mortgage banks, private development banks, stock savings, and loan
associations, and microfinancing. While rural and cooperative banks are more popular in
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rural communities because one of its functions is to provide financial needs to the rural
The Bangko Sentral ng Pilipinas (BSP) is the central bank of the Republic of the
Philippines. The Bangko Sentral has supervision over the operations of banks and
exercises such regulatory powers as provided in the New Central Bank Act (Bangko
instrumentality created to insure the deposits of all banks. PDIC exists to protect
depositors by providing deposit insurance coverage for the depositing public and help
promote financial stability. The Corporation provides the maximum deposit insurance
Corporation, n.d.).
This study involves careful selection of data from financial statements of one of the
top Thrift Banks of the Philippines. The primary purpose of the study is to forecast the
financial health of the company and to provide risk analysis. This is accomplished by
examining financial data across similar thrift banks and analysing financial ratio.
3
Chapter II
City Savings Bank is the thrift bank subsidiary of Union Bank of the Philippines and
a member of the Aboitiz Group. City Savings Bank’s main branch is located in Cebu City.
Don Ramon Aboitiz and Teotimo 'Timo' Abellana cofounded City Savings Bank in
December 1965. They wanted to offer financial assistance to those who contributed to
On March 25, 2013, Union Bank of the Philippines (Union Bank), the banking arm
of Aboitiz Equity Ventures (AEV), acquired 99.54% of City Savings from AEV and Pilmico
Foods Corporation. As of 2019, Union Bank owns a total of 99.79 percent of City Savings,
salary loans to employees of public and private educational institutions. The Bank has
extended its product suite to cater to employees of national government agencies, local
government units, and other private companies. The Bank also caters to pensioners
under the Government Service Insurance System and the Social Security System. In
June 2018, the Bank entered the motorcycle financing space via its acquisition of Isabela-
based thrift bank Philippine Resources Savings Banking Corporation (PR Savings Bank.)
Subsequently, City Savings was merged with PR Savings Bank on February 28, 2019.
From one branch built in 1966, they have over 100 branches with more than 1,000
employees, stockholders equity of PhP 15.7B, and total resources of PhP 77B, many
times doubled over the initial capital when they started. Their client base has increased
4
to more than 300,000 borrowers from 3,568 while the number of depositors has reached
creating superior customer satisfaction.” is the bank’s mission. “In the service of God and
His kingdom, City Savings Bank aspires to be the preferred institution in the areas where
we operate within the domestic banking industry.” is the bank’s vision. They envision to
Deposits
▪ Checking Account
▪ Savings Account
▪ Time Deposit
Loans
▪ Pensionado Loan
▪ Motorcycle Loan
5
Board of Directors
D. Organizational Chart
8
Chapter III
Banks offer deposits as one of their products. The bank offers security for
deposited money free of charge and with returns. It is because the bank uses this money
The bank won’t charge the clients for their deposits however the bank will require
to maintain an amount for it to earn an interest and for the account not to be closed. The
maintaining balance depends on the type of deposit account the client will avail. There
are three types of deposit accounts City Savings Bank offers. These are Savings Account,
Checking Account, and Time Deposit Account. The maintaining balance for Savings
Account is P3,000 (also the required amount to earn 0.25% per annum), for the Checking
Account P5,000 for personal use and P10,000 for Corporate (will not earn an interest).
The Time Deposit, on the other hand, is a deposit that cannot be withdrawn for a certain
period of time. The longer the term the higher the interest rate it will gain. The interest
amount is subject to a 20% withholding tax except for 5 years and up term Time Deposits.
submit 2 valid ID’s. This is to avoid fraud and to comply with the requirements of AMLA.
The loan products City Savings Bank offers includes Teachers’ Salary Loan,
Pensionado Loan, and Motorcycle Loan. The Teachers’ Salary Loan payments are
collected through Automatic Payroll Deduction System (APDS). The monthly amortization
will be automatically deducted from the teachers’ salary and will be reflected as loan
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payments for City Savings Bank on the teachers’ payslip. While the Pensionado Loan
payment is collected through the ATM card of the pensioner. The bank will have the right
to keep the ATM card of the pensioner as long as the loan is not yet fully paid. For
motorcycle loans, the client can pay at any CitySavings branch, Pera Hub and Bayad
Center outlets.
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Chapter IV
The government has placed the country under a national state of calamity, with
specific areas under ECQ measures as coronavirus disease 2019 (Covid-19) cases
continue to rise.
