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Dirty money watchdog told to study economic impact of halting POGOs

THE Anti-Money Laundering Council (AMLC) is studying the economic effects of a prospective government decision to close down Philippine offshore gaming operators (POGOs), the central bank chief said on Tuesday.

“I already asked AMLC team as well as our financial stability team as to the impact of discontinuing of POGO in the Philippines. What’s the impact on the real estate, what’s the impact on the economy…” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said in an economic forum in Manila on Tuesday.

“What if, all of a sudden, they pack up and leave? What will be the impact of that on the property sector plus also the food industry, the restaurants? So this is part of my job as BSP governor,” he added.

“It’s not really an investigation. It’s a study for the guidance of the Monetary Board and the AMLC,” he told reporters on the sidelines of the event.

There are 60 licensed POGOs in the country but only 48 are operational, a Philippine Amusement and Gaming Corp. representative said during a House of Representatives hearing on the agency’s 2020 budget.

The Bureau of Internal Revenue started collecting taxes from foreign workers employed by POGOs in early July and ordered the companies to remit withholding taxes from such workers by Aug. 10.

China last week asked the Philippines to ban all forms of online gambling. — Mark T. Amoguis

Gov’t execs expect state spending to have picked up

By Beatrice M. Laforga

STATE SPENDING is expected to have picked up further this month as government offices try to make up for lost time last semester due to a four-and-a-half month delay in enactment of the 2019 national budget, officials told reporters on Tuesday.

A private economist said, however, that while the government can “chase” disbursement targets, it “might have a hard time” catching up with the full-year program.

Undersecretary Tina Rose Marie L. Canda of the Department of Budget and Management’s (DBM) Budget Preparation & Execution Group said in a briefing in Manila that, after bigger disbursements in July, the department expects that in “August it rose” further, leading to more improvements towards yearend since expenditures “usually grow very fast in the last quarter.

“There was already an uptick for August,” Ms. Canda said, adding: “We’re optimistic that we will meet the program, the disbursement targets, barring no unprecedented event that will happen.”

National Treasurer Rosalia V. De Leon told reporters separately after a regular auction of government securities: “We’re looking into the [second week of] August na and we’re seeing a significant jump in terms of the disbursements… pati ’yun sa (including) infrastructure…”

Latest available DBM data showed infrastructure and other capital outlays dropping by 11.7% to P311.4 billion last semester from P352.7 billion in 2018’s first half, and missing a P392.9-billion target for the period by 20.8%. The government plans to spend P861.2 billion on infrastructure this year, 24% of the P3.662-trillion national budget that was signed into law on April 15, four-and-a-half months late.

That was blamed for a disappointing 5.5% gross domestic product expansion last semester, that compared to the government’s already tempered 6-7% full-year goal for 2019.

For next year, the Executive branch has proposed P972.5 billion in infrastructure funds, about 12.9% more than this year’s allocation and also 24% of a proposed P4.1-trillion national budget.

State spending catch-up was under way as of July, according to data the DBM released on Aug. 15, as state offices moved to make up for subdued expenditures for much of last semester. The DBM said then that while notice of cash allocation (NCA) — the authority the department gives to state offices to use cash allocated to them — dropped by 17% to P1.688 trillion as of July from P2.033 trillion in last year’s first seven months, and NCA used dipped 1.57% to P1.569 trillion from P1.594 trillion, NCA utilization actually improved to 93% from 78% in the same comparative periods.

“The government’s year-to-date NCA utilization rate is 93%. That’s a testament to various line agencies’ capability to disburse and allocate funds and implement programs and projects that they are tasked to do,” DBM Acting Secretary Wendel E. Avisado said in the same DBM briefing.

The Treasury reported on Thursday last week that state spending picked up by 3.43% to P339.4 billion in July from P328.1 billion a year ago, although primary expenditures — or net of interest payments — edged up by just 1.81% to P288.4 billion from P283.3 billion. Still, that was a turnaround from a 3.06% drop in primary expenditures in June.

