...the Asian miracle

PH is more than ‘Asian miracle’–BSP

 

Manila Bulletin – Mon, Jun 2, 2014

The Philippines is prepared to take on the risks and challenges of transforming the ASEAN trade grouping into an integrated, powerful economic community, opined Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr.

 

While his words are echoes of past pronouncements, Tetangco reiterates though that the economic growth of the last eight quarters – consistently above six percent GDP -- is not something he would describe as a miracle.

During the recently held World Economic Forum on East Asia, which the Philippines hosted for the first time, foreign officials, delegates, and investors have commonly referred to the country as an Asian miracle, a term Tetangco said may not be appropriate.

“Many during the WEF (called) the Philippines a country turning the tide from being the sick man of Asia to the next Asian miracle. To be perfectly frank though, I do not relish that we are called a miracle,” said Tetangco before a gathering of the country’s retail investors and financial analysts.

“The evidence will show that we are where we are now because of hard-fought reforms.”

In the region and across its ASEAN peers, the Philippines remains one of the fastest growing economies. The first quarter GDP growth of 5.7 percent, although falling short of consensus estimate of six percent, is third highest in GDP rate after China and Malaysia.

“Analysts have described the Philippine economy as being in the ‘pink of health’ and this rosy picture is expected to continue through 2014-2015,” said Tetangco. Consumption and capital formation, he said, continue to be the main drivers of growth.

“Our growth story has been underpinned by solid anchors – low and stable inflation due to credible monetary policy and a sound banking system maintained through responsive regulation,” he said. Inflation has remained within target for five consecutive years.

Tetangco also pointed out that local banks continue to be well-capitalized with a capital adequacy ratio of well above the 10 percent requirement and the standard eight percent by the Banks for International Settlements.

“Likewise the adoption of Basel 3 in 2014 is expected to strengthen further the financial system,” he said.

Tetangco said the healthy external sector position continue to shield the economy and the domestic financial market against financial market volatilities after the US Federal Reserve commenced its tapering move last year.

With the US Fed taper of asset purchases in place, markets are now watching developments in growth and unemployment in the US, to see if the Fed will change the perceived path of the taper, and when the “lift-off” (or when Fed would raise rates) would be, observed Tetangco.

“In this period of uncertainty and market volatility, good surveillance is key,” he stressed. “The BSP will not hesitate to deploy contingency measures in response to sharp volatility in capital flows. With an expanded monetary policy toolkit and a broad-range of macroprudential measures to help ensure financial stability, we are optimistic that we are equipped to deal with potential market volatility.”

In the meantime, the country’s favorable external sector dynamics has improved external liability management. The current account has been in surplus for 11 consecutive years.

The favorable sentiment is a positive multiplier, said Tetangco. “Both consumers and businesses continue to express upbeat views about the Philippine economy's growth trajectory,” he added. The positive sentiments are indicative of the “broad support to the general direction of economic policies, and this is expected to fuel the momentum of reforms moving forward.”

With sustained positive developments in almost all sectors of the economy, the outlook in 2014 remains upbeat.

“We are optimistic that GDP growth will reach the government’s growth target of 6.5 to 7.5 percent for the year,” said Tetangco. He is also confident inflation will settle within the three percent to five percent target for the year.

“External sector dynamics will remain favorable, as trade is expected to rebound in light of expected global turnaround while remittances are seen to remain on a steady growth path,” the BSP chief said.

 

...the PHL banks

PHL banks stand out for having positive outlook — Moody's

GMA News

July 18, 2013

 

 

The Philippines, however, is “unique among Moody's system globally” for having a positive outlook, which means that the system can be upgraded. 

 

 

The credit outlook for the Asia Pacific region remains stable despite perceived global economic slowdown and volatility in financial markets, with Philippine banks standing out as exceptional, debt-watcher Moody's Investors Service said Thursday.

“Looking ahead, sovereign ratings in the region are likely to withstand the effects of the moderation in global demand and the volatility in global capital markets,” Moody's said in its special report, “Asia-Pacific 2013 Sovereign Mid-Year Update: Broad Regional Stability Amid Continuing External Volatility.”

