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Resources of PHL financial system jump to P32 trillion

By Luisa Maria Jacinta C. Jocson, Reporter

TOTAL RESOURCES of the Philippine financial system rose by 10.5% to P32.1 trillion at the end of July from a year earlier, central bank data showed, with enough cash, savings and credit lines available to people and organizations.

Banking resources alone climbed by 12.3% to P26.779 trillion year on year. Resources held by universal and commercial banks jumped by 12.4% to P25.101 trillion, while thrift banks’ resources rose by 10.1% to P1.114 trillion.

Month on month, financial system resources, which include funds and assets such as loans, deposits, capital and debt securities that can be converted into funds when needed, dipped by 0.7% from P32.332 trillion.

At end-July, the resources of digital banks surged by 29.3% year on year to P106 billion. The BSP only started collecting data from digital lenders in March 2023.

There were no updated data for rural and cooperative banks, as well as nonbank financial institutions.

Rural and cooperative lenders held P458 billion in resources at end-March, while the resources of nonbank financial institutions stood at P5.323 trillion. Nonbanks include investment houses, finance companies, security dealers, pawnshops and lending firms.

Institutions such as nonstock savings and loan associations, credit card companies, private insurance firms, the Social Security System and the Government Service Insurance System are also considered nonbank financial institutions.

The rise in financial system resources reflects the double-digit growth in bank lending amid easing inflation, said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp.

Outstanding loans of universal and commercial banks rose by 10.4% year on year to P12.14 trillion. This was the fastest growth since 13.7% in December 2022.

“Further cuts in local policy rates, largely as a function of Fed rate cuts in the coming months, would lead to faster growth in loans, trading gains and other investment income of banks, all of which would lead to faster growth in banks’ total assets,” Mr. Ricafort said.

Fed fund futures showed traders are pricing in a 59% chance of a 50-basis-point (bp) cut at the September meeting, according to CME FedWatch. Futures priced a total of 125 bps in rate cuts in 2024, Reuters reported.

The US central bank is set to have its next meeting on Sept. 17-18.

BSP Governor Eli M. Remolona, Jr. earlier signaled another 25-bp rate cut in the fourth quarter.

The Monetary Board cut rates by 25 bps at its meeting last month, bringing the benchmark rate to 6.25% from 6.5%.

“Continued growth in banks’ earnings — banks have been among the most profitable, if not the most profitable industry in the country for many years — also added to capitalization and total resources,” Mr. Ricafort added.

The Philippine banking industry’s combined net income rose by 4.1% year on year to P190.21 billion at end-June, data from the central bank showed.

‘You dig’: Spain lures film fans to sets of The Good, the Bad and the Ugly

Clint Eastwood in the cemetery scene in 1966 film The Good, the Bad and the Ugly.) — IMDB

CARAZO, Spain — There are two types of people in the world, Clint Eastwood’s Man With No Name tells a rival gunslinger who has no bullets. Those with a loaded gun, and those who dig. “You dig.”

Volunteers in northern Spain have taken his words to heart, painstakingly tending the freshly dug graves on sets featured in Sergio Leone’s classic 1966 spaghetti Western The Good, the Bad and the Ugly to make the area a pilgrimage site for movie fans.

With its rolling hills of heather-strewn shrubland, the countryside near the town of Santo Domingo de Silos, some 200 km north of Madrid in Burgos province, stood in for the American Southwest in the epic set during the US Civil War.

The last instalment in the Dollar Trilogy that propelled actor Eastwood to international stardom is a fixture in most all-time best movie lists.

In 2015, a local cultural association launched a sponsorship drive to reconstruct the fictional Sad Hill Cemetery, site of a famed showdown between Eastwood’s Man with No Name and two rivals for a hoard of buried Confederate gold.

The cemetery now boasts more than 5,000 prop graves.

Kristine Guzman of the regional film commission said its refurbishment should sway fans to flock to what “will constitute a new place of pilgrimage.”