The seven months to July still saw the government spending 0.11% less at P1.93 trillion from P1.932 trillion a year ago, with primary spending still contracting by 1.32% to P1.699 trillion from P1.721 trillion.

Sought for comment, Nicholas Antonio T. Mapa, senior economist at ING Bank NV-Manila, said: “I think spending for the full year… we might have a hard time doing that [hitting the program] kasi nga (precisely because of) the budget delay.”

“… [I]t’s hard to fast-track. I mean you could chase it, you could disburse as much as you can, given that you’re disbursing na dapat nilabas mo (what you should have spent) in 12 months in only six months, medyo mahirap talaga (it will be really difficult to hit the target),” Mr. Mapa said in an interview at the sidelines of a separate economic forum.

And “given that last year third-quarter spending was very strong, I’d say maybe we can be happy with… growth, kahit (even if just) small or single digit,” he added.

“But in the fourth quarter, sana we can see double digits again…”

Inflation impact on the poor eases further in July — PSA

By Lourdes O. Pilar
Researcher

INFLATION, as experienced by low-income families, softened at its slowest pace in 23 months in July, according to the Philippine Statistics Authority.

The inflation rate for the country’s bottom 30% income households clocked in at 3.1% in July, slower than the year-on-year overall increases of 4% in June and 7.6% in July 2018. The latest reading for the bottom 30% inflation marked the slowest pace in 23 months or since the three-percent rate in August 2017.

Year to date, the inflation for this income segment averaged 4.5%, slower than the 6.1% average in the seven comparable months last year.

That compared to a 2.4% headline inflation experienced by the average household in July, which was the slowest in 31 months or since December 2016’s 2.2%, even as the consumer price index (CPI) used in measuring headline inflation uses 2012 prices compared to the CPI for the bottom 30% income households, which uses 2000 prices.

Aside from the two measures having different base years, the CPI for the bottom 30% income segment of the population reconfigures the model basket of goods, assigning heavier weight on food, beverage and tobacco (FBT), as well as other necessities so as to represent the spending patterns of the poor.

Inflation in the FBT index was at 3.2% in July, slower than the 4.3% in June.

A smaller annual increase was observed in fuel, light and water to 1.2% from the previous 2%. At the same time, slowdowns were logged in clothing at 2.9% from 3.3%; housing and repairs at 4.5% from 4.2%; services at 3.3% from 3.7%; and “miscellaneous” items at 2.4% from 2.5%.

“The slowdown in annual increases in food items, particularly, rice has largely contributed to this decline. In addition, the lower average prices of fuel prices and utilities costs have together influenced the decline in general prices,” said UnionBank of the Philippines, Inc. (UnionBank) chief economist Ruben Carlo O. Asuncion in an e-mail, adding that rice prices contributed negatively to inflation in the last three months.

“This does not include other food items important to the bottom 30% of the population, such as basic food items other than rice. Note that the rice tariffication law is critical to the slowdown in rice prices.”

Rizal Commercial Banking Corp. (RCBC) economist Michael L. Ricafort also cited slower increases in prices of food: “The onset of the rainy season, after the mild El Niño drought in the summer months, also helped in easing the prices of some agriculture/food prices,” Mr. Ricafort said in a separate e-mail. “Lower oil prices and stronger peso exchange rate also partly contributed to [the] slower increase in the food price index.”

The law signed on Feb. 14 that replaced quantitative restrictions on rice with regular tariffs and liberalized importation had slashed retail prices of the staple.

The food-alone index eased to 2.7% from 3.9% previously. In particular, the inflation rate for rice registered a 0.4% decline, a turnaround from its 0.9% year-on-year inflation rate the previous month.

Food accounts for 35.5% of the theoretical basket of goods used by the average household compared to a poor household’s 75%. Similarly, rice, which is part of the food index, comprise 9.6% of an average household’s CPI basket compared to 23% for a poor household.

Inflation experienced by poor households in the National Capital Region was recorded at 0.9% in July, slower than the 1.6% recorded in June. Similarly, those living outside of Metro Manila saw a slower inflation rate at 3.1% from 4.1%.

