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Phl net external liability widens to P2-trillion
The Philippines' net external liability position widened by 29.9 percent in the fourth quarter of 2022 due to the higher net external liability positions of Non-Financial Corporations (NFCs) and the General Government (GG), as well as the lower net external asset position of the central bank (CB), the Bangko Sentral ng Pilipinas (BSP) said. The latest data from BSP showed earlier this week that the country's net external liability position rose to P2 trillion in the fourth quarter (Q4) of last year from P1.5 trillion in the third quarter (Q3) of 2022. By sector, the NFCs remained the largest net debtor in the domestic economy at P8.5 trillion in Q4 2022 from P8.1 trillion in Q3 2022 due to the sector's higher net indebtedness against the ROW. "This arose from the expansion in the NFCs' gross external liabilities and its lower external assets. The sector's external assets and liabilities were mostly comprised of loans and equity securities," BSP explained in a statement. In Q4 2022, the NFCs' liabilities-to-GDP ratio decreased slightly to 91.1 percent as the economy's growth in nominal terms exceeded the increase in the sector's gross financial liabilities. On a year-on-year basis, the NFCs' net debtor position widened due to its higher net indebtedness to the ODCs. "This resulted mainly from the rise in bank loans availed to sustain operations amid heightened consumer demand brought about by the improved economic outlook," BSP said. The GG's net debtor position widened to P8.2 trillion in Q4 2022 from P7.7 trillion in Q3 2022 due to the sector's deposit withdrawals from the CB, which it used to meet its higher operating expenditures during the last quarter of the year. "The GG remained partly insulated from exchange rate fluctuations as the majority of its liabilities were funded by the domestic sectors," BSP said. Notwithstanding the record-high debt levels, the growth in the GDP outpaced the increase in the GG's level of borrowings in Q4 2022. As a result, the sector's liabilities-to-GDP ratio for the quarter decreased to 62.7 percent. Year on year, the GG's net debtor position rose primarily due to the increase in loans from the ROW and higher GS issuances. The households (HHs) continued to be the top creditor of the economy at P11.9 trillion in Q4 2022 from P11.4 trillion in Q3 2022. The HHs' net claims on the CB, which were composed mainly of the sector's currency holdings, increased. Amid the steady increase in the HHs' assets, the sector's gross financial liabilities registered double-digit YoY growth rates for the last two quarters of 2022 – the fastest recorded since Q1 2020. This coincided with the steeper increase in prices as headline inflation accelerated to 7.9 percent in Q4 2022. The ODCs' net creditor position eased to P1.89 trillion in Q4 2022 from P1.95 trillion in Q3 2022. In Q4 2022, the sector's net claims on the GG declined due to the increase in the GG's deposits in banks. Meanwhile, the ODCs' net debtor position to the OFCs widened on the back of the OFCs' higher deposit placements with the ODCs. Similarly, on a YoY basis, the sector's net creditor position contracted, brought about by the annual increase in deposits from the HHs and OFCs. The CB's net creditor position contracted to P811.4 billion in Q4 2022 from P937.9 billion in Q3 2022 as its net financial liability positions to the ODCs and the HHs increased. "The CB's higher financial liabilities to these counterparty sectors were due mainly to the expansion in the deposits of the ODCs and currency holdings of the HHs. These developments were mitigated by the increase in the CB's net financial asset position with the GG, which resulted from the substantial decline in deposits from the NG. However, on a YoY basis, the CB's net creditor position increased mainly due to the NG's deposit withdrawals. The post Phl net external liability widens to P2-trillion appeared first on Daily Tribune......»»
Outlook dims, Asia estimates reduced
The Asian Development Bank had cut its forecast for economic growth in developing Asia for next year, but it kept its estimates for 2023. The fact that the ADB reduced its estimate for 2024 from 4.8 percent to 4.7 percent showed that the global outlook is “dimmed by the delayed effects of interest rate hikes.” In an update to its Asian Development Outlook report, which came out on Wednesday, the ADB said that it still expects the region to grow by 4.8 percent in 2023, which is the same as what it said in April. “Exports from developing Asia weakened in the first quarter of 2023 as global demand slowed,” the Manila-based multilateral lender said. “However, consumption and investment are forecast to boost aggregate regional growth,” it added. Prices cooling This year, the region’s overall inflation is expected to slow down to 3.6 percent, which is much less than the 4.2 percent predicted last year. Prices should go up by 3.4 percent next year. As supply-side forces went down and monetary tightening took hold, the ADB said, headline inflation went back to where it was before the pandemic. The ADB said that most central banks have kept their policy rates the same this year and that “signs have emerged of a shift toward easing.” The biggest economy in the area, China, is expected to grow by 5 percent this year and 4.5 percent next year, which is the same as what was projected in April. “Growth in manufacturing investment is expected to moderate in line with cooling exports, while that of infrastructure investment is likely to remain stable,” the ADB said of China’s outlook. “Monetary and fiscal policies will continue to support economic recovery, particularly to boost domestic demand.” This year, the economy of the trade-dependent Southeast Asian country Vietnam is expected to grow slowly to 5.8 percent, down from 6.5 percent in April. The ADB says it will grow by 6.2 percent next year, which is less than the 6.8 percent growth rate that was predicted before. ADB also kept the growth predictions for India, one of the largest economies in the region at 6.4 percent and 6.7 percent, respectively, “supported by upbeat domestic demand.” The post Outlook dims, Asia estimates reduced appeared first on Daily Tribune......»»