Angel Sanchez, 63, from Toledo in central Spain, told Reuters he was weighing whether to have his own ashes scattered there.

To the east of the cemetery lies the Betterville prison camp, where the gunslingers played by Eastwood and Eli Wallach are held after being captured by Union soldiers.

Betterville was rebuilt using juniper trunks burnt when a fire ravaged the surrounding natural park in 2022. The project received €50,000 ($55,000) in funding from the park and involved professional construction crews.

Last Sunday, reenactors marked the project’s completion.

Garbed in a Union officer’s uniform, Sergio Garcia, a founding member of the Sad Hill Cultural Association, unveiled a plaque commemorating the hundreds of local extras who partook in the original production.

At the cemetery, a man stood in a ready-to-draw pose as his portable speaker blared Ennio Morricone’s “Ecstasy of Gold” earworm from the film’s unforgettable score. — Reuters

Sony in talks to buy Pink Floyd music rights for about $500 million, FT reports

SONY MUSIC is in advanced talks to buy the rights to music recorded by legendary English rock group Pink Floyd for about $500 million, the Financial Times (FT)reported on Friday.

Pink Floyd has been riven by personal differences between band members, notably Roger Waters and David Gilmour, that has made reaching an agreement difficult, the FT said, citing several people close to the matter. — Reuters

‘Build Better More’ to further stoke demand for South Luzon properties 

COLLIERS PHILIPPINES executives with Vista Land Chairman Manuel B. Villar, Jr. — ALFRED VALENCIA

THE PHILIPPINE property is likely to benefit greatly from the government’s massive infrastructure push. The “sustained, strategic, and on schedule” infrastructure implementation is a plus for the property sector that is still recovering from the adverse impacts of the pandemic. Major projects are heading south of Luzon, that’s why we see the region benefiting from the national government’s “Build Better More” initiative. 

This pledge to improve infrastructure connectivity is one of the major growth drivers for the property market of the Cavite-Laguna-Batangas (CALABA) corridor which I highlighted during the Colliers Philippines’ South Luzon Property Market Briefing held at Brittany Hotel in Villar city on Aug. 27.  Colliers Philippines partnered with Brittany and Villar city for our first ever South Luzon-focused property briefing.

Colliers Philippines believes that sustained infrastructure implementation will play a crucial role in booting land and property values in South Luzon. The government’s commitment to accelerate decentralization and infrastructure implementation will be key in further raising the region’s attractiveness and competitiveness. This should also facilitate the inflow of more foreign investments, particularly those funneled into the property sector. 

METRO MANILA SUBWAY’S GARGANTUAN ECONOMIC BENEFITS
While the multibillion-peso project will only cover Metro Manila, we are optimistic that the subway will have tangential positive impact on South Luzon’s property market. The Department of Transportation (DoTr) recently announced that the project has made ‘significant progress’ in its construction. According to the DoTr, the project has reached nearly 15% of its target completion as of May 31, 2024. There is no doubt that the country’s first underground railway system holds a lot of promise for the improvement of mass transportation in Metro Manila and we see the positive impacts spilling over to neighboring regions including CALABA. 

NLEX-SLEX CONNECTOR TO FURTHER EASE CONNECTIVITY
The project is an eight-kilometer expressway that connects C3 Road in Caloocan to PUP Manila and Skyway Stage 3. With a budget of P23.3 billion, the project aims to improve access between Metro Manila and Northern and Southern Luzon provinces and benefit employees and residents in these regions. The remaining section up to Santa Mesa is under construction and is projected to be completed by the end of 2024. 

SOUTH COMMUTER RAILWAY TO BUOY PROPERTY DEMAND IN THE SOUTH
The South Commuter Railway is a 55-kilometer project connecting Metro Manila to Laguna. The project involves three civil contract packages consisting of railway viaduct structures and elevated stations at Alabang and Muntinlupa, San Pedro, Pacita, Biñan, and Santa Rosa, and Cabuyao, Banlic, and Calamba. About 600,000 passengers are expected to be served daily by the railway and will provide less than two hours of end-to-end travel time. According to government and private sector sources, the project is expected to be completed in 2028. 