Specifically, outlooks for banking systems are stable in nine out of 15 rated systems in the Asia-Pacific.

The Philippines, however, is “unique among Moody's system globally” for having a positive outlook, which means that the system can be upgraded.

Hong Kong, Mongolia, and Singapore have been revised to negative this year.

“Although we do not expect banking system stress to materially affect sovereign creditworthiness in these countries, there continue to be important channels of transmission,” Moody's said.

Moody's sees governments “running relatively tight fiscal policies, or continuing with gradual fiscal consolidation.”

Last year, Moody’s upgraded the issue ratings for the Bangko Sentral ng Pilipinas' debts to Ba1 or one notch below investment grade from Ba2 with a stable outlook.

It also upgraded the foreign and local currency long-term bond ratings of the Philippines to Ba1 from Ba2 with a stable outlook.

Moody's cited as one of the reasons for the stable financial system is that it posed limited contingent risks and provided a stable source of financing for the government.

A higher credit rating allows banks and governments to borrow for less.

The debt watcher noted that the region's debt as a percentage of its output is expected move up only slightly, averaging 49 percent for the 2011 to 2014 period from 47 percent in the pre-2008 financial crisis.

“Overall, Indonesia and the Philippines have featured the biggest improvements in terms of their percentile ranking,” Moody’s said.

“High economic growth, narrow fiscal deficits, and exchange rate appreciation have combined to lead to debt consolidation in both countries and have contributed to the upward trajectory in their ratings,” it added. — SOA/BM, GMA News

 

 

...the stock market new high

Foreign buying, positive sentiment buoy PHL stocks to all-time high

 

VICTOR D. SOLLORANO

GMA News

November 23, 2012

 

 

“Year-to-date, the PSEi has broken through new record highs for a total of 28 times” - PSE

 

 

Shares on the Philippine Stock Exchange closed the week at an all-time high Friday, buoyed by foreign buying and positive sentiment on the domestic front.

 

 

The market sentiment remains driven by corporate developments, particularly the impending merger of Bank of the Philippine Islands (BPI) and Philippine National Bank (PNB), said Arlysa Narciso, equity analyst at AB Capital Securities Inc.

 

 

BPI is buying a majority stake in PNB that will create the largest bank in the country in terms of assets of than P1.2 trillion.

 

 

This development augurs the possibility more mergers and acquisitions, said Narciso.

 

 

Early this week, analysts said the consolidation of corporate assets would strengthen the capital base of banks and companies.

 

 

“Foreign funds were more of the net buyers this week,” Narciso noted, saying foreign buying is now more diversified across large- and mid-cap issues because of the positive outlook for 2013.

 

 

The main PSEi rose 38.97 points or 0.71 percent to close at 5,552.34.
 

Friday’s closing numbers surpassed the November 21 record close at 5,534.18.
 

More than 1.900 billion shares valued at P5.750 billion were traded.
 

Gainers led losers 88 to 72, with 51 issues unchanged.
 

Supporting the backdrop of a stable political landscape and positive economic outlook, investors also factored in the legislation of the sin tax measure that would translate into additional revenues for the government next year, Narciso noted.

 

 

“Year-to-date, the PSEi has broken through new record highs for a total of 28 times,” the PSE noted in a statement Friday.

 

 

"Upbeat expectations on both the listed company and macroeconomic fronts continue to infuse excitement in our investors,” said PSE chief operating officer Roel A. Refran.

 

 

“Local developments have been able to overshadow ongoing concerns abroad, and this certainly bodes well for the market as we look to end 2012 on a high note," he added.— TJD, GMA News

...the PHL banks

BSP: PHL banks' capital adequacy ratios way above the global standard

 

February 23, 2012

GMA News

 

 

Local banks have more than adequate capital to absorb possible losses from financial risks they encounter in the course of doing business, according to official figures.

