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The Monetary Board, the policy-making arm of the Bangko Sentral ng Pilipinas, has approved amendments to relax rules on banks’ loan write-offs.
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Garments firms have pledged to pour in additional P500 million in investments within a year if government negotiators can swing a special access to the United States market.
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In the face of steady surge in world oil prices, state-owned National Power Corporation (NPC) is working hard to bring down the share of oil-fired plants in the power generation mix to a single-digit level.
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Commercial and universal banks’ total loan portfolio as of July this year amounted to P1.834 trillion, higher by 4.4 percent compared to the same period in 2004, which was P1.756 trillion, based on central bank figures.
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In an attempt to post a "break even" record in its financial performance this year, state-owned National Power Corporation (NPC) is bidding to recover from consumers roughly P0.20 per kilowatt hour (kWh) average adjustment in its generation charge which remain unbilled since October last year.
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P /$ rate closes at P56.17 to $1
The peso rate closed at P56.17 to the US dollar last Friday at the Philippine Dealing System of the Bankers Association of the Philippines. The weighted average rate stands at P56.129.
SEC reviews tender offer rule
The Securities and Exchange Commission (SEC) is revisiting its mandatory tender offer rule to lower the threshold from 35 percent to 15 percent. SEC Chair Fe Barin said the mandatory tender offer rule is no under review by the Corporation Finance Department of the Commission. Under the SRC, any person or group of persons acting in concert, who intends to acquire 35 percent or more of equity shares in a public company in one or more transactions within a period of 12 months, shall be required to make a tender offer to all holders of such class for the number of shares so acquired within the said period. The mandatory tender offer will require a prospective buyer to make an offer to buy the remaining shares held by the minority shareholders at the same terms offered to the controlling shareholders.
BAP rejects Favila proposal
Bankers have rebuffed Trade and Industry Secretary Peter B. Favila’s proposal that they extend a portion of their loanable portfolio for small and medium enterprises saying that is not viable. A banking source said that Favila has met with members of the Bankers Association of the Philippines (BAP) including BAP chairman Cesar Virata. Banks cannot agree to Favila’s microfinance proposal because it is not cost effective and not all banks are into microfinance, the source said. "It is not viable because microfinance is collateral-free and requires daily collections and not all banks have that kind of system," a source said. This prompted Virata to tell Favila in jest that he should better "liberalize 56" if he insists that commercial banks also go into microfinance. When Favila joined the government service, one of his first pronouncements was to seek for more financing for the development of the SME sector. He was then confident that his friends from the banking sector is going to support his objective.
MB okays outsourcing rules
The Monetary Board, (MB) central bank’s policy-making body, has decided to allow other banking functions that may be outsourced by banks and other non-bank financial institutions under the Bangko Sentral ng Pilipinas (BSP) supervision. This is to enable the banks to focus more on their core businesses of banking and enhance cost-efficiency, according to BSP Deputy Governor Nestor A. Espenilla Jr. Under the additional guidelines, Espenilla said legal services from local legal counsel and compliance risk assessment and testing may now be outsourced without the need of prior BSP approval. In the meantime the MB may also outsource back-up and data recovery operations subject to prior approval. The new rules would allow banks and non-banks to outsource banking services such as loan documentation, collection of defaulted accounts and crisis management operations that can be better managed and handled by third party service providers with the necessary resources and specialized skills, training and experience. The BSP said compliance risk assessment and testing may also be outsourced, subject to appropriate oversight by the compliance officer.
Banks’ NPL ratio declines
The Bangko Sentral ng Pilipinas (BSP) said as of end-July, the non-performing loans ratio of commercial and universal banks stood at 9.54 percent, higher by 0.33 percentage points from June’s 9.21 percent but better than 13.92 percent recorded in July 2004. The banking sector’s NPL ratio slid back to single-digit levels last month for the first time in six years. The last time NPL ratio was at this level was July 1998. BSP Governor Amando M. Tetangco Jr. said earlier that NPL ratio will probably end at ten percent or lower by the December. Based on the latest central bank data, the total NPLs amounted to P175.98 billion from P174.87 billion at end-June. The BSP said the hike in this month’s NPL ratio resulted from the 0.1 percent rise in NPLs and the 3.4 percent contraction in total loan portfolio. TLP was reported at P1.843 trillion for the period. Net of inter-bank loans, the NPL ratio likewise rose to 11.34 percent from last month’s 11 percent as regular lending fell by 2.9 percent. This month’s ratio nevertheless reflected a 5.20 percentage point improvement from year ago’s 16.54 percent ratio.