Global outlook dims, ADB cuts growth estimates from 4.8 percent to 4.7
The Asian Development Bank cut its forecast for economic growth in developing Asia for next year, but it kept its estimates for 2023. The fact that the ADB cut its estimate for 2024 from 4.8 percent to 4.7 percent shows that the global outlook is "dimmed by the delayed effects of interest rate hikes." In an update to its Asian Development Outlook report, which came out on Wednesday, the ADB said that it still expects the region to grow by 4.8 percent in 2023, which is the same as what it said in April. "Exports from developing Asia weakened in the first quarter of 2023 as global demand slowed," the Manila-based multilateral lender said. "However, consumption and investment are forecast to boost aggregate regional growth," it added. This year, the region's overall inflation is expected to slow down to 3.6 percent, which is much less than the 4.2 percent predicted last year. Prices should go up by 3.4 percent next year. As supply-side forces went down and monetary tightening took hold, the ADB said, headline inflation went back to where it was before the pandemic. The ADB said that most central banks have kept their policy rates the same this year and that "signs have emerged of a shift toward easing." The biggest economy in the area, China, is expected to grow by 5 percent this year and 4.5 percent next year, which is the same as what was predicted in April. "Growth in manufacturing investment is expected to moderate in line with cooling exports, while that of infrastructure investment is likely to remain stable," the ADB said of China's outlook. "Monetary and fiscal policies will continue to support economic recovery, particularly to boost domestic demand." This year, the economy of the trade-dependent Southeast Asian country Vietnam is expected to grow slow to 5.8 percent, down from 6.5 percent in April. The ADB says it will grow by 6.2% next year, which is less than the 6.8% growth rate that was predicted before. ADB also kept the growth predictions for India, one of the largest economies in the region at 6.4 percent and 6.7 percent respectively, "supported by upbeat domestic demand." The post Global outlook dims, ADB cuts growth estimates from 4.8 percent to 4.7 appeared first on Daily Tribune......»»
ADB cuts inflation forecast for developing Asia
The Asian Development Bank cut its inflation forecast for developing Asia on Wednesday, as food and fuel prices eased, supply chain disruptions waned and interest rate hikes started to bite. Inflation, which has squeezed household budgets and left millions of poor households struggling to put food on the table, is heading back towards pre-Covid levels, the Philippines-based lender said. It expects inflation of 3.6 percent this year, compared with its forecast in April of 4.2 percent as prices in China ease sharply, the bank said in its flagship outlook report. Developing Asia refers to the multilateral lender's 46 emerging member economies, stretching from Kazakhstan in Central Asia to the Cook Islands in the Pacific. The ADB kept its economic growth forecast of 4.8 percent for 2023, citing robust consumption, travel, and investment, even as global demand for the regions' exports weakened. Further upside to its forecast was possible, the bank said. "If inflation is tamed more quickly than currently expected in the advanced economies, the authorities there would likely adopt a more dovish monetary policy, which would support growth in the region," ADB said. At the same time, the lender warned an escalation in Russia's invasion of Ukraine could fuel price hikes, while the return of the El Nino weather phenomenon this year could hurt economies. The tide was also turning on interest rates, the bank noted. "With lower inflation in developing Asia and more moderate monetary tightening in the United States, most central banks in the region have kept policy rates steady this year, with signs emerging of a shift toward easier money," it said. China, the world's second-largest economy, is still expected to grow at five percent this year and 4.5 percent in 2024, the bank said, citing supportive monetary and fiscal policies. The post ADB cuts inflation forecast for developing Asia appeared first on Daily Tribune......»»
OFW monies reach $2.78B
Cash remittances coursed through banks increased in May following the growth in receipts from workers abroad. Data from the Bangko Sentral ng Pilipinas on Monday showed that overseas Filipino remittances reached $2.78 billion in May 2023, higher by 2.9 percent than the $2.70 billion registered in the same month last year. “The expansion in cash remittances in May 2023 was due to the growth in receipts from land- and sea-based workers,” BSP said in a statement. Consequently, personal remittances for the first five months of the year grew by 3.1 percent to $14.46 billion, from $14.02 billion posted in the comparable period in 2022. On a year-to-date basis, cash remittances reached $12.98 billion, 3.1 percent higher than the year-ago level of $12.59 billion. “The growth in cash remittances from the United States, Singapore, and Saudi Arabia contributed mainly to the increase in remittances in the first five months of 2023,” BSP said. “Meanwhile, in terms of country sources, the US posted the highest share of overall remittances during the period, followed by Singapore, Saudi Arabia and Japan,” BSP added. In an emailed commentary, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the continued growth in the year-on-year overseas Filipino remittances might have to do with increased holiday-related spending since the Holy Week in April 2023. “More people travel to go back to their respective hometowns in the provinces for vacations, also during the school break (June to July), spend for gatherings/reunions, as well as finance vacations locally or overseas,” Ricafort said. He added that relatively higher inflation also required sending more money to families and dependents in the Philippines. Ricafort said that further reopening the economy towards greater normalcy also led to increased spending with some pent-up demand or revenge spending by OFW families and dependents that were partly financed with the increased OFW remittances. Meanwhile, President Ferdinand Marcos Jr. on Monday encouraged overseas Filipinos to return to the Philippines, citing the “great many opportunities” for them here. During the courtesy call of 2023 Very Important Pinoy Tour participants in Malacañang, Marcos encouraged overseas Filipinos to come home and bring their children back to the Philippines so that they could learn about Filipino culture. “There are a great many opportunities for you and for the country as we try to transform the economy,” Marcos said. “I encourage you to come back and see what is happening in the Philippines,” he added. He also praised the contributions of overseas Filipinos to the Philippines, saying that they were “practically parts of their families.” “In every part of the societies that we Filipinos have decided to go to, we have made a very good name for ourselves,” Marcos said. “And for that, we thank our Filipino brothers and sisters who live abroad and continue to make the name of the Philippines shine.” Marcos added that Filipinos worldwide have become and continue to become an essential part of Philippine society and of the places where they decided to live and work. Per its website, the VIP Tour is led by the Department of Foreign Affairs in collaboration with the Department of Tourism and Rajah Tours. The current year’s travel plan blends the finest attractions of Metropolitan Manila, Iloilo and Boracay, offering participants a thrilling and educational vacation experience. The post OFW monies reach $2.78B appeared first on Daily Tribune......»»
