An industry study on investment houses in the Philippines for the years 1999 to 2008

• Main Authors: Devantes, Lysette Faith, Guevarra, Bernalin, Tapia, Ma. Elora, Umandap, Marvin
• Format: text
• Language: English
• Published: Animo Repository 2009
• Subjects: Investments > Philippines; Investment banking > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18451
• Institution: De La Salle University

The study entitled An industry study on investment houses in the Philippines for the years 1999 to 2008, is an update of the study done by Castro et. al in the year 2002. The proponents used the list of investment houses under the Investment House Association of the Philippines (IHAP) for the years 2008 in coming up with the sample size. The market share of each investment house was based on its total assets and the results show that the top ten investment houses comprise 86.35% of the industry.The ten investment houses include: First Metro Investment Corporation, RCBC Capital Corporation Abacus Capital & Investment Corporation Multinational Investment Bancorporation, Philippine Commercial Capital, Inc. State Investment Trust, Inc. PBC Capital Investment Corporation and, SMBC Metro Investment Corporation. A descriptive and historical approach was conducted as a research design. For analysis, the researchers used Michael Porter's five forces and the SWOT analysis for the performance of the industry. The use of selected ratios was also undertaken in the study to analyze the financial aspect. Aside form these, other factors of the industry such as marketing, management and socio-economic aspects were gathered and studied to obtain a better understanding of the industry. There is stiff competition among the investment houses before and at present due to the number of players in the industry which offers almost the same products at lower costs. Every investment house's key to growth is quality of work, outstanding performance, growth in profits and loyal clients in the foreign and local market. The investment house industry at present are adapting to the advancing of the financial system. They offered wider array of products aside from underwriting securities. The commission and fees and the interest income on earning assets contributed to the increase in the profitability of the investment houses. In 2008, the financial performance of the industry slowed down as an effect of the global financial crisis. There was less demand of their services and incurred trading losses which caused profits to drop for the year. Evidenced in the study, the bank-allied investment houses have a competitive advantage over the stand-alone investment houses when it comes to profitability. The bank-allied investment house have more interest income and loans receivable that help boost their profitability ratios such as return on equity, return on assets and return on earning assets. Investment houses which are subsidiaries of universal banks may be profitable compared with stand-alone investment houses, they do not have much difference in their liquidity and leverage. The investment houses in general make use of heavy financial leverage as their bills payable and other liabilities increase. This will expose the investment houses to greater liquidity risk and pose as a weakness of the investment houses if they cannot meet their obligation as they become due.