“The decline in annual increases of price levels is expected to continue [in the] next months,” UnionBank’s Mr. Asuncion said, adding that price slowdowns in rice and other basic food items in the next few months are “highly likely.”

RCBC’s Mr. Ricafort shared this outlook: “Inflation for the bottom 30% of households could continue to ease in the coming month, in line with the easing trend in the headline inflation, largely due to the continued easing of the prices of rice… and some food items with the onset of the rainy season…” he said.

“Higher base/denominator effects a year ago would also mathematically lead to slower inflation for both headline inflation as well as the inflation for the bottom 30% of households…”

Banks mark Q2 with higher profitability despite slower asset and loan growth

By Christine Joyce S. Castañeda
Senior Researcher

THE COUNTRY’s biggest banks saw their profitability and capacity to absorb risky assets improve last quarter, even as growth in assets and loans slowed.

Combined assets of the philippines’ universal and commercial banks (U/KBs)reach p16.89 trillion as of second quarter of 2019

The second quarter edition of BusinessWorld’s Quarterly Banking Report showed the combined assets of 46 universal and commercial banks (U/KBs) grew 9.71% to P16.888 trillion in the April-June period from the P15.394 trillion posted in the same period last year.

Asset growth in the second quarter was slower than the 10.91% recorded in the first quarter and 9.85% in April-June 2018.

Money lent by banks in the form of loans and receivables totaled P9.272 trillion, 10.25% more than the P8.41 trillion last year.

However, the second-quarter figure marked a deceleration from loan growth rates of 12.38% in the first quarter and 18.18% in the second quarter of 2018.

In terms of profitability, the median return on equity (RoE) on these big banks improved to 9.13% from 8.05% in the first quarter and 6.38% last year. RoE — the ratio of a bank’s net profit to shareholder equity — measures how well a company makes use of money from shareholders to generate income. Put another way, it measures the amount that shareholders make on every peso they invest in a company.

BDO Unibank, Inc. (BDO) continued to have the most assets among U/KBs, followed by Metropolitan Bank & Trust Co. (Metrobank) and the Bank of the Philippine Islands (BPI).

They are also the banks that issued the most loans during the quarter, also in that order.

Among banks with assets of at least P100 billion, the Philippine National Bank (PNB) topped in terms of growth, increasing 23.72% year-on-year. It was followed by East West Banking Corp.’s 22.17% and Asia United Bank Corp.’s (AUB) 20.07%.

The same three months saw the Development Bank of the Philippines as the most aggressive lender, with a year-on-year growth of 33.52%, followed by those of the Bank of Commerce’s (BOC) 27.21% and AUB’s 18.94%.

In terms of deposits, BDO remained on top with P2.398 trillion, followed by BPI’s P1.661 trillion and Metrobank’s P1.624 trillion. AUB saw the fastest growth in deposits with 20.16% while the deposits of BOC and PNB grew by 16.89% and 15.27%, respectively.

ASSET QUALITY
Meanwhile, the U/KBs’ ability to absorb losses from risk-weighted assets improved as their median capital adequacy ratio (CAR) — a measure of bank solvency — rose to 19.5% from the 18.84% seen in the preceding quarter.

The ratio remains well above the regulatory minimum of 10% set by the Bangko Sentral ng Pilipinas as well as the international minimum standard of eight percent.

On the other hand, the U/KBs’ nonperforming assets ratio, or nonperforming loans and foreclosed properties in proportion to total assets, edged up to 0.74% from 0.7% in the first quarter and 0.66% in the second quarter of 2018.

Their nonperforming loan (NPL) ratio likewise worsened to 1.58% from 1.53% three months prior and last year’s 1.50%.

The banks’ coverage ratio, which is the ratio of the total loan loss reserves to gross NPL — stood at 113.2% in the second quarter. This was lower than the 117.67% in the preceding quarter and 143.6% in the same period last year, but still enough to cover the entire value of bad loans held by big banks, with loan loss reserves totaling some P162.774 billion.