Remittances reach P2.78B, rise by 2.9%
PAMPANGA – Cash remittances coursed through banks increased in May following the growth in receipts from workers abroad. Data from Bangko Sentral ng Pilipinas showed on Monday that overseas Filipino remittances reached $2.78 billion in May 2023, higher by 2.9 percent than the $2.70 billion registered in the same month last year. "The expansion in cash remittances in May 2023 was due to the growth in receipts from land- and sea-based workers," BSP said in a statement. Consequently, personal remittances for the first five months of the year grew by 3.1 percent to $14.46 billion, from $14.02 billion posted in the comparable period in 2022. On a year-to-date basis, cash remittances reached $12.98 billion, 3.1 percent higher than the year-ago level of $12.59 billion. "The growth in cash remittances from the United States, Singapore, and Saudi Arabia contributed mainly to the increase in remittances in the first five months of 2023," BSP said. "Meanwhile, in terms of country sources, the U.S. posted the highest share of overall remittances during the period, followed by Singapore, Saudi Arabia, and Japan," BSP added. In an emailed commentary, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the continued growth in the year-on-year overseas Filipino remittances growth might have to do with increased OFW remittances sent back home in May 2023 in time to finance holiday-related spending continued since the Holy Week in April 2023. "More people travel to go back to their respective hometowns in the provinces for vacations, also during the school break (June to July), spend for gatherings/reunions, as well as finance vacations locally or overseas," Ricafort said. He added that relatively higher inflation also required sending more overseas Filipino remittances to families and dependents in the Philippines. Ricafort said further reopening the economy towards greater normalcy also led to increased spending with some pent-up demand or even some revenge spending by OFW families and dependents locally that are partly financed by increased sending OFW remittances. The post Remittances reach P2.78B, rise by 2.9% appeared first on Daily Tribune......»»
Inflation seen back to target range soon
The Bangko Sentral ng Pilipinas has expressed confidence that inflation will return to its target range later this year, following a 14-year high earlier in the year. During the Philippine Economic Briefing in Toronto Thursday morning (Eastern Time), BSP chief Eli Remolona underscored the Philippines’ robust post-pandemic recovery and its adaptable approach to maintaining stable prices through the flexible inflation targeting framework. The inflation rate decreased to 5.4 percent in June from 6.1 percent in May. Remolona also expects inflation to stabilize and fall within the target range of 2 to 4 percent by the final quarter of this year. “We think, at least our models tell us, that we will be within target range of 2 to 4 percent by Q4, by the last quarter this year,” he said. “The 2 to 4 percent is not an arbitrary range. That’s a range which we think is ideal for an economy like the Philippines which is growing at full capacity,” he added. In the same speech, Remolona said the Monetary Board is collaborating with scientists to create a measurement system for the bank’s climate-related assets. The new BSP governor said that banks and lenders should disclose climate-related assets as the Philippine banking system will join the global efforts to slow climate change. He explained that this system will be used to evaluate and rank banks based on their contributions to combating climate change. “We look at each kind of loan or asset and what it’s financing, and decide what it’s doing for climate change — is it slowing down or accelerating climate change?” Remolona said in a live-streamed speech. He added that BSP plans to release the scores of banks publicly and will urge lenders to disclose their assets, aiming for the act of disclosure to be effective. “We hope that the disclosure alone will do the trick,” he said. Banks doing their bit Several Philippine banks, including the Bank of the Philippine Islands and Rizal Commercial Banking Corporation, have already taken initiatives to combat climate change. They have committed to eliminating their outstanding coal-energy loan portfolio within a specific timeframe while focusing on increasing lending for renewable energy. Given the rise in energy prices and the increase in extreme weather events, central bank policymakers worldwide have recently emphasized the importance of addressing climate change and transitioning to clean energy. The Philippines, being highly vulnerable to climate change impacts, has set a target to reduce greenhouse gas emissions by 75 percent by the end of the decade, starting from 2020 levels. The post Inflation seen back to target range soon appeared first on Daily Tribune......»»
BSP launches overnight reference rate as world drops LIBOR
The LIBOR lost its luster in recent years, since figuring in a scandal in 2012. Back then, some banks manipulated the LIBOR to amass larger profits. This incident smeared the integrity of the benchmark interest rate......»»
Interest rates likely to stay on hold until early 2024 — BSP
Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla said on Friday that interest rates are likely to stay on hold until January or February next year as monetary policymakers had done enough to tame inflation. In a television interview, Medalla stated that the central bank's upcoming policy decisions will primarily be influenced by inflation data. The central chief, whose term ends on 3 July, said inflation might return to the central bank's target range of 2 percent to 4 percemt by the fourth quarter. "There is little reason to raise, there is little reason to cut," Medalla said. Medalla added that the BSP is closely watching the inflation situation in the Philippines, as well as the actions of other central banks around the world. "If the only basis for the rates is Philippine inflation, we're quite confident that we have already done enough," Medalla said. "The current inflation rate is 6.1% headline, but headline really is two stories. It's the inflation of first seven months, and inflation of the last four or five months. And inflation for the last five months, which is December to the most recent data is actually already back to normal," he added. Medalla said that the BSP expects inflation to be below 4% by October or November, and to be very close to the midpoint of its target of 3% next year. However, Medalla said that the BSP is also watching the actions of other central banks, which have been raising interest rates in an effort to combat inflation. "If they're doing that this year, the interest rate differential just gets to big," Medalla said. "But if all they're doing are 25 (basis points), then we can be just be very focused on Philippine inflation," he added. Medalla said that the BSP is likely to remain on hold until it sees more evidence that inflation is coming down. "I suppose if we see inflation being below three, let's say as far as January or February, that will be a good time to say 'Well wait, maybe we have room to cut,'" Medalla said. Medalla said that the BSP is also concerned about the impact of higher interest rates on economic growth. "We have to be careful not to raise rates too much," Medalla said. "We don't want to choke off economic growth." The post Interest rates likely to stay on hold until early 2024 — BSP appeared first on Daily Tribune......»»
