Bank risk manager of the year: Marita Socorro Gayares, Bank of the Philippine Islands

Asia Risk Awards 2020

As chief risk officer of the Bank of the Philippine Islands (BPI), Marita Socorro Gayares has been instrumental in transforming the bank’s governance, risk management and compliance culture over her 35-year tenure at the bank. Gayares leads the BPI’s risk management office, consisting of 20 specialised risk management teams and more than 160 risk officers. BPI also has offices in London and Hong Kong.

During her tenure, Gayares has overseen the full integration of the risk management office with the bank, resulting in a unified view of BPI’s credit, market, liquidity, operational and enterprise risks. Gayares’ risk strategy aims to address inefficiencies arising from dispersed risk teams and silo-based risk methods. Risk modelling and validation, risk dashboards and regulatory risk reporting have been automated and streamlined, resulting in increased efficiency and a 360-degree view on risks facing the bank.

“We have built our own risk data architecture where anything that is risk-related is stored in a data warehouse controlled by the risk management office. The requirements of the business and management has increased by three-fold and there is pressure on our end to make sure our risk data architecture is robust, and that we are able to provide management with data to make informed decisions,” she says.

Bank of The Philippine Islands

Over the past 12 months, this 360-degree risk assessment system has supported initiatives such as the bank’s digital transformation strategy (a five-year strategy that began in 2016), small and medium-sized enterprise and microfinance lending and green financing bond issuances.

There have been a number of landmark deals over the past 12 months, including $300 million of capital raised via issuance of five-year senior unsecured fixed-rate Asean green bond. These debt instruments offered a 2.5%, marking the lowest credit spread paid by a Philippine bank. Other important milestones included the issuance of the first Swiss franc-denominated green bond and the first negative-yielding green bonds to be issued from the Philippines. BPI also secured a BBB+ credit rating from S&P in August 2019, the first credit rating assigned by S&P to the bank and on par with the Philippine sovereign rating due to what the bank terms, in a press release, its “sound asset quality and risk control”.

We have built our own risk data architecture where anything that is risk-related is stored in a data warehouse controlled by the risk management office

Marita Socorro Gayares, BPI

Banking on big data

Under Gayares, the bank has invested in big data infrastructure aimed at delivering more efficient and timely risk reporting, improving data availability and processing, and the overall quality of regulatory and internal risk reporting. This utilisation of big data infrastructure for risk management was a first among local Philippine banks. BPI’s big data system relies on data across all its customer segments – such as loans, deposits and investments – to provide a complete view of the customer and their risk profile.

“We have realised the power of data and data analytics to provide almost real-time customer information,” says Gayares. “We have also invested in our anti-money laundering systems to make them more robust for risk-profiling transaction monitoring. Critical to this is data analytics and big data – each of our product segments has access to its own customer data – but we have an overarching customer relations management group that provides a complete view of all customer dealings with the bank.”

Prudent provisioning

Due to the economic uncertainty caused by the Covid-19 pandemic, BPI is bracing for a rise in non-performing loans (NPLs) over the next 12–18 months. While NPLs have not risen by much in the year-to-date primarily (because there was a government moratorium on loan payments), BPI has been actively provisioning for a spike in NPLs, which Gayares expects to see in the succeeding quarters.

“If you look at our provisioning, it is over and beyond what is required by regulations as we recognise that customers have availed of the loan moratorium and thus NPLs may be understated. This credit risk is tracked internally and reported every month to the risk management committee,” she says.

And while the bank is concerned about a spike in NPLs, Gayares notes that BPI’s liquidity and market risk book has been very stable and the bank is in a strong net cash position.

“In a bear market such as this, due to the strength of our bank, we actually find ourselves as a recipient of funds,” says Gayares.

BPI set aside an additional 15 billion pesos ($310 million) in provisions for loan losses relating for the first half of 2020, which Gayares says is the highest amount of capital it has set aside in its history – and higher than during the Asian financial crisis and the global financial crisis.