Latest indicators of the sufficiency of local banks’ capital to absorb possible losses show that their capital adequacy ratios—16.34 on solo basis and 17.25 percent on consolidated basis as of last June—are double the international standard of 8 percent, the Bangko Sentral ng Pilipinas (BSP) said Thursday.
 
“The CARs of the Philippine banking system remained within a tight range of 16 percent to 17 percent despite global difficulties,” BSP Governor Amando Tetangco stressed.
 
Ten percent is the CAR minimum requirement of the BSP.
 
June CAR levels were slightly lower than what they were in the previous quarter.
The end-March level was 16.48 percent on a solo basis and 17.39 percent on a consolidated basis.
 
“The ratio actually declined from the previous quarter but this was due to increases in risk weighted assets outpacing the growth in banks capital,” Tetangco said.
 
BSP data indicate that the increase in risk weighted assets was largely the result of  additional investment in securities issued by various unrated counterparties and expansion of loan exposures to unrated corporations, banks, individuals for consumption and housing purposes.
 
Risk weighted assets of the banks rose by 3.32 percent to P4.67 trillion from P4.159 trillion on solo basis and 3.56 percent to P4.854 trillion from P4.687 trillion on a consolidated basis.
 
CAR ratios of universal and commercial banks were higher than those of thrift banks.
 
UKBs’ CAR at June 30 stood at 16.31 percent on solo basis and 17.32 percent on consolidated basis. The CAR of the thrift banks was 15.53 percent on solo and 15.53 percent consolidated basis following the merger of a thrift bank and a commercial bank. — ELR, GMA News

...the 2012 economic forecast

PH seen to expand, withstand turbulent ’12

Government expects economy to grow 5.5% by year’s end

By: Doris C. Dumlao
Philippine Daily Inquirer

Sunday, January 1st, 2012

 

MANILA, Philippines–The Philippine economy this 2012 will likely grow at a faster pace than the previous year, supported by stable interest rate as well as consumer spending that derives strength from the billions of dollars sent home by millions of overseas Filiipino workers, according to Banco de Oro Unibank.

Also, the country’s economic condition will remain sound—able to withstand the effects of the lingering debt crisis in Europe and uncertainties in the United States, said Jonathan Ravelas, chief market strategist at the country’s largest bank.

In a research note, the economist projected that the country’s gross domestic product (GDP) would grow by 4.5 percent this year—higher than the 4-percent rate expected for 2011.

The government’s growth expectations appear to be rosier, settling at 5.5 percent for 2012, and 5 percent for 2011.

In 2010, the country’s GDP grew at a robust 7.6 percent due to the rebound in exports and steady growth in remittances.

Ravelas said resilient OFW inflows and other strong macroeconomic fundamentals were the Philippines’ “saving graces” that would enable it to ride a tough 2012.

He added that the sunshine industries, expansion of energy and mining investments, as well as construction of low- or medium-cost housing and office buildings, will contribute to the country’s economic growth in 2012.

Meanwhile, Ravelas listed agribusiness, consumer durables, information technology, health beauty and wellness, transport, telecommunications and tourism as among the sunshine industries, or those that are expected to become more important in the future.

Ravelas predicted that “2012 will be a tough one, with reduced global growth outlook due to global uncertainties.”

Financial market barometers, he added, would “experience near-term volatility but should stabilize in the medium term.”

Investors are expected to hold on to their cash as the global impact of the crisis in the euro zone continues to shake markets.

“We may experience near-term volatility … but once investors realize that we can withstand these so-called headwinds, they will start rolling their funds again in the financial markets,” Ravelas said.

Trouble abroad curbed the country’s economic growth last year and dampened the market. The debt crisis in the euro zone rattled investors and heightened demand for safe haven and assets such as US dollars and bonds.

In the United States, plans for economic stimulus in the near term and fiscal austerity in the medium term led to uncertainties that kept investors on the edge.

At the same time, the political tension in the Middle East caused crude prices to soar, while the earthquake, tsunami and nuclear accident in Japan stalled manufacturing.