BSP keeps rates unchanged
The Bangko Sentral ng Pilipinas decided to keep interest rates unchanged at 6.25 percent for the second time this year, as it waits for the effects of its previous rate hikes to take hold and slow down inflation. The BSP's Monetary Board made the decision on Thursday, saying that it wanted to see how the recent rate hikes would impact the economy before making any further changes. Most economists polled by Daily Tribune had expected the Bangko Sentral ng Pilipinas to leave its benchmark overnight borrowing rate unchanged at Thursday's meeting as inflation had slowed for a fourth successive month in May. To recall, the BSP has raised interest rates six times since last September in an effort to cool inflation, which has been running above target for most of the year. In a press briefing, Governor Felipe Medalla highlighted the positive trends in inflation and domestic growth, while acknowledging the lingering risks and the need for continued vigilance. "The BSP’s latest baseline projections continue to suggest a gradual return of inflation to the target band of 2-4 percent over the policy horizon,” Medalla said. "Both headline and core inflation decelerated further in May due mainly to slower increases in the prices of food and energy-related items, affirming expectations of a return to the target range by year’s end,” he added. While the positive trends in inflation are promising, Medalla emphasized the potential risks to the outlook. These risks include the potential impact of additional transport fare increases and minimum wage adjustments, persistent supply constraints of key food items, El Niño weather conditions and possible knock-on effects of higher toll rates on agricultural prices. Medalla also highlighted the downside risk of a weaker-than-expected global economic recovery. “Given these considerations, the Monetary Board deems it appropriate to maintain current monetary policy settings to allow the BSP to further assess how inflation and domestic demand have responded to tighter monetary conditions,” he said. ING Bank Manila senior economist Nicholas Antionio Mapa expects some flexibility on the BSP’s part. “Despite the pause, BSP will likely remain open to hiking if data developments warrant a response,” he said in a Viber message. The pause is the BSP’s “best option” right now as “hiking in the dark” at this stage, without much data, could lead to costly outcomes, he added “Data-dependent central banks will always choose to see data before making adjustments to policy,” The latest BSP decision to keep interest rates unchanged could be the last policy move for Medalla, whose term ends on 3 July. President Ferdinand Marcos has yet to reveal whether he will reappoint Medalla or choose another candidate. Economists said the decision of who will be the next BSP governor will likely affect the central bank's policy stance. “Marcos’ choice for governor will likely inform our outlook for BSP’s policy stance, but should Medalla be reappointed, we expect BSP to be on hold for at least two more policy meetings before possibly cutting rates once inflation settles back within target,” Mapa said in a separate interview. The post BSP keeps rates unchanged appeared first on Daily Tribune......»»
UBS completes Credit Suisse takeover
UBS finalized the takeover of its former rival Credit Suisse on Monday, clearing the way for the Herculean task of integrating two of the world's most important banks. UBS, Switzerland's leading bank, was forced into the marriage on March 19 to prevent its closest domestic rival from going under -- which potentially could have had catastrophic consequences for the global financial system. "UBS has completed the acquisition of Credit Suisse today, crossing an important milestone," the bank announced. "Credit Suisse Group AG has been merged into UBS Group AG and the combined entity will operate as a consolidated banking group." UBS chairman Colm Kelleher said he was pleased to have closed the transaction in under three months, "bringing together two global systemically important banks for the first time. "We are now one Swiss global firm and, together, we are stronger," he said. The technically- and politically-complex merger has created a megabank bigger than anything Switzerland has seen before -- and its size has some politicians worried, fearing it could not be rescued if it too got into trouble. No other option "We consider the merger to be a massive task with substantial executions risks," said ING senior sector strategist Suvi Platerink Kosonen. For Thomas Jordan, chairman of Switzerland's central bank, there was no other solution. "Of course, it's a pity there is only one (big bank) left. But I am sure that if the takeover by UBS hadn't succeeded, there would have been an international financial crisis," the Swiss National Bank chief told the SonntagsZeitung weekly newspaper. UBS chief executive Sergio Ermotti said Monday that "instead of competing, we'll now unite as we embark on the next chapter of our joint journey. Together, we'll present our clients an enhanced global offering, broader geographic reach, and access to even greater expertise." But he warned Friday that the coming months are likely to be "bumpy", saying the operation would require "waves" of difficult decisions, particularly regarding employment. At the end of 2022, the two giants had around 120,000 employees worldwide, including 37,000 in Switzerland. Ermotti told public broadcaster SRF that around 10 percent of the Credit Suisse workforce had left in recent months. "It helps in part to mitigate the social costs a bit, which we're pleased about," he said while adding that it showed there was competition in the sector, and "people who are willing to hire employees". Just the beginning For the time being, the two banks will continue to operate separately under the UBS umbrella. But UBS has already created a new board of directors for certain Credit Suisse operations, headed by current UBS vice-chairman Lukas Gaehwiler. Credit Suisse risked collapse when its share price plunged more than 30 percent during trading on March 15, after three US regional lenders folded. A series of scandals had undermined confidence in the 167-year-old bank. The Swiss government, the central bank, and the financial regulators FINMA stepped in and strongarmed UBS into a quickfire $3.25 billion takeover announced on March 19. The deal includes guarantees for UBS in case there are any nasty surprises in the Credit Suisse cupboards, and liquidity to facilitate the takeover. In an internal memo to staff, seen by AFP, UBS executives welcomed Credit Suisse workers, calling for "patience" from all employees while concrete details are worked out. "The most crucial phase is just beginning," Kelleher and Ermotti said. Clarity and stability According to the Financial Times newspaper, UBS will impose red lines on Credit Suisse staff on the type of business they can do while waiting for the integration to be completed. And UBS executives have been careful to highlight their conservative approach to risk, saying the integration cannot be compromised. The outline of UBS's plans should become clearer when it publishes its second-quarter financial results. The bank has pushed the publication date back by more than a month to August 31. FINMA said the merger completion "marks the end of a phase of great uncertainty" and "creates clarity and stability". "FINMA welcomes UBS's strategic focus, which foresees a rapid reduction of risk in investment banking," it said in a statement, referring to the most troubled part of Credit Suisse's operations. UBS expects its CET1 capital ratio, which compares a bank's capital to its risk-weighted assets, to be around 14 percent in the second quarter of 2023. Monday marks the last trading day for Credit Suisse shares on the Swiss stock exchange. Shareholders will receive one UBS share for every 22.48 Credit Suisse shares. The post UBS completes Credit Suisse takeover appeared first on Daily Tribune......»»
