A study on the profitability and efficiency of bancassurance to selected domestic universal banks in the Philippines for the years 2000-2005

• Main Authors: Besitan, Anne Emmanuelle Sarah N., Erese, Gin Krishna C., Hernandez, Denilou D., Ordinario, Marianne G.
• Format: text
• Language: English
• Published: Animo Repository 2006
• Subjects: Banks and banking > Philippines; Bank profits > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/14198
• Institution: De La Salle University

Bancassurance is relatively new to the banking industry. It was only in the year 2000 that the Bangko Sentral ng Pilipinas (BSP), issued a circular that permits banks to engage in bancassurance. This study is beneficial to the bankss that are not engaged in bancassurance and also to banks that are currently offering bancassurance. This will aid them in assessing the contribution of bancassurance to their operations. This study analyzed the relationship between bancassurance and the profitability and efficiency of six domestic universal banks. Pearson Product Moment Coefficient, Spearman's Rank Correlation Coefficient and Multivariate Canonical Regression were utilized as tools for evaluation of relationships whereas financial ratios were computed for assessment of the banks' performance. Profitability is represented by the following ratios: return on assets and return on equity, which is the product of net profit margin, asset utilization and equity multiplier and Efficiency represented by the operating efficiency ratio. Results have shown that bancassurance income is related to net income and that there is inconsistent movement of the variables over a period of time. The inconsistent movement may be an influence of the intervening variables - the current economic condition of the Philippines and the BSP regulations. Despite volatility, the outcome proved that bancassurance is nevertheless a viable investment for banks.