Since 1987, BusinessWorld has been tracking the quarterly performance of the country’s largest lenders based on their published statements of condition.

The report ranks these lenders in terms of the size of their balance sheet and presents other key ratios used in measuring bank performance such as capital adequacy, earnings and liquidity.

Combined assets of the Philippines’ universal and commercial banks (U/KBs)reach P16.89 trillion as of second quarter of 2019

THE COUNTRY’s biggest banks saw their profitability and capacity to absorb risky assets improve last quarter, even as growth in assets and loans slowed. Read the full story.

Combined assets of the philippines’ universal and commercial banks (U/KBs)reach p16.89 trillion as of second quarter of 2019

Ayala Land gets top credit rating for P5-B bonds

AYALA LAND, Inc. (ALI) has secured the top rating for its fixed-rate bonds worth P5 billion, according to a local debt watcher.

In a statement Tuesday, the Philippine Rating Services Corp. (PhilRatings) said it assigned an issue credit rating of PRS Aaa to ALI’s five-year bonds. This is the highest on its credit rating scale, indicating that the property giant has an “extremely strong” capacity to meet its obligations.

The rating also carries a stable outlook, which means it is unlikely to change within the next 12 months. This outlook aims to further guide investors, regulators, and the general public.

In assigning the rating, PhilRatings said it took into account ALI’s well-diversified portfolio, healthy outlook for the economy and the industry, growing profitability, as well as sound capitalization and manageable debt level.

“ALI is one of the largest real estate conglomerates in the Philippines and is primarily involved in the development of large scale, integrated mixed use estates. It is highly diversified, with projects that serve all market segments of the real estate sector,” PhilRatings said in a statement.

It also noted that ALI has 11,624 hectares of land bank under its portfolio as of end-2018, which can be developed for further growth.

The bonds represent the second issuance from the ALI’s three-year shelf registration program worth up to P50 billion with the Securities and Exchange Commission. Earlier this year, the company raised P8 billion from the issuance of bonds in the same program.

Proceeds will be used to partially finance ALI’s P130-billion capital expenditures for the year. It will specifically fund the construction of Manila Bay BPO and Seda Manila Bay in Pasay City; Ayala Triangle Garden Tower Two in Makati; and Central Bloc in Cebu.

The company’s 2019 budget is 18% higher than the P110.1 billion it spent in 2018, as it looks to hit its target of having P40 billion in net income by 2020. The company will have to grow in the mid-teens level to reach this goal.

Aside from its residential, office, and mall projects, ALI is also set to launch two estates within the year, located in Tarlac and Batangas, in addition to its 26 existing mixed-use developments.

ALI’s net income grew 10.4% in the second quarter of 2019 to P7.8 billion, amid flattish revenue growth to P43.5 billion.

On a six-month basis, ALI’s net income gained 12% to P15.2 billion, while revenues went up 4% to P83.2 billion. — Arra B. Francia

DICT unveils priority initiatives

By Denise A. Valdez, Reporter

THE Department of Information and Communications Technology (DICT) is seeking collaboration with other government agencies as it identified five priority initiatives.

In a Strategic Development Partners’ Forum yesterday, the DICT unveiled five initiatives that will support its promotion of a digital ecosystem in the Philippines. A key element of this list is deploying information officers among government agencies.

“We intend to share with you DICT’s strategic direction and plans, challenges and opportunities, to encourage support in terms of resources and technical-capability building for the department to implement key programs and projects,” DICT Secretary Gregorio B. Honasan II said in a speech at the forum.

Attending the event were representatives from the British Embassy, World Bank, Asian Development Bank, New Zealand Aid, Japan International Cooperation Agency, Australian Embassy, Canadian Embassy, Korea International Cooperation Agency, International Labor Organization, United Nations Development Programme and Anti-Red Tape Authority.

“The DICT is initiating this (forum) to provide an avenue for storing ideas of cooperation and future collaboration,” Mr. Honasan said.