To ensure that the service to customers remains unhampered despite ECQ, City
Savings Bank have started the “Loan Ranger” application. It is the bank’s unique lending
facility that allows sales associates to physically go to areas to process and approve a
loan without the customer needing to visit a branch. To date, there are 188 loan rangers
deployed in Luzon and 109 in Visayas and Mindanao. And since the ECQ was
“The loan will help me a lot, particularly in this time of crisis where I need to buy
(BusinessMirror, 2020).
City Savings Bank (CitySavings) has also pledged its support to the DepEd under
the government’s Basic Education – Learning Continuity Plan (BE-LCP). “The donation
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from City Savings Bank is a big help for the Region to help fight against Covid-19. We are
happy to engage with the CitySavings as we prepare our teachers, learners, and schools
for the new normal”, said DepEd Eastern Visayas Regional Director Ramir Uytico (The
Chapter V
FINANCIAL STATEMENTS
13
14
15
Chapter VI
FINANCIAL ANALYSIS REPORT
A. LIQUIDITY
Current Ratio
Current ratio shows the relationship between current assets and current liabilities.
The current liabilities is the immediate financial obligation of the bank. The Current ratio
shows current assets as the payment source of the current liabilities. The higher the
In the given 2019 Financial statements, the Bank’s total current assets which is
true that the current ratio decreased from 1.74x in the year 2018 to 1.42x in 2019, the
bank is still liquid as the current ratio remains to be higher than one (1), or simply put,
current assets remain to be higher than the current liabilities. This means that City
Savings Bank’s is able to pay off its current liabilities 1.42 times over using its current
assets. This means that the company is very capable of using its current assets in meeting
Aside from the current ratio analysis, the bank is said to be financially doing well
because of the fact that it has been consistently showing positive comprehensive income
Quick Ratio
In the Financial statements, the Cash and Other Cash Items are not enough to pay
the current liabilities but adding this to Loans and Receivables and Marketable Securities
the bank will be able to pay its current liabilities 1.30 times over. This tells us that the bank
has a strong financial well-being in the sense that its quick ratio is greater than one (1).
Hence, the bank has the ability to instantly use its near-cash assets (i.e. marketable
securities, accounts receivable) to pay down its current liabilities. This also signifies the
bank’s capacity to pay its current liabilities without needing to sell its inventory or get
additional financing. In other words, the bank is fully equipped with exactly enough assets
Cash and other cash items, Due from BSP, and Due from other banks have
increased since 2017 which is a good indicator that the bank is liquid enough to pay off
Cash Ratio
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Based on 2019 cash ratio, the bank is able to pay 50% of its current liabilities using
its most liquid assets. Using the cash ratio, we can say that the bank will not be able to
pay off the bank’s total current liabilities using its most liquid asset. However, this does
not mean that the bank is totally incapable of settling its current liabilities. It merely gives
us the impression that it would have to resort to using its other current assets such as
Securities Purchased Under Resale Agreements and Loans and Receivables in order to
Cash ratio of 0.50 in 2019 is an indicator of the bank’s value under the worst-case
scenario - say, where the bank is about to go out of business. This information is useful
to creditors when they decide how much money, if any, they would be willing to loan the
bank. It tells creditors and analysts the value of current assets that could quickly be turned
into cash by the bank, and what percentage of the bank’s current liabilities these cash
Times Interest Earned Ratio is the ability of the company to meet its debt
obligations on a periodic basis. The larger the interest earned, the more capable the
In the case of City Savings Bank, the EBIT of the bank is more than the interest it
has to pay on its obligations which means that the bank will be less likely to default on its
loans. This also means that it is a safer investment opportunity for debt providers.
The computed Times Interest Earned ratio of 1.50 in 2019 measures the bank’s
ability to continue to service its debt. It is an indicator to tell that the bank is not running
into financial trouble, as evidenced by the Income Statement of the bank. It also means
that the said bank is able to meet its interest because its earnings are significantly greater
Having a 1.50 times interest earned ratio is preferred because having a higher ratio
could be interpreted that the bank has an undesirably low level of leverage or pays down
too much debt with earnings that could be used for other investment opportunities to get
a higher rate of return. Having a lower times interest earned ratio, on the other hand,
could mean fewer earnings are available to meet bank interest payments.