Inflation control tool relaxed
The Bangko Sentral ng Pilipinas will reduce the reserve requirement ratios by 250 basis points or bps for universal and commercial banks or U/KBs and non-bank financial institutions with quasi-banking functions. The central bank in a statement added that 200 bps will be cut for digital banks, and by 100 bps for thrift banks, rural banks, and cooperative banks. The moves bring the RRRs of U/KBs and NBQBs to 9.5 percent, digital banks to 6 percent, thrift banks to 2.0 percent, and rural and cooperative banks to 1.0 percent. The relaxed requirements shall take effect on the reserve week beginning 30 June 2023 and shall apply to the local currency deposits and deposit substitute liabilities of banks and NBQBs, according to the BSP. Goal is stable liquidity The reduction in reserve ratios is intended to coincide with the expiration of alternative modes of compliance with reserve requirements by end-June 2023 and thus ensure stable domestic liquidity and credit conditions. The operational adjustment is in line with the BSP’s ongoing efforts towards a more active and flexible approach to liquidity management through market-based monetary operations. This includes the inaugural offering on 30 June 2023 of the 56-day BSP Bill, which serves as an additional instrument for absorbing system liquidity. The BSP said the lower reserve requirements do not constitute any shift in the BSP’s monetary policy settings. The BSP said it continues to prioritize bringing inflation back “towards a target-consistent path over the medium term and will continue to signal its monetary policy stance through the key policy interest rate, or the rate on the overnight reverse repurchase facility.” The post Inflation control tool relaxed appeared first on Daily Tribune......»»
Banks’ bad loans ratio hits 3.41%
The share of bad debts to the banking sector’s total loan book climbed for the fourth straight month to hit a seven-month high in April on the back of slower credit growth after a series of aggressive rate hikes delivered by the Bangko Sentral ng Pilipinas......»»
Digitize, digitize, digitize
Even before the Covid-19 pandemic struck, the banking industry already had digitalization on top-of-mind discussion in board meetings. But the pandemic presented new circumstances that created an unstoppable trend that made digital banking more relevant than ever. UnionBank of the Philippines president Edwin R. Bautista said the pandemic disrupted the industry and that almost every bank, large and small, adopted digital technology and saw a spike in digital banking usage. "We are taking the digital banking approach," Bautista said in an interview with Daily Tribune. "Digitalization allows us to lower our operational costs. Now we are also leveraging the use of artificial intelligence to serve the traditionally underserved sectors because the technology now lowers the cost of servicing that sector." UnionBank's willingness to adopt digital tools and cutting-edge innovations, when needed, allowed it to expand its market reach. Its relentless pursuit to be at the forefront of digitalization, not only in the banking sector but in the Philippines, is extraordinary. The introduction of AI was a big leap for UnionBank. Bautista said, "Traditional banks will not touch the so-called unserved and underserved sectors because the cost of servicing them was too high. A big portion of the cost is the fact that it is very difficult to predict whether they will pay back or not. In the past, banks assessed credit by looking at financial statements, taxes, etc. It is more difficult for the underground economy because they have no written transaction documents." The lack of these essential documents does not mean a person cannot pay, but rather, the banks try to avoid them because of the risks. "AI helps us by putting together different information about that particular business or person, including the cash flows, sales, and other trends that are usually taken for granted by manual assessments. AI can give a prediction on the likelihood of whether they will pay you back or not, Bautista added. Indeed, UnionBank is one of the very first banks to witness the storm of digitalization. Unfortunately, many popular banks are very slow to catch up and are new to the list of digitalization. Low digital banking penetration Although the Philippines is one of the fastest-growing economies in Southeast Asia, the country has the lowest digital banking penetration of any Asian market, according to a study by McKinsey& Company. In a survey, McKinsey found that only 12 percent of Filipinos had tried Internet banking, compared with 28 percent in other developing countries of the region. “In the Philippines, 35 percent of digital consumers (defined as consumers who make purchases online) own a smartphone, but only nine percent of Filipino consumers said they had used a smartphone to bank, compared with 26 percent in developing Asia,” the study said. In addition, local banks allocate less than 10 percent of their revenues to IT, compared with nearly 15 percent among leading banks elsewhere in Asia–Pacific and digital channels account for just five to 15 percent of their income, well below the average of 25 percent for their peers in Asian emerging markets. But change is coming, Bautista said. 'No more baby steps "We have a problem if we continue taking baby steps because, by the time your development is ready, a new technology will emerge. You need to move faster and you need to take bolder actions if you want to ensure that you stay in the game," he added. In order to be competitive, Bautista said technological advances such as blockchain and AI would need to be integrated into the banking system, adding these technologies will play a critical role in the evolution of the industry. The need to modernize the banking industry's backbone, including its core banking systems, deposits and credits, will remain the most important services of a bank, he added. Bautista said that harnessing the powers of AIs, machine learning and blockchain would deliver a seamless customer experience on the front end by solving the growing intolerance of clients for glitchy apps or systems. “We don’t really know where the banking sector or technology is going to go because, to me, the AI that we see right now is not even stage one of its potential. Yet, we are already talking as if our lives will be destructed by the technology,” he said. “You can just imagine if we reach stage two or three,” Bautista added. According to Bautista, AI is going to disrupt our lives in all aspects. “We don’t know how big its impact will be, but we have to figure out how we can adapt,” he said. All told, no matter how banks utilize digital technologies or even AI, the focus on technology and constant investments in IT infrastructure across the industry is paramount to avoid the risk of being disrupted and be prepared for any disruption. The post Digitize, digitize, digitize appeared first on Daily Tribune......»»