As investors return to markets, stable interest rates and foreign exchange rates will ensue, leading to “a vibrant economy, which is reflected by a rising equity market,” Ravelas said.

The main-share Philippine Stock Exchange index will likely hit the 5,000-point mark in 2012, he said. The PSEi finished at 4,371.96 points in the last trading day of the year.

The BDO strategist forecasts the exchange rate to average 40.70 to a dollar this year, compared to the 43.80 to a dollar he projected for last year. The government believes that the peso-dollar rate will average 42.00 this year, the same as last year.

The three-month interest rates will likely average 3 percent this year, unchanged from last year, Ravelas said.
He also projected that inflation would average 4.5 percent this year, slightly lower than the 4.7 percent seen in 2011.

...the strong Asian banks

16 PH banks in Asia's 500 list

 

By Ted P. Torres,

The Philippine Star

 11/02/2011

 

MANILA, Philippines - Sixteen Philippine banks have made it to the list of 500 strongest banks in the region, based on a study by The Asian Banker.

 

Of the 16 Philippine banks, 13 are commercial banks and three are thrift banks.

The Metropolitan Bank & Trust Co. (Metrobank) has been adjudged the strongest bank in the Philippines, and the Philippine Savings Bank (PSbank) the strongest among the three thrift banks.
Banco de Oro Unibank Inc. (BDO) has been classified as the largest Philippine bank – at 186th among the top 500 banks in the region.

East West Banking Corp. (EastWest Bank) has been recognized as the largest gainer, with its reported 191-percent increase in net profit.

The study recognizes Security Banking Corp. (Security Bank) as having the highest return on assets among regional banks. It has the highest return-on-equity among Philippine banks.

As the biggest Philippine bank, BDO has been ranked 186th from 195th in 2010. Metrobank kept its ranking at 197th.

The Bank of the Philippine Islands (BPI) has improved to 200th spot from 211th while Land Bank of the Philippines is at 264th down from 251st in 2010.

The Rizal Commercial Banking Corp. (RCBC) has been ranked 317th from last year’s 310th.
The Philippine National Bank (PNB) placed 324th from 313th, while China Banking Corp. has settled at 338th from 340th.

Union Bank of the Philippines (UnionBank) landed on the 343rd slot from 331st a year ago. Allied Banking Corp. has been ranked 384th from 366th, while United Coconut Planters Bank (UCPB) has settled at 387th from 406th.

Meanwhile, Security Bank made it to the list for the first time at 398th. Also making its debut in the list was BPI Family Savings Bank at 415th.

Bank of Commerce is at 449th from 420th, while PSBank is at 452nd from 426th. EastWest Bank is at 466th, the first time it has made it to the list. RCBC Savings Bank has also made it to the list for the first time at 497th.

The top two banks in the region, based on the list, are Mitsubishi UFJ Financial Group of Japan (assets worth $2 trillion), and the Industrial and Commercial Bank of China or ICBC (assets worth $2 trillion). Of the top 10, four are from mainland China, three from Japan, two from Australia and one from Hong Kong.

Curiously, no Philippine bank has made it to the list of top 50 banks with the largest profit, largest growth in loans, largest growth in deposits, lowest cost to income ratio, highest non-interest income to total operating income ratio, lowest gross NPL ratio, and highest capital adequacy ratio.

Of the top 50 banks in South and Southeast Asia, BDO has been ranked 36th; Metrobank, 40th; and BPI, 43rd.

The State Bank of India with assets worth $321 billion and the DBS Group (Singapore) with assets worth $220 billion are the top two banks in South and Southeast Asia.

Among the top 50 banks in South Asia and Southeast Asia, 23 are Indian banks, four are from Singapore, nine from Malaysia, seven from Thailand, and four from Indonesia.

The next three leading Indian banks are ICICI Bank, Punjab National Bank and Bank of Baroda.
Maybank, with $103 billion in assets, is the top Malaysian bank. The next is CIMB Group Holdings with $87 billion in assets. The top three Thai banks are Bangkok Bank, Krung Thai Bank, and Kasikornbank.