Fue prices to rise 6.3% with EVAT
Fuel prices are expected to rise by an average of about 6.3 percent once the government begins to implement the new expanded value-added tax (E-VAT) law in October, government officials said. However they said both fuel and electricity prices, which are are also set to go up with the imposition of the new law, will do so at slightly lower rates than previously assumed. The reason for this is that some other taxes formerly levied on the oil and power industries have been removed in order to cushion the impact of the E-VAT. Both the oil and electricity sectors were previously exempted from VAT payments. Energy Undersecretary Melinda Ocampo said oil prices will rise by an average 6.3 percent, instead of a full 10 percent. This was after the law removed the excise tax on socalled socially sensitive petroleum products, while President Gloria Arroyo recently ordered a reduction in the import duty on petroleum products to 3 percent from 5 percent previously. The government expects to generate P30 billion in additional revenues from the E-eVAT on petroleum alone, or roughly a third of the P86 bilion to P109 billion it expects to earn from the tax measure annually, Finance Undersecretary Emmanuel Bonoan said. "This is the very first time VAT will be imposed on petroleum products and electricity, and the government recognizes the need for mitigating measures," Ocampo said. She said its impact on electricity rates will be partially offset by the removal of the 2 percent franchise tax previously collected from power distribution utilities.
Thrift bank sets R550-M notes
Asiatrust Development Bank Inc. said in a statement its board of directors has approved the issuance of unsecured 10-year subordinated debt, or Tier 2 notes, worth up to P550 million. The bank has yet to finalize the timetable for the fund-raising exercise, which is still subject to approval by the central bank. In an earlier statement, the bank said the fund raising would boost its capital adequacy ratio to close to 20 percent from 13.9 percent as of end-July.
Global Steel Philippines, Inc. (GSPI) the country’s largest steel manufacturer reported that its energy conservation drive has generated P2.4 million in savings for the company over three months. Over the past year of operations, electricity cost constituted over 25 percent of our variable conversion cost. We therefore set up last May a monitoring system involving routine inspections to seriously scrutinize energy usage in the Iligan plant. This led to the development of an energy conservation program, said N.M. Patnaik, GSPI senior manager for Cost and Accounts. The campaign targeted the steel plant_s major production lines and focused on reducing electrical consumption to the minimum possible during non-operating days, while operating at high efficiency levels on production days. Various measures such as shutting off unnecessary lighting systems, heaters, transformers, and other electrical equipment were strictly enforced, according to Patnaik. The program involved employees at every level, and saving electricity has now become part of our culture at the plant. Because of our innovation and teamwork, we saved around 572,295 kwh of electricity over the past three months. That translates into savings of P2.4 million for the company, Patnaik said.
UNDP taps BDO for LGF
The United Nations Development Programme (UNDP) signed an Escrow Agreement with Banco de Oro Universal Bank-Trust Banking Group (BDOTrust) for the establishment of a $2.6 million Loan Guarantee Fund (LGF) for Renewable Energy (RE) Projects last September 1, 2005. The LGF is intended as a partial loan guarantee mechanism for RE Projects to spur the development of sustainable energy sources for the Philippines. It will be made available to RE project developers, including retail funders of small RE systems, whose loans may require a high level of securitization or are inadequately capitalized and could not meet the collateral requirements of financial institutions. The LGF is funded though grants from the Global Environment Facility (GEF) to the CBRED Project ("Capacity Building to Remove Barriers on Renewable Energy Development in the Philippines") implemented by UNDP and the Rural Power Project (RPP) administered by the World Bank (WB). The Department of Energy which acts as the Executing Agency for both UNDP and WB projects will have an oversight role in the implementation of the LGF.
No cooking the books — NSCB
A senior official denied suggestions that the government had cooked up its trade figures for 2002-2004, which were then revised last month to reveal a far worse picture of the Philippine economy than first thought. "Revision of official statistics is standard fare, recognized and appreciated by those who truly know," said Romulo Virola, secretary-general of the National Statistical Coordination Board. According to new figures issued by the National Statistics Office last month, the 2004 trade deficit was $4.36 billion rather than the previously stated $713 million. The 2003 deficit was revised to $4.24 billion from the previously given $1.27 billion while for 2002, it was revised to $4.03 billion from $218 million. In 2003 the government had also revised its previously released import figures for the three years to 2002. "Concerns were raised, quite understandably, about the revision of foreign trade statistics released recently," Virola said in a statement. "Some of these concerns were articulated objectively but some, unfortunately, degenerated into convoluted accusations about cheating by government statisticians," he added. Virola said the new 2002-2004 trade data came from a revised methodology following studies by the central bank’s monetary board on the proper valuation of exports and imports, particularly of 15 electronics companies that account for much of the country’s electronics exports.