Since 2017 up to 2019, the bank has consistently lowered down its times interest
earned ratio to 1.50x, an average ratio which could be considered as a positive sign that
The company has had a high TIE Ratio since 2017. However it has also declined
since 2017 because of the increase of the total amount of expenses which affects the
From 2018 to 2019, the Operating Cash Flow Ratio of the bank significantly
increased by 0.33 which means that the bank has generated significant amount of cash
under the bank’s normal business operations and does not require or rely to external
If we are to dissect the Income Statement of the bank from 2017 to 2019, the bank
has generated the highest operating income in 2019 yet it has the lowest comprehensive
income. This is due to the non-cash operating expenses deducted from the operating
In other words, the operating cash flow of the bank provides a clearer picture of
the current reality of the bank’s business operations. While it is true that the
comprehensive income of the bank consistently lowers down from 2017 to 2019, it does
not mean that the bank is not financially doing well. In fact, it shows the other way around
- the bank is financially stable as evidenced by the remarkable increase of operating cash
The bank’s Operating Cash Flow Ratio has considerably increased since 2017. An
operating ratio of less than 1 indicates that the bank did not generate enough cash to pay
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off its current liabilities. However, banks are mandated by BSP to set an amount as a
Reserve Requirement. For thrift banks, the Reserve Requirement Ratio (RRR) is at 6%
of the total deposit liabilities (Lopez, 2019). RRR is part of the current assets and based
on the 2019 current ratio, the bank can pay off its current liabilities 1.42 times over. The
operating cash flow ratio also indicates that the bank earns Php0.26 for every peso of its
current liabilities. This is higher compared to 1st Valley Bank which only earns Php0.09
Using Current Ratio, Quick Ratio, and Times Interest Earned Ratio the bank is able
to pay off its current liabilities and interest expense by more than 100%. However, based
on Cash Ratio and Operating Cash Flow Ratio, the bank is not liquid enough to pay its
total current liabilities. Cash and cash equivalents and total cash from operating expenses
is not enough to cover for the total current liabilities of the bank. This is because the bank
uses deposits (current liability) in order to offer loans. In 2019, the bank has a total of
P46,257,601,690 as deposit liabilities (more than 50% of the total current liability). The
total loans offered has amounted to P52,782,364,953 which when collected is able to pay
off the total current liabilities of the bank. However, loans won’t be collected for such a
period of time thus BSP mandated for banks to have a Liquidity Coverage Ratio and Net
Stable Funding Ratio (NSFR) not to be lower than 100%. Liquidity Coverage Ratio
promotes short term resilience while NSFR aims to promote long-term resilience against
liquidity risk. The Bank reported a 103.93% of LCR and 153% of NSFR last December
2019. With this, we believe that the bank is doing well financially.
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The efficiency ratio shows the operating cost incurred to earn each dollar of
revenue, and it varies across banking firms. A higher efficiency ratio indicates that the
bank faces higher operating costs (Non-Interest Expense, n.d.). The City Savings Bank
Efficiency Ratio has increased since 2017. From 2017’s 36.60% efficiency ratio to 2019’s
62.47% which means that expenses have almost doubled since then. The total expenses
affecting the efficiency of the bank in generating revenue for every peso of expenses. In
2017, for every Php1 of expenses, the bank earned Php2.73. In 2018, every peso of
C. LEVERAGE
Debt-to-Equity Ratio
The bank’s debt-to-equity ratio has declined since 2017. However, total liabilities
is still higher than equity which means that the company is financed with debt. A relatively
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high debt / equity ratio is common in the banking system and in the financial sector as a
whole (Which Ratio Between Debt And Equity Is Common For A Bank?, n.d.). This is
because banks accept deposits which are liabilities and they use it as additional
funds. Compared to 1st Valley Bank and MCPSB, City Savings Bank has a lower debt-
to-equity ratio.
Equity Ratio
The bank’s shareholders have a 20.47% residual claim over the total assets in
case of liquidation. The bank’s total liabilities is almost 80% of its total assets. Almost
Debt Ratio
The debt ratio measures the amount of leverage used by a company in terms of
total debt to total assets (Hayes, 2020). The bank’s debt ratio is lower than 1 which means
a portion of the bank’s assets is funded by equity or total assets is more than the total
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liabilities. Compared to similar banks, 1st Valley Bank has a lower debt ratio than City
D. PROFITABILITY
Financial System, 2019). City Savings Bank is higher than the industry’s average, which
means that the bank has a high competitive advantage and can attract investors. Also,
compared to other companies, City Savings Bank has a higher ROE than MCPSB. On
the other hand 1st Valley Bank’s average ROE is higher than City Savings Bank.
Return on Assets
24
The bank has a higher ROA from 2017-2019 compared to industry average
companies, 1st Valley Bank has a higher ROA while MCPSB has a lower ROA. 1st Valley
Bank manages its resources well in generating profit than City Savings Bank.
City Savings Bank’s ROCE has declined over the years. However, when compared
to MCPSB, it is more efficient in generating profit per peso of capital employed. On the
other hand, 1st Valley Bank generates more profit compared to City Savings Bank.