The five priority initiatives include: sending chief information officers to other government agencies to lead capacity development and form solid digital foundations; forming a Technical Task Force that will help the DICT in developing the technical soundness of its projects; organizing a Project Management Office that will spearhead digital transformation across all digital initiatives of DICT; holding capacity-building activities to promote a digital-first mindset within the agency; and gathering technical assistance to support the DICT in its research and development.

The DICT said these initiatives will help the easier implementation of five key projects: the establishment of a National Broadband Network; rollout of Free WiFi for All; creation of a Central Business Portal and National Citizens Portal; promotion of ICT-based education through collaborations with the Department of Education and online educational groups; and launch of a Cybersecurity Management System for all government agencies.

These projects come as the DICT ticked off major accomplishments in the past months, including the entry of a new major telecommunications player and the welcoming of more than 20 independent common tower providers.

The DICT is undergoing some administrative changes after the appointment of Mr. Honasan in July. Two new undersecretaries and three new assistant secretaries have been added in the past month, which Mr. Honasan said are leading the agency’s strategic programs.

The new appointees are Jose Arturo C. de Castro and Eleazar H. Almalbis, Jr. as undersecretaries; and Emmanuel Rey R. Caintic, Felino O. Castro V and Vicente Luna Cejoco as assistant secretaries.

“House cleaning muna,” he told BusinessWorld after the forum, referring to the administrative changes that he hopes will help the agency stabilize its direction moving forward.

Gov’t fully awards three-year T-bonds

THE GOVERNMENT made a full award of the reissued three-year Treasury bonds (T-bond) it offered yesterday on the back of strong demand following the speech of US Federal Reserve Chief Jerome Powell over the weekend and bets of monetary easing by the local central bank as early as next month.

The Bureau of the Treasury fully awarded P20 billion worth of the reissued bonds, with total tenders amounting to P56.6 billion or nearly three times the offer volume.

The bonds, which were first issued last July 4, carry a coupon rate of 4.75% and have a remaining life of two years and 10 months.

The three-year debt notes fetched an average rate of 3.961% yesterday, 84.2 basis points (bps) lower than the 4.803% quoted when the bonds were first offered on July 2.

At the secondary market on Tuesday, the three-year bonds fetched a rate of 3.99%, based on the Bloomberg Valuation Service Reference Rates.

Following the auction, National Treasurer Rosalia V. De Leon said the Treasury expected the debt papers to fetch lower rates due to external factors such as the US Federal Reserve’s Jackson Hole retreat over the weekend and fears of a global economic slowdown.

“It’s expected coming after what we’ve heard from Powell…during the Jackson Hole speech. We also see that the Fed will be acting appropriately given the slowdown in the global economy, and also on the onshore,” Ms. De Leon told the reporters.

The US economy is in a “favorable place” and the Federal Reserve will “act as appropriate” to keep the current economic expansion on track, Mr. Powell said on Friday in remarks that gave few clues about whether the central bank will cut interest rates at its next meeting or not.

The Fed cut rates for the first time in more than a decade last month, backing Mr. Powell’s verbal commitment to sustain the expansion with action. Mr. Powell on Friday made clear that commitment is still in place in a speech he gave at an annual Fed retreat at a Jackson Hole valley resort set against the Grand Teton mountains.

He said there are “significant” risks to the economy, including the trade dispute, the chaotic British exit from the European Union, tension in Hong Kong and signs of a global economic slowdown.

But he also said the domestic US economy is in a “favorable place” now and he stressed limits to the Fed’s ability to respond to the trade issues. He also said officials need to “look through” short-term turbulence, and stopped short of endorsing or signaling the pace and depth of rate cuts markets widely expect and that US President Donald Trump has demanded.

There are “no recent precedents to guide any policy response to the current situation,” Mr. Powell said, adding that monetary policy “cannot provide a settled rulebook for international trade.”

Locally, Ms. De Leon said the lower rates may also be attributed to bets of possible easing by the Bangko Sentral ng Pilipinas (BSP) as early as its Monetary Board’s (MB) rate-setting meeting next month and to increased liquidity in the market.