ATR-Kim Eng Securities Inc. said it is recommending a "buy" on Robinsons Land Corp, which is trading at a substantial 36 pct discount to the brokerage’s fair value estimate of P7.23. Robinsons Land closed today up P0.15 or 3.33 percent at P4.65. ATR-Kim Eng analyst Leo Venezuela said in a research note that Robinsons Land is very cheap on a price-earnings ratio basis. Venezuela said that the stock is trading at 9.4 times the brokerage’s earnings estimate for 2005 and 8.5 times its estimate for 2006. He believes that Robinsons Land could sustain its cash dividend of P0.20 a share starting this year, up from the annual P0.05 a share dividend payout last year. Robinsons Land is preparing the construction of its second building here designed for the call center and business process outsourcing industry, Venezuela said. The 27-story building, to be called Cyberzone 2, will have 42,000 square meters of leasable space. Construction is expected to be completed in 18 months, he said. Cyberzone 1 is an 18-story building in the same area. Venezuela noted that both buildings are in an area covered by income tax holidays and other incentives offered by the Philippine Export Zone Authority.
SIA slaps fuel surcharge
SINGAPORE, Sept.12 (AFP) — Singapore Airlines (SIA) said it will raise its fuel surcharge again by as much as five US dollars to cope with higher oil bills, boosting its highest levy to $50 per passenger. SIA said the hike was needed as jet fuel prices had risen to $80 a barrel from $70 in July, when the last surcharge adjustment was made. SIA said the new fuel levy "will offer only partial relief from higher operating costs" arising from increased oil expenses. It said the charges will be raised by three dollars to $15 per sector for flights between Singapore and Bandar Seri Begawan, Bangkok, Denpasar, Hanoi, Ho Chi Minh City, Jakarta, Kuala Lumpur, Manila, Penang and Surabaya. For all other destinations, the levy will be raised by five dollars to $50 per sector, the carrier said. The new fuel levy will take effect on or after September 14. SIA is one of the world’s most profitable airlines but has not escaped from the impact of higher oil prices. In the first quarter to June, the airline’s net profit fell 7.9 percent year-onyear to S$235 million (US$140 million as fuel expenses increased. The airline said net fuel costs of $892 million accounted for 32 percent of the group’s expenditure, compared with 23.3 percent the year before.
DIRECTV viewership expanding
ABS-CBN International (ABS-CBNi), America’s number one source for Filipino entertainment and services, has logged more than 10,000 customers in the migration to DirecTV just four weeks into its new agreement with DIRECTV. The firm said it is now gearing up to handle even more conversions and new sales. Last month, ABSCBNi struck a deal with DirecTV to migrate all of its TFCDirect direct-to-home satellite subscribers to DirecTV as the company focuses on its core competency of developing U.S.-based content that caters to a broader Filipino-American audience. "We are overwhelmed by the sheer number of people excited about the migration to TFCDirect on DIRECTV and we’ve added more phone and customer service capacity to handle the demand," said Raffy Lopez, managing director of ABS-CBN International. He added that they have had a number of new subscribers sign-up through because they offered subscribers a tempting deal: free long distance, free /Star Studio/ magazine subscription plus a rebate program. In addition to the standard free home installation and equipment deal, ABS-CBNi is offering new subscribers who sign-up for TFCDirect the following exclusive perks: Free Calls to the Philippines: 20 minutes of free long-distance service each month; free magazine subscription: Every month the latest in celebrity news comes in /Star Studio/ Magazine; rebate Program: A total of $21 in rebates for the first three months of service. The TFCDirect package on DirecTV includes four video channels: The Filipino Channel, Cinema One, ABS-CBN News Channel, Pinoy Central TV, and two audio channels, DZMM and DWRR. These channels offer dramas, sitcoms, game shows, movies, 24-hour news, music, sports and talk radio entertainment in English, Tagalog, Ilocano, Cebuano and Ilonggo.