US banks expect to tighten lending standards on sector worries
US banks tightened lending standards in the first few months this year, and expect this to continue over the rest of 2023, said a Federal Reserve survey released on Monday. The report, which is closely watched on Wall Street, comes as the financial sector contends with deposit outflow worries on the back of turmoil after the high-profile collapse of Silicon Valley Bank and Signature Bank in March. In recent weeks, shares of midsized banks suffered brutal trading days while investors remained on edge for a repeat of earlier episodes in which deposit runs precipitated or played a significant role in bank failures. Asked about their outlook for lending standards over the rest of 2023, "banks reported expecting to tighten standards across all loan categories," the Fed said on Monday. Among the most frequently cited reasons included an expected deterioration in credit quality of loan portfolios and in customers' collateral values, alongside reduced risk tolerance, found the senior loan officer opinion survey on bank lending practices. Other reasons included "concerns about bank funding costs, bank liquidity position, and deposit outflows," the survey added. In the first quarter, respondents reported tighter standards and weaker demand for various types of loans to businesses and households, the report added. "In general, the tightening in standards for business loans was more frequently reported across the mid-sized banks," the report said. On commercial and industrial lending, midsized and other banks more often cited their liquidity positions and issues such as heightened concerns about the impact of legislative changes. And among banks' worries were an uncertain economic outlook. Analysts have recently warned that the full impact of March's banking shock is yet to materialize. With banks tightening lending standards, there could be less credit flow to households and businesses -- with ripple effects on spending and the broader economy. It was "hardly surprising" that many banks tightened lending standards across a range of loans in the first three months this year, said Michael Pearce of Oxford Economics in a note. "But the bigger concern is that a majority of banks plan to tighten standards further over the rest of the year," he added. "That will starve firms and households of credit and help push the economy into recession in the second half of this year," he said. The post US banks expect to tighten lending standards on sector worries appeared first on Daily Tribune......»»
HSBC stays intact, share owners vote
Global lender HSBC on Friday overwhelmingly defeated an activist proposal supported by its largest stakeholder, Chinese insurer Ping An, to spin off the bank’s Asia business. Of the shareholders who voted, more than 80 percent opposed the call to break up the Asia-focused bank, HSBC said in a statement. The vote took place during HSBC’s annual general meeting or AGM in Birmingham, central England. Last March, HSBC assured it is further strengthening its consumer banking business in the Philippines. The AGM came at the end of a week in which the London-headquartered bank posted a surge in quarterly net profit, boosted by rising interest rates and its rescue of the UK arm of failed US lender Silicon Valley Bank. “A large majority of HSBC shareholders voted overwhelmingly to support the board,” HSBC chairman Mark Tucker told the meeting. “That draws a line (under) the debate over the structure of the bank.” Speaking earlier at the meeting, Tucker insisted the proposal to split the bank was not beneficial. “We concluded that the alternative structural options would materially destroy value for shareholders, including putting your dividends at risk. This remains our unanimous view today,” he said. But Ping An, which owns more than 8 percent of HSBC, argued that the lender lags behind international peers and that a recent improvement in performance was tied mainly to rising interest rates, which it claims have peaked. The US Federal Reserve this week hinted that it would pause a policy of lifting borrowing costs aimed at cooling inflation. The European Central Bank on Thursday delivered a smaller interest rate increase than recently as higher borrowing costs begin to take their toll, but said it had “more ground to cover” in fighting red-hot price increases. “It is necessary for HSBC to push for structural reform to fundamentally address HSBC’s underlying market competitiveness issues,” Michael Huang, chairman and CEO of Ping An Asset Management, said recently. Strategic restructuring pushed Ping An had called on HSBC to engage in a “strategic restructuring” that would see it create a separately-listed bank headquartered in Hong Kong. Huang said the proposal would allow the bank to retain control over a separate Asia business, adding that management had “exaggerated many of the costs and risks” associated with a split. HSBC was among a number of major banks to cancel dividends early in the Covid-19 pandemic after an order from the Bank of England, a move that riled some Hong Kong investors. Some retail investors had cited the cancellation of the dividend as a reason to back the spin-off proposal. Friday’s shareholder meeting faced disruption from climate protesters, a common feature this year at annual general meetings being held by major UK companies. “You are happy to profit while the world burns. HSBC stop the greenwash,” one protester shouted as the meeting got underway and before security removed some demonstrators. Environmentalists are pushing for banks to stop funding fossil fuel projects, arguing that while they continue to do, their pledges to help tackle climate change are acts of “greenwashing”. The post HSBC stays intact, share owners vote appeared first on Daily Tribune......»»