“There’s also the expectation of more easing coming from the BSP, including a possible rate cut when they meet again during the MB discussions in September. So this is something that’s expected,” she said.

Ms. De Leon said the maturity of some P18-billion worth of government securities this week contributed to market liquidity.

A bond trader shared the same sentiment, adding that the decline in yields yesterday was within market’s expectations amid strong demand for short-term debt papers.

“The auction result is actually within market expectations. Lots of tenders because there’s a strong demand on the short end of the curve. Market continues to price in another 25 bps rate cut in September due to inflation within BSP’s forecasts. Then of course there’s the possibility of a reserve requirement cut by BSP,” a bond trader said in a phone message.

BSP Governor Benjamin E. Diokno has hinted on another cut in key policy rates and a 25-basis-point reduction in big banks’ reserve requirement ratio (RRR) as early as September.

The central bank’s Monetary Board at its previous meeting slashed policy rates by 25 bps. Current interest rates now range from 3.75% to 4.75%.

The RRRs now stand at 16% for big banks and 6% for thrift banks following the last round of the 200-bp multi-phased reduction in all RRRs last July 26.

PRIZE BOND
Meanwhile, Ms. De Leon said they are currently studying the possibility of issuing a “prize bond,” like the lottery bonds issued in Pakistan and other countries. Through this scheme, bonds are randomly selected within an issue and are redeemed at a higher value than the face value of the debt paper.

“We’ve already discussed this before… [We’re] looking at some possible structures like what others have also been doing…,” she said.

“So on top of the usual coupon that you get, there’s also an opportunity for you to win… But that’s something that we still need to explore further [and] evaluate in terms of the [funding] requirements like infrastructure, and also even in terms of the legal issues that may come up,” Ms. De Leon said.

The government is set to borrow P230 billion from the domestic market this quarter through T-bills and Treasury bonds.

It is looking to raise P1.189 trillion this year from local and foreign sources to fund its budget deficit, which is expected to widen to as much as 3.2% of gross domestic product. — B.M. Laforga with Reuters

SEC says Kapa-Community has not applied for secondary license

THE Securities and Exchange Commission (SEC) refuted claims by alleged investment scam Kapa-Community Ministry International that it has filed for a license to solicit investments from the public, noting that its incorporation papers remain suspended.

In a statement issued Tuesday, the country’s corporate regulator said Kapa has been making false claims on social media that it has submitted an application for a secondary license that will allow it to offer and sell securities to the public.

“The Commission has not received any application for a secondary license from Kapa, as verified by the SEC Company Registration and Monitoring Department,” the SEC said.

It added that Kapa cannot apply for a secondary license since its certificate of incorporation has been revoked last April for “serious misrepresentation of what it could do or was doing to the great prejudice of or damage to the general public.”

Kapa was also found to be posting information that the Bangko Sentral ng Pilipinas (BSP) has approved its investment scheme, even questioning delays on the part of the SEC.

The BSP has already denied this claim, according to the SEC.

Kapa was previously registered with the SEC as a nonstock corporation, but its incorporation papers were revoked after the commission found that it has been illegally soliciting investments from the public.

In a press conference earlier this year, SEC Chairperson Emilio B. Aquino said that the group may have taken at least P50 billion worth of investments from the public, based on a membership of five million people with a P10,000 investment each. The capital was solicited in the guise of donations, with the promise of a 30% “monthly blessing” or “love gift” for life.

Mr. Aquino said this type of scheme is not sustainable and would eventually collapse.

“We enjoin the investing public to be more discerning with and critical of any promises and persuasions made by fraudsters,” Mr. Aquino said in a statement.

“When presented an investment opportunity, take time to verify the legitimacy of the company, especially their authority to solicit investments from the public, and to understand how the promised returns will be generated and delivered.”

Kapa’s activities are prohibited under the Securities Regulation Code, and could face a fine of up to P5 million or a 21-year sentence, or both.