Metropolitan Bank & Trust Co (Metrobank) is on track to grow its net profit to P4.5 billion this year from P3.6 billion in 2004, president Antonio Abacan said. The country’s largest lender by assets is also planning to sell P5 billion worth of non-performing loans through an auction, he said, adding four investors have expressed interest to join the bidding. "We are within (our profit) target. In fact, in the first semester of the year, we have attained 50 percent of our earnings target," Abacan said. The bank earlier reported its first-half net profit jumped 30 percent to P2.25 billion, aided mainly by higher non-interest gains. Abacan said the planned sale of bad-loans would cut its NPL ratio to total loans to single-digit level from 10.5 percent currently. Among the interested parties are Deutsche Bank, Avenue Asia and ADM Investors Services Inc., he said. The bank is focused on reducing its NPL level, which has been a drag on profitability, and is not planning to acquire any bank. "We are comfortable with our current position in the banking industry. We are not looking at any bank," Abacan said.
The group of retail and mall magnate, Henry Sy, Sr., has wound down some of its interest in China Banking Corporation (China Bank) by selling some, bringing its equity down to 49.692 percent as of end August this year from 52. 753 percent in March this year. Based on its disclosure to the Philippine Stock Exchange (PSE), Sy and his other firms both have direct and indirect interest in China Bank. The selldown was some sort of a fund raising activity to pay the family of Antonio Go in exchange for the 24.76 percent interest in Equitable-PCI Bank. As of end August, the elder Sy has direct holdings of 5.727 percent in China Bank. His wholly-owned subsidiary, SysMart controls 20.779 percent; ShoeMart controls 6.881 percent. While, SM Investment Corporation holds 16.881 percent, bring the total interest of Sy and his companies to 49.692 percent. Market sources remained firm on their belief that "it is only a matter of time for the group of Henry Sy" to be controlling one of the top financial institution of the country, referring to Equitable-PCI Bank. Thus, the reason for the winding down of some of his interest in China Bank. Since last year, Sy and his various companies have been buying shares of China Bank in the bourse. At one point in time, Sy and his companies total shareholdings in China Bank reached 69.501 percent, virtually inching-out the Dee family from controlling the bank. From year to date, total volume of China Bank’s shares traded in bourse hit 271,471 and valued at P192.101 million with the highest price per share of P820.
BPI emerges as Top Bank
The Bank of the Philippine Island (BPI) has emerged as the top bank in the Philippines, according to the international publication The Asian Banker’s latest issue. The Asian Banker is a publication that details the ranking of the strongest top 300 banks in Asia. BPI’s ranking was based on its assets, deposits, loans, income and profit levels. The ranking of Asian banks are further broken down into region, country by country listings, and performances. Just last year, The Asian Banker’s Excellence In Retail Financial Services Program named BPI as the "Best Retail Bank in the Philippines". That was the second consecutive year that BPI won the award. BPI was chosen based on these values: performance in year under review; sustainability; value of franchise; transparency and strategy; sales capability; risk management; process, technology and efficiency; penetration of distribution channels; and people skills.
SEC to takeover CAP management
The filing for rehabilitation of College Assurance Plan Philippines, Inc.(CAP) will affect the possibility of a management takeover by the Securities and Exchange Commission(SEC). SEC Chair Fe Barin said since CAP went to court and filed a Petition for Rehab, it will affect the Commission’s ability to place the pre-need firm under a management committee. Barin however said the SEC will take action as warranted. " I can’t see their basis why they can still be rehabilitated, " she added. CAP filed for rehab with the Makati Regional Trial Court late last week saying that it was constrained to take such action earlier because of the threat of a management takeover by the SEC. The SEC along with a group of planholders of CAP are expected to file their opposition to the filing for rehab by CAP, the country’s pioneer in the pre-need industry. Earlier, Atty. Maricel Lopez, counsel for some 800 CAP planholders said she will file for an immediate opposition to CAP’s rehab plan. She said the pre-need firm is not qualified for a rehab since it is already insolvent.
Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said the government plan to spend more next year will not necessarily cause inflation to exceed targeted ceilings. Tetangco said the Department of Budget and Management and the National Economic Development Authority has to allot more expenditure for infrastructure development to encourage economic activities. "We need to spend more to improve productivity," said Tetangco. "More spending is not exactly inflationary," he added. The BSP inflation target for next year is 5-6 percent while forecast is 7.5 percent from 7.9 percent in 2005. The 2007 target of 4-5 percent is now under review. The National Government is proposing a budget for 2006 of P1.03 trillion. This is 14 percent higher than the 2005 national budget. The proposed budget also includes a 28 percent increase in capital outlay to allow the government to spend more for infrastructure projects.