Vigan City launches tourist passport as it celebrates its arts festival
[caption id="attachment_129307" align="aligncenter" width="525"] PHOTOGRAPHS BY ROEL HOANG MANIPON FOR THE DAILY TRIBUNE | Vigan City mayor Jose ‘Bonito’ Singson Jr., city and province officials and special guest, former senator Nikki Coseteng, led the launch of the Vigan City Tourist Passporton Calle Crisologo.[/caption] Vigan City is one of the most popular tourist destinations in the Ilocos Region, and its main draw is the handsome heritage houses, the Filipino bahay na bato, that date back to the Spanish colonial era. These old houses cluster around Calle Crisologo, the heritage center of the capital of the province of Ilocos Sur in northwestern Luzon Island, and the area, declared a UNESCO World Heritage site, has highest concentration of heritage structures in the Philippines. The city also has several museums, extraordinary for regions outside of Metro Manila, and traditional crafts such as pottery and textile weaving still survive and had become tourist attractions. It also affords visitors a taste of the food of the Ilocano people, the dominant ethnic group in the region, such as pinakbet, poque-poque, tinubong, their version of the empanada and bagnet. [caption id="attachment_129306" align="aligncenter" width="525"] Iconic bagnet was one of the Ilocano dishes served during the passport launch.[/caption] The local government has been concocting touristic events and products to entice more visitors, especially now that tourism in the area is recovering from the lockdowns because of the coronavirus pandemic and the July 2022 northern Luzon earthquake, which damaged several old structures in the area including the 19th-century Metropolitan Cathedral of the Conversion of Saint Paul the Apostle and the Saint Augustine of Hippo Church of neighboring town of Bantay, which remain closed until today. One of the city’s touristic efforts is its own tourist passport. Using a tourist passport has recently become a fun activity for tourists in several areas around the world. In Taiwan, for example, tourists earn cute stamps on their passports on every destination and landmark they visit. In the Philippines, the Department of Tourism issued Jose Rizal passports in 2011 in celebration of the 150th birth anniversary of the Filipino writer and hero. Tourists earned stamps in sites associated with Rizal all over the Philippines such as his birthplace in Calamba, Laguna, and his place of exile in Dapitan, Zamboange del Norte. Tourists who completed their stamps earned prizes. [caption id="attachment_129308" align="aligncenter" width="525"] The tourist passport is said to have a rewards system, aimed at boosting local businesses, and holders earn stamps by patronizing stores, restaurants and other establishments.[/caption] In Vigan City, the passport is a way to boost local businesses, according to its mayor, Jose “Bonito” Singson, Jr., who is from the province’s most dominant political clan and who spearheaded the venture. The Ciudad de Vigan Pasaporte de Turista is said to have a rewards system, and holders earn stamps by patronizing stores, restaurants and other establishments in the city. The launch of the tourist passport on 28 April served as the opening event of the Viva Vigan Binatbatan Festival of the Arts, which ran until 5 May. The Binatbatan is one of three main festivals of the city, strategically scheduled throughout the year. The Longganisa Festival in the early part of the year is inspired by the city’s popular version of the Filipino pork sausage, while the Raniag: The Vigan Twilight Festival in October features the celebration of Halloween and the traditional local undas, which honors the departed. Binatbatan is in the middle of the hot, dry season, and highlights heritage, creativity and culture. The launch was held on charming Calle Crisologo led by Singson, a whole day affair starting with a motorcade in the morning and an al-fresco program with dinner in the evening. The event was attended by provincial and city government officials and employees, visitors and special guests such as former senator Anna Dominique “Nikki” Marquez-Lim Coseteng. [caption id="attachment_129303" align="aligncenter" width="525"] A beautiful setup for the launch of the Vigan City Tourist Passport on Calle Crisologo, famous for its heritage houses.[/caption] The tourist passports were readily made available to purchase through booths placed on the main street, at the city hall and online at www.vigancity.gov.ph. Singson hinted at more tourism projects to come. The Binatbatan Festival started rolling. A mural, a collaboration among local artists, has just been unveiled at the Plaza Burgos, where Art in the Park was held on 29 April, including an art exhibit and a painting contest. At night, several groups performed at the Vigan Dance Festival 7. The Food and Trade Fair, at the Boardwalk on Govantes Dike, by the banks of Mestizo River, and the Abel Product Expo were opened on that day. [caption id="attachment_129305" align="aligncenter" width="525"] An on-the-spot art contest at Plaza Burgos.[/caption] On 30 April, the Capture the Vigan Experience: On the Spot Photography Competition was held with the theme “Time Travel” for the Professional Category and “Ilocano Heritage Hospitality” for the Amateur Category, as well as the Television and Music Video Competition. While the Black and White Photography Exhibit was mounted on Calle Crisologo, the Abel and Recycled Costume Ramparade featured designs using recycled materials and the local hand-woven textile at the Vigan City Hall. Other festival events and activities included the Abel Iloco Fashion Show and Competition, the Damili Jar Painting Competition, Reynas ti Mayo, Kalesa Parade and Competition, Carabao Painting and Pasagad Dressing, Ramada Traditional Games, a skateboarding competition, and the Binatbatan Tattto and Band Festival. The festival concluded with the street-dancing and showdown competition, a regular fixture in recently created Philippines festivals. Contingents of young performers danced on the streets in colorful costumes carrying batbats or bamboo sticks, and mimicking the movements of the batbatin, the traditional process of taking the seeds out of the dried fiber of the kapok, or kapas in Ilokano, by beating the cotton-like material with sticks, which the festival memorializes and from which it derived its name. The post Vigan City launches tourist passport as it celebrates its arts festival appeared first on Daily Tribune......»»
Why take over all SIM cards?
