Interview with Helen Yuchengco-Dee, President, Yuchengco Group

25 Oct Interview with Helen Yuchengco-Dee, President, Yuchengco Group

Can you give us an overview of Yuchengco Group and its subsidiaries in 2024?

My grandfather started the company in the insurance industry, and my father expanded the company into other industries. Today, we focus mainly on finance and renewable energy. Our subsidiaries have been on the market for a long time. Malayan Insurance, the oldest in our group, turns 96 this year. Rizal Commercial Banking Corporation (RCBC) is 64 years old, and our life insurance company, Sun Life Grepa Financial, is 60 years old. House of Investments, the oldest private equity fund in the Philippines, is more than 50 years old. We employ around 60,000 Filipinos. All of Yuchengco Group’s companies donate 3% of their net income to our foundation. Recently, our funds have focused on the two following main areas: feeding the poor in Makati and Manila through church organizations and supporting thousands of scholarships that cover tuition and expenses for underprivileged students.

RCBC is the fastest-growing bank in the country in terms of total assets, loans and deposits. We have been the best digital bank for four consecutive years and aim for a fifth. Our growth and quality have attracted Sumitomo Mitsui Banking Corporation, which invested an additional $477 million and raised their ownership to 20%. Sumitomo Mitsui Banking Corporation is also adding project finance and consumer loan technology, with a dozen ongoing projects. Private equity firms often meet with us to explore opportunities. RCBC is the primary bank to partner with for fintech initiatives. The bank has extensive data on small and medium-sized enterprises and conglomerates. Some borrow from RCBC to acquire Philippine companies, although banking ownership is typically limited to 40% except where exemptions apply.

What efforts is the company making to expand its reach in the renewable energy sector?

We are focusing on renewable energy with funding from Japanese equity partners, primarily focused on the solar and wind sectors. While the Philippines has ample resources for renewable energy, rising land prices could make projects uneconomical. Land must be bought or leased near transmission lines to connect to the grid. While we have yet to move to the offshore segment due to high costs, we do have a wind farm in Boracay. We have a strong appetite for project finance, particularly in renewable energy. We have completed three gigawatts of renewable projects and welcome collaborations with US companies.

How important is digitization to the company’s current growth strategy?

The Yuchengco Group has plans for digitization. What sets us apart is our long-term focus on artificial intelligence, which we have been leveraging since 2019 at RCBC. While other banks are just beginning in this segment, RCBC has 55 artificial intelligence models in use across the bank. This has enabled us to grow our assets while reducing headcount, unlike other banks that have increased their staff. Our productivity gains are largely due to our investment in this new technology.

What major economic challenges is the Philippines currently facing?

The Philippine economy is primarily driven by consumption due to our growing population, which is increasing at a rate of more than 2.2%. In contrast, countries like China and the USA face declining populations. Our property insurance has faced major challenges due to the tightening reinsurance market. Costs have increased more than tenfold, which has made it very expensive to reinsure, especially for a catastrophe-prone country such as the Philippines. As a result, we are reducing our acceptance of Philippine risks, which may lead to inadequate insurance coverage for many local companies in the future.

We also currently lack sufficient manufacturing industries; most of our companies are service oriented. American companies could manufacture in the Philippines for distribution across Asia. Increasing exports is crucial. American investments are highly welcome in the Philippines and Filipinos are generally easy to work with.

Another challenge is the global shortage of nurses and doctors. Our school will introduce medical sciences this year, starting with nursing and expanding to doctors next year. Previously, the USA and the Philippines faced issues with nurse and doctor retention. However, the USA now offers immediate visas for entire families, which has encouraged migration.

Access to banking services is another critical challenge. Universal access to banking services remains a national issue. We require a national identification and a national credit bureau, both of which are in progress. Our customers can transact at any branch with a single client identification thanks to facial recognition. Digitalization has made this easier. However, we must add special security features as advanced artificial intelligence is able to mimic faces and voices and poses a risk.