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CHAIRMAN'S REPORT Sustaining Growth* Fellow Queenbankers: Queen City Development Bank enjoyed a bumper year of sustained growth in 2006. Powered by strong dynamics, with higher revenue surging 8.00% year on year, and resources growing by 6.80%, the bank delivered its best performance since it was established in 1981. In attaining these encouraging results, we took a number of steps to lay down a strong foundation for sustainable future growth. We allocated funds through capital build-up to support our lending activities to serve as our bank compliance to engage in trust services. We managed to come-up with creative packages to suit clients needs, promoted new generation of leaders, and encouraged innovative thinking that have been the hallmarks of our franchise. After 25 years, Queenbank has demonstrated its capability to stay in step with competitions, adapt to fast-moving changes in technology, delivered client expectation, and adjusted to the new business environment. It has constantly strived to achieve the right balance between the interests of the public it serves, its shareholders and its employees. The bank’s financial results in 2006 bear testimony to this momentum. Similar important bank-wide actions were implemented during the past year starting with the formation of our technology department, to the transition program of our systems group, and the creation of our compliance function. What Makes This Bank Unique We have built-in advantages that allow us to recognize and pursue market opportunities more readily than any other financial services company. First, we have established a strong footprint in the areas we serve. Our deep local roots give us greater insight into what clients want and where the opportunities for growth reside. Second, we serve more clients compared to the previous year through our improved facilities, improved deposit generation campaign of branches, and more aggressive ATM openings. All these enhancements resulted in an improved efficiency, which is reflected in our margins and higher resources that have enabled us to grow over the years while weathering harsh economic environments. With these unique competitive advantages, we have every reason to look forward to Queenbank’s future with optimism. Indeed, with the country’s improved GDP growth, market reforms and the rise in export trade, we are witnessing the emergence of a new middle class. We estimate a vast potential new customers emerging in the next five (5) years – an unprecedented opportunity for the financial services sector, and especially for Queenbank which has identified the SMEs as its market niche. While we have a full menu of products and services to offer, the real edge of Queenbank comes when we integrate and work as one team boost efficiency. I am fully confident that the direction we are going will pave the way to achieve that goal. Our Strategic Priorities The future holds many opportunities and challenges. In short term, we can expect growth in an unsettled business environment that remains vulnerable to significant uncertainties. Acquiring a bank for instance, is an option that may lead to a sudden rise in client, market presence and resources. To penetrate new markets and strenghten our presence in existing ones, we are accelerating the speed of retail and consumer finance including branch openings, expanding electronic capabilities, and increasing a number of banking services bank-wide. The financial sector in the medium term is likely to undergo far-reaching changes on the back of a faster pace of consolidation among major players. These developments constantly throw up new possibilities that Queenbank is ready to seize. While extending our regional footprint, we will continue to bolster our franchise by stepping up the pace of organic growth and external expansion. This year, we plan to open at least three (3) new branches. We have identified the cities of Urdaneta, a second branch in Bacolod, and possibly outskirt Manila as potential sites. This way we can slowly but surely fortify our presence in every key city of the country. In pursuing our drive to boost operating efficiency, we have adjusted ourselves to the latest accounting standards by closely coordinating both with the Bangko Sentral ng Pilipinas (BSP) and our internal auditors. In maintaining a stringent control of risks we have updated our key personnel by sending them to BSP sponsored seminars more often. In keeping abreast with current banking practices, we secure copies of latest BSP policies manual to analyze its contents and convert it into policy manual for uniform bank-wide implementation. Our success hinges on the efforts of our teams, who apply in their daily tasks the values and culture inherent to Queenbank – dedication, focus, ambition, creativity, pro-activeness – and the ethical principles that underpin all our actions as a business enterprise. Building on the experience acquired over the past few years, has steeled our resolve to meet all challenges and opportunities the future may hold. We believe we must not only satisfy but even exceed our clients’ expectations. Our main thrusts are to find integrated solutions and to bridge our businesses to achieve client satisfaction. To help ensure that we reach this goal, we are continuing our efforts to make Queenbank a fast-acting, yet lean organization and to shed bureaucracy. In the face of changes in the banking environment and more stringent regulations endemic to banking and finance related activities, we have underlined the following activities: 1. Conducting a bi-weekly Asset and Liabilities Committee (ALCO) meeting. Our meeting includes setting up of time deposit interest and lending rates comparable to competition. It is in this meeting where we are discussing the revenue through proper matching of investment and lending opportunities is raised. The bank’s compliance function and direction as well as its efficiency of actions undertaken relative to regulatory provisions are also covered.
Corporate Social Responsibility The past year was a year of unprecedented natural disasters – the aftermath of typhoons "Milenyo" and "Reming" These and other events of middle and late 2006 wrought havoc to our people. In response to our dislocated brothers and sisters in the cities of Naga and Legaspi, your board of directors approved an emergency/calamity loan to all employees of the bank including our sister company, Bombo Radyo Philippines stationed in the ravaged area. We have also assisted in the campaign for blood donation through our highly successful Dugong Bombo project late last year as in previous years. We are pleased that Queen City Development Bank and our sister companies under the Florete Group of Companies were chosen to take part in a livelihood program by way of building some residential houses for the Gawad Kalinga Project. Our employees gave valuable time as equity to build houses for our less fortunate brothers and sisters for them to enjoy decent place to live in. I am also happy to announce that Queenbank Foundation continually provides support for the education of deserving children from our group through our “Support for the Florete Group’s Employees’ Children Program”, a commitment of which we continue to cherish. Our People We are an organization whose employees exceed even our own high expectations. In 2006, we asked more from them – to stay focused on their objectives while we reshape our culture. It required an enormous amount of time and energy, and our employees succeeded in building a strong foundation for our future growth, and moving us closer to our goal of being one of the more respected financial services company. What We Expect for 2007 Looking ahead, we will measure ourselves by the progress we make against our strategic initiatives, including the long-term financial goals. For 2007, our priorities are: The impact of acquisitions will be incremental to these goals. In 2006, we refocused the company on its core businesses, put together a clear set of strategic initiatives, strengthened our culture, and laid the foundation for future growth. For 2007, we expect to reap what we have sown.
Click here for Chairman's Report 2006
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