Aside from DBS Group, the other top Singaporean banks are Overseas Chinese Banking Corp. and United Overseas Bank.


 

...the potent growth

Guinigundo: PH has what it takes but investors lack `animal spirit'

by Coco Alcuaz, ANC

07/13/2011

MANILA, Philippines - Bangko Sentral Deputy Governor Diwa Guinigundo said economic fundamentals make the Philippines ripe for accelerated economic expansion but that investors remain conservative.

The government is narrowing its budget deficit and its debt has been upgraded by all three major ratings companies since late last year. The central bank says inflation will likely start to decelerate this month.

"I think we have all it takes to grow but the animal spirit is not there," Guinigundo said at a forum of the Economic Journalists Association of the Philippines. "Some people are not taking the long view in terms of sinking in their money for long-term investment."

Business confidence in the Philippines
Q2 2011	31.8%
Q1 2011	47.5%
Q2 2010	43.9%
--Source: BSP April to May survey

Business confidence fell in the second quarter, according to the BSP’s most recent survey, due to rising oil prices, political unrest in the Middle East and Libya and the Japan earthquake and tsunami.

Since the survey was taken in April and May, Greece's continuing financial crisis has raised concerns other economies may be squeezed as well.

Locally, the government has failed to start biddings for its infrastructure projects. It’s also drawn criticism for scrapping or seeking changes in contracts awarded by the previous administration.

Still, Guinigundo said the central bank is ready to act if inflation accelerates more than projected. He said allowing consumer goods prices or asset prices to climb excessively could be disastrous.

"When you allow excess liquidity to simply flow around, even the banks will be in danger sooner rather than later," Guinigundo said. "So yes we may need to tighten our monetary policy, but we have a lot of policy tools."

The central bank has raised interest rates twice this year and then raised banks' reserve requirements to fight inflation.

...the favorable outlook

Fitch gives 'stable' outlook for Philippine banks

 

By Michelle V. Remo in Manila/

Philippine Daily Inquirer | ANN 

07 July  2011

 

Manila (Philippine Daily Inquirer/ANN) - Fitch Ratings assigned a "stable" outlook for the Philippine banking sector, citing the favourable impact of a growing economy on the industry's financial performance.

A "stable" outlook indicates security of credit ratings from being downgraded, at least within a year.

Fitch said an improving economy would drive demand for loans and other services provided by banks, in the process boosting their income.

"With a satisfactory economic backdrop, the agency expects banks' lending and fee-based activities to expand in 2011, although treasury gains may ease amid rising interest rates," Fitch said in its latest report on the Philippines.

The outlook on the banking sector was anchored on Fitch's projection that the Philippine economy would grow between 5 and 6 percent this year, consistent with the government's own forecast.

The credit rating firm also cited the comfortable level of liquidity of the country's banking sector, and this would help protect it from a crisis similar to that experienced in industrialised countries.

"In Fitch's view, capital and liquidity buffers are crucial in helping banks preserve their credit profiles in the event of a renewed global downturn, given the fragile economic recovery globally," Fitch said.

However, Fitch said the country's banking industry faces risks including the relatively low capital cover for foreclosed properties. It said improving provisioning for these assets is one area Philippine banks must focus on.

Still, Fitch recognized the country's banking sector for being able to survive the latest global turmoil.
"All the rated Philippine banks have weathered the global economic turmoil in 2008/2009 rather well, with credit costs easily covered by earnings and capital intact," Fitch said.

The "stable" outlook on the Philippine banking sector came amid continually rising resources of the banking sector and growing bank lending.

Latest documents from the Bangko Sentral ng Pilipinas showed that outstanding loans by commercial banks amounted to 2.4 trillion pesos (US$56 billion) as of end-April, up 14.2 percent year on year.

Fitch's issuance of a "stable" outlook on the country's banking sector came after it decided last month to raise the country's credit rating on foreign debt from two notches to a notch below investment grade, or from BB to BB+.

The credit rating firm cited the Philippine government's improving fiscal situation and the growing economy for the improved ratings.