A criminal complaint against Kapa, its founder and president Joel A. Apolinario, trustee Margie A. Danao, corporate secretary Reyna L. Apolinario and other promoters of the investment scam, is currently pending. — Arra B. Francia

Bank of the Philippine Islands gets investment-grade rating from S&P

AYALA-LED Bank of the Philippine Islands (BPI) secured on Tuesday a “BBB+” long-term and “A-2” short-term issuer credit ratings (ICR) with a stable outlook from S&P Global Ratings.

“This is the first credit rating assigned by S&P to the bank, of which the ‘BBB+’ ICR is at par with the Philippine sovereign rating of ‘BBB+,’” the lender said in a disclosure on Tuesday.

“The stable outlook on BPI reflects our view that the bank will maintain its dominant market position and strong capital buffers over the next two years,” the S&P said in its research update dated Aug. 26.

“The ratings reflect BPI’s dominant market position as the third-largest bank in the Philippines, its good competitive position, and its strong capitalization. We expect the bank’s risk adjusted capital (RAC) ratio to be 10%-11% over the next two years, underpinned by high profit retention and moderation in loan growth,” the credit rater said.

“In addition, we anticipate that BPI’s asset quality will continue to be sound, underscoring the bank’s good underwriting practices and risk control. However, a minor deterioration in asset quality is likely as the bank grows its higher-yielding, but riskier, consumer and small and midsize enterprise portfolio,” it added.

S&P said BPI’s funding profile is supported by its branch network and record of “strong depositor confidence.” It gave BPI’s stand-alone credit profile (SACP) a grade of “bbb+.”

BPI said in a statement to the local bourse that it is the first private domestic bank in the Philippines to achieve investment-grade ratings of bbb+/BBB+ in both SACP and ICR.

According to the bank, the entire ratings process took about three months — from May to August — in coordination with the bank’s ratings advisor consultant, Mizuho Bank Ltd.

BPI booked an attributable net income in the first half of the year at P13.74 billion, an increase of 24.6% from P11.03 billion during the first semester of 2018.

In the second quarter of the year, its total capital adequacy ratio stood at 16.44%, while its Tier 1 and common equity Tier 1 ratios were both at 15.55% on a consolidated basis.

Shares in BPI went down P2.80 or 3.11% on Tuesday to P87.10 apiece from its Aug. 23 close of P89.90 each. — Mark T. Amoguis

Restored UP Visayas main bldg., Iloilo’s 1st City Hall, officially opens

By Emme Rose S. Santiagudo, Correspondent

ILOILO CITY — The opening of the restored main building of the University of the Philippines Visayas (UPV), which served as Iloilo’s first government hall, adds to the roster of historical and cultural attractions here.

Designed by renowned Filipino architect Juan Marcos Arellano — who also designed Manila’s Metropolitan Theater, the Central Post Office Building, and the Legislative Building that is now the National Museum of Fine Arts — the UPV building was inaugurated in 1936 alongside the elevation of Iloilo from a municipality to a chartered city in December that year.

Mr. Arellano tapped the help of his Italian friend, sculptor Francesco Riccardo Monti, particularly for the two bronze male statues at the building’s main entrance, representing the concept of “Law and Order.”

“Essentially, the building is neo-classical, putting emphasis on the compactness and the space, at the same time ventilation because the idea is an open and spacious office space,” Randy M. Madrid, director of the UPV Center for West Visayan Studies, said in an interview during the unveiling ceremony on Aug. 16.

Doña Juliana Melliza donated the 10,000-square meter lot to the government in 1929.

The construction of the building started in 1931 and was completed at a cost of P90,000.

During World War II — still the biggest building in the city — it was used by the invading Japanese army as a garrison.

After the war, the city government decided to donate the building to UP in order to establish a UP Junior College in Iloilo.

The mayor at that time was Fernando H. Lopez, who would later hold other government posts, including vice-president of the country.

In 1947, the UP Iloilo College was formally opened.

It was renovated in 1950 with the help of the Philippine War Damage Commission. Now, nearly 70 years later, the building has been fully restored.