The bank’s net profit margin has declined over the years. The bank earns
13.28% for each peso of revenue which is much lower compared to 2017. This is also
Chapter VII
RISK ANALYSIS REPORT
handling
clients and
ensure
100%
customer
satisfaction
always
Customer Irate clients 4 4 16 Provide January
Service seminars on
how to
properly
handle
customer
complaints.
Over-the- Unsatisfied 3 4 12 Assign a January
counter Loan clients bank teller
Payment exclusive
(Long queue) for receiving
loan
payments.
Refund for Clients 3 4 12 The January
billed but dissatisfactio assigned
already paid n personnel
loans (slow) should
Clients will inform
not reapply immediately
for a loan the billing
department
of the
school
division
where the
teacher is
currently
assigned.
If the loan
payment is
still
ongoing,
the
assigned
personnel
should
immediately
deposit the
loan
deduction
28
to the
savings
account of
the client.
Position Position
Note:
Process: set of interrelated or interacting activities that use inputs to deliver an intended result
Frequency: occurrence
Completion Date: time to complete the strategy After Completion Date re -assess again the risk
30
Chapter VIII
Based on the liquidity ratios, the City Savings Bank’s overall financial well-being is
healthy. The bank is liquid when it comes to its finances and is able to pay its debts
interest on time. Also, the bank is capable of paying its liabilities using its assets.
However, City Savings Bank’s efficiency ratio has declined since 2017 which means that
City Savings Bank is highly leveraged. Its assets are mostly financed by debts.
Nevertheless, this is normal as banks rely on its depositors for additional capital and
deposits are treated as liabilities. The bank's net profit margin has declined over the
years. Based on its income statement, the bank’s net income has decreased considerably
since 2017. The bank’s total expenses have almost doubled since 2018. City Savings
Bank should review its expenses and check thoroughly what caused the increase of
expenses. Overall, based on ROE, ROA, and ROCE the bank is still profitable.
The Risk Analysis revealed that loan payment collection is at risk. Submitted
documents, such as payslip, must be thoroughly checked in order to ensure that the
reflected net salary is accurate. Also, it was found out that some branches of City Savings
Bank lack good customer service. Clients have complaints when it comes to the
31
processing of loan applications, claiming refund, over the counter payment of loans, and
that might harm the bank’s image. Also, the number of clients will decline if poor customer
service will continue. City Savings Bank should correct wrong practices in order to fulfil
customer satisfaction.
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Chapter IX
BIBLIOGRAPHY
Lopez, M. Lu. (2019). BSP rolls out reserve cuts for thrift, rural banks. CNN.
https://www.cnnphilippines.com/business/2019/5/23/BSP-reserve-cuts-thrift-
rural.html
The Manila Times. (2020). CitySavings supports DepEd’s Learning Continuity Plan.
https://www.manilatimes.net/2020/06/15/public-square/citysavings-supports-
depeds-learning-continuity-plan/731884/
Which Ratio Between Debt And Equity Is Common For A Bank? (n.d.).
http://directvanqex.com/which-ratio-between-debt-and-equity-is-common-for-a-
bank/
34
Chapter X
CURRICULUM VITAE
as a waitress at Caviar House and Prunier Seafood Bar and Restaurant from 2014-2017.
She worked as an on-call waitress at Marco Polo Plaza Hotel in Lahug, Cebu for 8 months
(2013). She had her international on-the job training at The Fullerton Hotel Singapore,
Singapore from 2010-2011 and was assigned in the main restaurant of the hotel that is
the TOWN Restaurant. She currently lives in Don Carlos, Bukidnon. She is married with
Hotel and Restaurant Management at Bukidnon State University, Malaybalay City, then
She currently live in Imbatug, Baungon, Bukidnon, but during Christmas break, summer
vacation she will spend it to her home place in Bacusanon, Pangantucan, Bukidnon,
married to Mr. Juventino Cadiz Hubayan and blessed with two wonderful sons Jovanne
Emmanuel 5 years old and Jevanne Ezekiel 2 years old. She is a family oriented, God
at a BPO company as a Quality Control Manager. She previously worked at 1st Valley
Bank as a bank teller for 5 years in Buug, Zamboanga Sibugay. She was raised and born
in Cabadbaran City, Agusan del Norte. At present, she is residing in Cagayan de Oro
City. She is married to Mark Lester S. Masamayor and they are blessed with a beautiful
son.
38
Iligan City. She has been in Mr. Curly for 9months. Before Mr. Curly
She finished TESDA Competency for Front Office and Housekeeping NC II. She Currently
Live in Greenheights Subdivision Del Carmen Iligan City. But during summer vacation
she will spend it at her home place in Lianga, Surigao del Sur. Married to Mr. Val Alexis