NextStage, PRTC in swap deal
NextStage Inc. said it will issue a total of 113.5 million shares to Perfect Research Technology Corp. (PRTC), in exchange for the latter’s 100 percent stake in Technology Support Services Inc., a company engaged in business process outsourcing. The shares to be issued to PRTC, which are to be listed in the stock exchange, comprise of 67.56 million new shares and 45.95 million shares from NextStage’s authorized but unissued capital stock. PRTC will own 67 percent of NextStage after the share issue, NextStage said in a statement. The transaction is supported by a capital hike for NextStage to P170 million from P100 million, which the Securities and Exchange Commission has approved.
BERKELEY, California (AP)—Hong Kong’s richest man has donated $40 million (euro32.5 million) to the University of California, Berkeley for a health sciences center that will conduct stem-cell research. The gift from billionaire tycoon Li Ka-shing _ the largest international donation ever received by the UC Berkeley campus _ will go toward construction of a $160 million (euro130 million) research center for biomedical and health sciences. Li Ka-shing’s donation was part of a record-breaking total of $318 million (euro258 million) in private donations received by the university during the last fiscal year, university officials said. "That is an all-time historical record," UC Berkeley Chancellor Robert Birgeneau said Thursday. Birgeneau said more significant donations will be announced soon, including one "comparable" to Li Ka-shing’s gift, but he declined to provide details.
Mining firm Basic Consolidated Inc. said it is formally negotiating the sale of unit Basic Petroleum and Mineral Inc. to Forum Energy PLC of the UK. Basic, in a disclosure to the stock exchange, said the terms and conditions of the transaction are being discussed with Forum Energy, but it gave no details.
Rice stocks, including imports, in the country rose by 3.3 percent to 1.62 million metric tons as of July 1 this year. The Bureau of Agricultural Statistics said that the July 2005 stocks would last for 57 days and distributed as follows: households, 46.5 percent, commercial establishments, 21.4 percent and NFA, 32.2 percent. Corn stocks, estimated at 236,000 metric tons as of July 2005, increased by 24.1 percent from last year. Total corn stocks distribution showed that commercial warehouses held 75.2 percent while households stored 24.8 percent. The total volume of fish catch for the second quarter reached 1.03 million metric tons, up by 4.8 percent compared to the same period in 2004. The increase in the total volume of fish catch was due to the 9.0 percent growth in municipal, 4.1 percent in commercial and 2.4 percent for aquaculture fishery. The total value of fish catch for the second quarter amounted to P38.36 million. Of this amount, municipal fishery was valued at P13.32 million, reflecting a 9.8 percent increase. Value of aquaculture rose by 3.6 percent while value of commercial fishery went up by less than 1.0 percent.
Domestic trade transactions decline
Total quantity of domestic trade transactions decreased by 18.1 percent to 4.35 million tons in the first quarter of 2005 from 5.31 million tons last year. Water was the major mode of transport with shares of 99.8 percent in the first quarters of both years 2004 and 2005. The National Statistics Office (NSO) noted that there was an increase in the total value of domestic trade by 3.9 percent from P79.08 billion in the first quarter of 2004 to P82.12 billion in the same period of 2005. The commodities were traded mostly through water comprising 99.6 percent and 99.5 percent in the first quarters of 2004 and 2005, respectively. The bulk of the value of commodities that flowed throughout the country in the first quarter of 2005 came from food and live animals with value amounting to P25.36 billion (30.9 percent). This was followed by mineral fuels, lubricants and related materials with P14.22 billion (17.3 percent). Machinery and transport equipment was next with P12.58 billion (15.3 percent). Animal and vegetable oils, fats and waxes generated the least value of P792.75 million (1.0 percent). NCR accounted for 17.9 percent (P14.69 billion), this being the largest share of the total value of domestic trade. This was followed by Northern Mindanao with P13.49 billion (16.4 percent). Central Luzon was third, contributing P12.67 billion (15.4 percent). MIMAROPA was next with P7.44 billion (9.1 percent). Cagayan Valley contributed the least domestic trade share with only P91,000. The inflows in Central Luzon were recorded at P319.44 million.
Vietnam gets $100 M ADB grant
HANOI (XFN-Asia)—Vietnam will get a grant of some $100 million from the Asian Development Bank to help upgrade a rail link between the capital and Lao Cai province bordering China, an official said. "The total investment for the project is two trillion dong or $133 million, with most of it given by the ADB in the form of official development assistance," an investment official of Vietnam Railway told Agence France-Presse. Work is expected to start in 2007 and be finished in early 2009, he said. According to the state-run Vietnam News Agency, the rail link to the China border, one of the busiest in Vietnam, has deteriorated because of the load it has to carry over high gradients. Many bridges, almost 100 years old, that limit speed will be replaced as part of the upgrade, the agency said.
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