RESTORATION
The building’s P54-million restoration was funded under the National Historical Commission of the Philippines (NHCP).

Senate Minority Leader Franklin M. Drilon and Antique Rep. Loren B. Legarda were among those who pushed for the restoration of the building.

Mr. Drilon, a graduate of the school, has fond memories of his school days.

“I studied high school here and it brings back a lot of memories. I am very pleased with what the NHCP has done. It gives pride to the Ilonggos that we are able to restore these buildings to make them conscious of its rich culture and historical background,” Mr. Drilon said during the turnover ceremony.

NHCP Chairperson Rene R. Escalante led the formal turnover to the UP, represented by UP President Danilo L. Concepcion and witnessed by UPV Chancellor Ricardo P. Babaran and Vice-Chancellor for Planning and Development Martin G. Genodepa.

Mr. Madrid said they are hoping that the opening of the building to the public would contribute to the city’s tourism industry.

He said, “When Iloilo City was dubbed as the ‘Queen City of the South’ (a title that is now also attributed to Cebu), many major activities happened here and in the different parts of the city. Now, we are hoping that this structure can contribute something to the tourism development of Iloilo City.”

Among Iloilo City’s other historical-cultural sites are the Molo Mansion; the Jaro Cathedral; Calle Real in the downtown area; the Western Visayas Regional Museum at the old Iloilo Provincial Jail; the Museum of Philippine Economic History, housed at the Elizalde Building Iloilo; the Museum Contemporary Arts at the Iloilo Business Park; Nelly’s Garden, also known as the “Lopez Heritage House” in Jaro District; and the Old Customs House of Iloilo, also known as “Aduana in Muelley Loney St.”

Singapore’s Duty-Free operator to exit

HOTEL LOTTE Co. and Hotel Shilla Co., South Korea’s two largest duty-free companies, are among bidders for the rights to take over the liquor and tobacco business at Singapore’s Changi Airport, after longtime operator DFS Group Ltd. unexpectedly didn’t bid for the rights again.

Lotte and Shilla were joined by Germany’s Gebr Heinemann in a tender exercise that closed on Monday, Yonhap reported, citing sources. Spokespeople for Lotte Duty-Free and Shilla, which already sells cosmetics at Changi, confirmed their bids in separate statements to Bloomberg.

The winner is expected to be chosen by the end of the year, according to Changi Airport. They’ll take over alcohol and tobacco selling rights for all four Changi terminals for six years, starting in mid-2020.

The exit of Singapore Changi Airport’s largest tenant came as a surprise. DFS, in addition to being the airport’s largest tenant, is also its oldest, according to the Straits Times. DFS has sold alcohol and tobacco at Changi for nearly 40 years, and is estimated to have generated S$590 million (US$425 million) in sales last year, according to the Moodie Davitt Report.

DFS Chairman and CEO Ed Brennan cited regulatory changes combined with geopolitical uncertainty for the exit, in a statement to the Straits Times. He added that staying at the Singapore airport was “not a financially viable option.”

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Singapore’s government announced in February that it would reduce the alcohol duty-free allowance to two liters from three liters. The Ministry of Health said last month that starting July 1 next year, all tobacco products sold in Singapore must be in standardized packaging and contain large graphic health warnings.

DFS did not return multiple calls seeking additional comment. DFS’s luxury concessions at Changi, as well as operations in Singapore’s T Galleria by DFS and the cruise center would operate as usual, Mr. Brennan told the Straits Times.

Changi is Asia’s third-busiest for international passengers, handling a record 65.6 million passengers in 2018. The aerodome is currently building a fifth terminal and a third runway as it anticipates travel demand to grow.

Yet the escalating US-China trade war has dampened the region’s most trade-reliant economies. Singapore earlier this month cut its forecast for economic growth this year to almost zero.

Hundreds of staff are expected to lose their jobs when DFS pulls out, the Straits Times reported. However, many of them could be hired by the new operator, who will likely need to staff up ahead of the handover. — Bloomberg

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