Simon Hughes interviews Ms. Gilda E. Pico, President and CEO of LANDBANK, looking at her leadership style and the bank’s continual growth in the Philippines.
So congratulations to LANDBANK and yourself, of course, for winning these awards: the Commercial Bank of the Year, Innovation in Retail Banking and Banking CEO of the Year. Many congratulations.
Thank you very much. We thank the International Banker for these awards which assure us that we are in the right direction in our journey toward being the Filipinos’ partner in growth. It’s an honor to be in the league of corporate leaders and exemplars in the banking industry. But we acknowledge that we have a lot more to learn in this aspect. These awards inspire us to further strive for excellence while we continue our journey to be the best partner of Filipinos in investing their money and improving their lives. On behalf of every LANDBANKER who contributed to this effort and our clients who inspired us, we thank you.
Very good to have this opportunity to talk to you, Gilda. LANDBANK is on course in 2015 to have one of its best years ever, from an earnings and financial perspective. How do you ensure that this is going to keep going forward?
Well, based on our eight-month performance we are confident that we will be exceeding our target for 2015, and 2015 will be our best year. We plan to ensure the continuity of this performance by actually managing our risk portfolio; we will expand our traditional and untraditional sources of revenues. And, of course, the most important is taking care of our clients. So improving our customer service and at the same time providing innovative products and services that will address the growing needs of our clients.
Now, thinking about your clients, one of the challenges, I suppose, for somebody in the Philippines is the geographic spread of those clients. How important has it been for LANDBANK to establish a presence in all 81 provinces of the Philippines?
That’s the reason why we have established branches in all the provinces; it’s because of the geographical locations. Since we are the biggest government bank in the Philippines, we need to service the local government units and other government agencies like the Department of Social Welfare and Administration, which have offices in all these provinces. So we are the only bank in the Philippines that has branches in all the provinces. It’s also important because we want to help the government in its program of inclusive growth and improving the lives of the people in the countryside.
Now thinking of that kind of social mandate of promoting countryside development, how much of a challenge is it maintaining financial viability while doing that?
LANDBANK has a very unique role in the sense that we are a catalyst of progress in the countryside and at the same time we have to maintain our financial viability. So we have to generate enough income as far as our commercial banking is concerned so that we can finance the development programs and projects of our mandated sector. We have considered as our priority sectors the small farmers and fishers; micro, small and medium enterprises; the agri business; and also the education, health and other development programs of the government.
Are there ever instances when these two goals produce conflicts of interest, and if so, how do you overcome that challenge?
That’s the reason why we have a focus on three business goals of the bank. We have the pursuit of our mandate, customer service and financial viability; so we present this in a triangle because we believe that they are equally important. So we make sure that we balance our commercial operations and at the same time provide enough revenues and funds to fund our developmental projects. But internally we have a policy that at least 65 percent of our total loan portfolio should go to the priority sectors of the bank. And right now we’re doing so at 87, so it’s much more than our internal policy.
LANDBANK was deservedly recognized for its disaster response effort in the aftermath of Typhoon Haiyan. What do you think are some of the most important factors for a bank to consider in its response when a natural disaster like this occurs?
Well, first you have to put your crisis management and your crisis committee in place so that if anything happens then you are ready. The next thing is that we realize the very important role of the banks in putting the operations back to normalcy. So in the case of LANDBANK, the first thing that we did was to account for all our employees; so our employees from other branches who were not affected by the typhoon went to see, to make sure that all the employees had been accounted for. The next thing we did was to put our banking operations in place so that we could service the needs of our local government units and also the department agencies like the Department of Social Welfare and Administration. Because they need to withdraw cash so that they can buy the food items and other necessities that will be provided to the typhoon victims. It’s also important that everyone operates and supports the initiative. In our case, our employees also contributed part of their salaries in order to support the typhoon victims. On the part of the bank for our employees we provided financial assistance to them, and we also gave them loans so that they could restore whatever damage had been done in their homes. We also gave them leaves, severance-based leaves, so that they could attend to their families and also to the rehabilitation of their homes. So what happened was employees in the different branches were the ones minding the branches affected by the typhoon. So we also realized that technology played an important role in bringing the operations to normalcy. So it’s also the teamwork and cooperation of the different government agencies because we had to request their assistance in shipping all our generators, all our mobile ATMs so that we could start operations in the local bank immediately.
Now thinking about a huge environmental challenge like a typhoon but you also have become embedded in environmental protection measures and programs into the operation itself. Do you think there’s much scope for improvement in that kind of work that you’re doing at LANDBANK?
We have a very strong commitment to sustainable development and environmental protection. In the case of LANDBANK, this is embedded in our loan process, so all the loan proposals that are submitted to LANDBANK for financing and their goals and assessments and the evaluation of the compliance to environmental rules and regulations. This is preliminary to the submission of the application to the Department of Environment and Natural Resources, who finally approves and certifies compliance to the rules and regulations. Actually we have received several awards in this area for our environmental due diligence projects.
And other things that have been recognized, too, I think are your use of technology. Give me some examples of the ways you’ve employed technology and innovation to promote countryside development.