A Subscriber Identity Module is, per se, unique to the user. With RA 11934 making SIM registration mandatory, is there foolproof protection left against privacy, identity theft, hackers, and scammers when a “ghost” other than the user gains access to a lot of information and data stored in it? There is neither empirical evidence nor robust studies to validate how mandatory registration lowers crime rates or helps in crime detection. What if those behind surveillance systems render rich businessmen, investors and captains of industry easy prey since a broad range of financial transactions could be tracked or in the case of political activists, red-tagging be made systematically worse? With the explosion of technologies that flattens the world and where knowledge and resources are connecting all over the planet as never before, we should benefit from all it has to offer. In our geopolitical milieu, it has hardly made any headway as a “force for good — for business, the environment and people everywhere” precisely because the bureaucratic norm appears to purposely digress from where globalization is about to take us. The officialdom’s rather “damaged psyche” has made top bureaucrats repressive to the point Congress has even legislated against the open and uninterrupted use of electronic gadgets to keep connected with the world or with every man on earth. The ruling class in our midst wants to “deactivate” our connectedness unto one another unless we have registered our SIMs. Our policymakers should return to the old order some 40 years ago and stick their lives with it as they have proved to be an anachronism of our modernizing times. The SIM card registration issue is short of an invasive approach to police the range and whole breadth of our connectedness where the rest of humankind benefits. Government meddles in all our affairs even as it lacks the agency to run after those using technologies for crime-related activities. Worse, what if an enforcement job is transformed into a profitable cottage industry? Just when the “cost of communication is falling towards zero,” regulatory operatives are reposed with duties too vulnerable to abuse. What the present and past dispensations have done — and they are good at it — is to take us back to the “unflat world.” In so doing, have they not become the new “identity thieves, hackers and scammers” with full access to our financial accounts and over our private and public affairs? It’s like burning the house to get rid of the rat. We must find instructive what Winston Churchill said: “To build may have to be the slow and laborious task of years. To destroy could be the thoughtless act of a single day.” What metrics could have led police or crime-detection officials to equate cell phones with guns? The state requires permits from everyone rather than applies the whip to criminal-specific targets undertaking their unlawful tradecraft with the use of loose SIMs. In no time, the next public signs might read from “No guns allowed” to “No cellphones allowed” in banks, corporate boardrooms and conferences — out of fear of fictional crimes. Our police operatives, policymakers and bureaucrats are way behind tech-wise to even regulate, apply fines and penalties, and exert censorship on global technology. What if our regulatory agents block SMS messages on our cellphones on the unfounded suspicion that some of us are communists, destabilizers, or influential critics as they did in China after the infamous Tiananmen Square massacre on 4 June 1989 when government censors were blocking messages using jamming technology? The absence of legal safeguards to protect against abuse matters. That’s when it creates a chilling effect on people’s rights under pain of systematic suppression. It is therefore the proper subject of judicial oversight given the inherent dangers of a broad-spectrum access to subscriber’s data on all fronts. Absent a comprehensive data protection infrastructure to protect the personal details and data of subscribers — unique to them — this disconcerting policy has to be assailed. The post Why take over all SIM cards? appeared first on Daily Tribune......»»
HSBC’s largest shareholder outlines bank break-up strategy
HSBC's largest shareholder ramped up pressure on the bank to break up its business on Tuesday, saying it was underperforming and has failed to "address key business model challenges". In a rare public statement, Chinese insurer Ping An said HSBC was lagging behind international peers and a recent improvement in performance was tied to rising interest rates, which have now peaked. Ping An outlined revised proposals for restructuring that highlight HSBC's precarious position as US-China tensions rise, with some observers doubting whether Europe's largest lender can continue to straddle East and West. "It is necessary for HSBC to push for structural reform to fundamentally address HSBC's underlying market competitiveness issues," Michael Huang, chairman and CEO of Ping An Asset Management, said in a statement. Ping An last year suggested a series of ideas for HSBC to separate its business but Huang said the bank's management had "exaggerated many of the costs and risks" associated with a split. The previous proposals involved spinning off the bank's Asia business into a separate entity listed and headquartered in Hong Kong, and a consolidation of the bank's interests in the region, Huang said. "HSBC Group has drained HSBC Asia of dividends and growth capital to support its relatively low return non-Asia businesses," he added. "In effect, HSBC Asia has been subsidizing the group's relatively low return non-Asia businesses." The revised proposals called for London-listed HSBC to engage in a "strategic restructuring" that would see it create a separately listed bank headquartered in Hong Kong. Huang said the proposal would allow HSBC to retain control over a separate Asia business. "Secondly, each structural solution would deliver material benefits to the group's shareholders including valuation unlock, capital relief, long-term efficiency gains, geopolitical risk mitigation and competitive repositioning," he added. However, HSBC said the proposed restructuring alternatives would not "deliver increased value for shareholders. Rather they would have a material negative impact on value." "We remain clear that our current strategy is the fastest way to deliver returns," the bank said in a statement. HSBC was among a number of major banks to cancel dividends early in the Covid-19 pandemic after a de facto order from the Bank of England -- a move that riled some Hong Kong investors. Some retail investors have cited the cancellation of the dividend as a reason to back Ping An's spin-off proposal. The post HSBC’s largest shareholder outlines bank break-up strategy appeared first on Daily Tribune......»»
Banks seen bracing for more rate hikes
After kicking off the year with a 50-basis-point interest rate hike, the Bangko Sentral ng Pilipinas is expected to further raise key policy rates by another 25 to 50 basis points next month to bring inflation back to within the two to four percent target and anchor inflation expectations. In an interview with Bloomberg Television, BSP Governor Felipe Medalla has ruled out the possibility of a hefty 75-bp hike in the next rate-setting meeting of the Monetary Board scheduled on March 23......»»