Aside from the usual branches and installation of ATMs, we have opened other banking offices in areas where there are no banks. So we opened Obios where we put ATMs, cash-deposit machines, and the bills-payment machines. On top of that we also have the phone-banking facilities where they can transact using the phone or Internet-banking facilities where they can transfer funds or pay their bills using the Internet. We have a very good product which we launched recently. This has gotten several international awards. This is the LANDBANK mobile loan saver. This is a project of LANDBANK together with Smart e-Money. So this is a paperless and fully electronic system where the employees of a corporation can borrow money using their salaries as payment for the loan. The employees can apply or see if they are qualified for the salary loan using their mobile phones. And then if they are qualified, they file their application on line, and we release the loans in less than three days. Payments are done through salary deductions from the payroll accounts.
I mean, thinking about the amount of time you’ve spent with LANDBANK—you’ve been there nearly 35 years, I think—what remains the same? When you’re talking about innovation like that, and new digital products, and new telephone banking products, is there much similarity between when you first started and today in terms of the bank’s overall business ethos?
Actually LANDBANK’s operation is anchored on integrity, transparency, accountability and good governance. But over the years, of course, we have to improve and strengthen all these processes, especially our risk management, because there are a lot of changes in the environment and also a lot of rules and regulations issued by government regulatory bodies. So I think what is important is also our commitment to excellence and service with passion. That’s I think what was added to the transparency, integrity and good governance.
And thinking about that long professional association that you’ve had, you became CEO and president in 2006. Do you think it’s been important that you’ve had that heritage and legacy in terms of making a difference to the bank’s overall performance?
I have served five former presidents in the past 25 years, and I’ve seen their leadership and management styles. And I think I was able to get the best practices amongst these presidents. It was also very helpful for me when I was given the opportunity to be assigned to the different sectors of the bank. So I was assigned to both the back room and the frontline operations, technology, human resources, admin, treasury, banking, branch banking and lending operations. When I assumed as president of the bank, I was confident because I knew the institution very well, and I knew the people and the clients. Maybe that was the reason why I was able to get their cooperation. We had a very good performance over the past years. Because they know me, I know them, and I have worked with them for so many years, and I know how to motivate and inspire them to do what should be done in the performance of the bank.
And thinking about that, having worked for other presidents, how would you describe your own leadership style, what is it that you’ve used having had those lessons from the other folks you worked with?
Well, they look at me as a mother figure in the institution, being the first woman president of LANDBANK. But my leadership style is really, I encourage them to give their ideas on various issues that are facing the bank, and we discuss this thoroughly. But at the end of the day if there is a decision that has been made, everybody should support that decision.
You’ve had experience across all the different areas of operation within the bank, how has your own role evolved since you became president?
Well, it’s the same. I worked with them, so I know them very well. There really has not been that much change. In the past it was less difficult because the banking at that time was doing very well in terms of interest margins. But during the time that I was president, competition was very stiff so we had to do a lot of customer service, a lot of improvements in our customer service, so that clients would stay with us. Interest margins, the banking industry has been highly competitive and highly regulated, and we had to come out with new policies that would address the needs of our clients. So this is one of the differences between now and in the past.
And thinking about that really good understanding you have of the staff and of the various job functions within the bank, what are some of the philosophies you’ve adopted to ensure that you get the most from LANDBANK staff?
First, I believe that I have to get the trust and confidence of the people I work with, because if you have the trust and confidence of your staff then it is easy for them to implement policies that are issued by management. We inspire them, and at the same time they also inspire us, and it is important that…communication is very important. We have to communicate clearly the strategies and objectives of the bank. And these are cascaded down to the field level. Because it is important that everybody will be on the same page, and everybody will have the same understanding of what the policies and objectives of the bank are.
What are your thoughts on the future of banking in the region?
Well, the ASEAN integration presents both opportunities and challenges. There are opportunities in the sense that there will be a wider market for all the participating banks. There are also challenges because of the stiff competition that this will bring. The prices of products and services will go down. Well, another advantage is that there will be sharing of advanced technology from the other banks, but I’m sure there will be mergers and consolidations in the process because smaller banks will not be able to exist with the very high requirements of the regulatory bodies.
Now, finally, LANDBANK’s vision is to be the Philippine’s top universal bank by 2018 but more particularly with that very clear social mandate in terms of supporting your clients and your customers. Your ranking, your industry rankings in June placed the bank in fourth position in terms of total assets, loans and deposits, and in fifth place as far as total capital is concerned. So my final question is, how do you believe LANDBANK can propel itself to take the top spot in just a few years’ time?
Well, we have to qualify that because in our vision statement we stated that LANDBANK will be the top universal bank that promotes inclusive growth and improves the quality of life, especially in the countryside through innovative financial and support services in all provinces, cities and municipalities. So it’s not really to be the top bank in the Philippines but to be the top universal bank in countryside development. So we aim to do this by, of course, being present in all the provinces, cities and municipalities, so we have started with the provinces. We are present in the 81 provinces. Where soon we will be present in all the cities, 160 cities in the Philippines, and eventually in the 1,500 municipalities. But we can do this not only by putting up branches or other banking offices but also by entering into strategic partnerships with rural banks; these are the small banks in the rural areas and also the cooperatives who are servicing our small farmers and fishers.
We wish you all success with that.