LRT-1 CAVITE EXTENSION PROJECT TO EXTEND ECONOMIC BENEFITS OUTSIDE METRO MANILA
The LRT-1 Cavite Extension is a 11.7-kilometer railway extension that can accommodate up to 800,000 passengers per day and reduce travel time from Baclaran to Bacoor, Cavite in just 25 minutes.  According to government sources, the first phase of the railway has a progress rate of 98% as of April 2024 and will be completed by the fourth quarter (Q4) of 2024. Phase 1 will span 6.7 kilometers and will connect the existing LRT-1 Baclaran Station to five new stations namely Redemptorist, MIA, Asiaworld, Ninoy Aquino, and Dr. Santos. Meanwhile, Phase 2 of the project includes the construction of Las Piñas and Zapote stations, while the final phase and the last stop of the Cavite Extension is the Niog Station. 

CAVITE-LAGUNA EXPRESSWAY TO EXPEDITE FOSTERING OF INCLUSIVE GROWTH
Cavite-Laguna Expressway (CALAX) is a four-lane expressway connecting CAVITEX and SLEX. The project will start from the CAVITEX in Kawit, Cavite and end at the SLEX-Mamplasan Interchange in Biñan, Laguna. The 3.9-kilometer Silang Interchange segment opened in November 2023. The interchange can cater to 5,000 motorists daily and offers a faster route to Silang town and Tagaytay City. In 2025, CALAX will further expand to a total of 45 kilometers and will connect to the Manila-Cavite Expressway (CAVITEX) in Kawit. 

MANUFACTURING A MAJOR PLANK OF SOUTH LUZON’S ECONOMY
A major driver of the region’s economic growth is its manufacturing sector. In fact, the industrial sector accounted for 50% of the region’s economy in 2023. This indicates that manufacturing is one of the South Luzon region’s major pillars and long-term growth will hinge on this subsegment.

The CALABA region continues to attract major investors that export electronic products and other high-value manufactured items to major Asian and western economies. Japanese firms continue to gravitate towards the south and this has been enticing property firms to expand residential and industrial footprint especially in the CALABA corridor. 

A more dynamic manufacturing sector should be beneficial to the Southern Luzon region as it houses expansive industrial parks. The region continues to attract global manufacturing players due to its skilled manpower.

TAPPING SOUTH LUZON’S MASSIVE UPSIDE POTENTIAL
Colliers believes that the CALABA region’s property market will only continue to expand in the years to come. Hopefully, a cargo rail will also be lined up in the near future as this will further boost the competitiveness and attractiveness of south Luzon’s property market, including its industrial subsegment. 

All these efforts should be complemented by the government’s push to ease business registration processes especially as this is an important step in raising the Philippines’ competitiveness as an industrial hub in Southeast Asia. An improving infrastructure connectivity supported by an aggressive push to decentralize and simplify business registration should be a plus for the south Luzon property market. 

Indeed, there’s a lot of property upside down south (Luzon)!

 

Joey Roi Bondoc is the director and head of Research of Colliers Philippines.

joey.bondoc@colliers.com

Breaking our plastics habit is easier said than done

NAJA BERTOLT JENSEN-UNSPLASH

COULD our unshakeable addiction to plastics be broken?

That’s certainly the hope of activists.

The US — birthplace of the modern polymers industry, and the biggest producer of its key feedstocks, oil and gas — has joined a bloc supporting a worldwide treaty capping plastics production. That could make a United Nations meeting in South Korea in November into a turning point in the material culture of humanity. The harder challenge will be ensuring that an agreement is workable.

Whichever way you look at it, a mountain of waste polymers is likely to be one of the most lasting monuments of the 21st century. We produce some 400 million metric tons of plastics year in, year out. Except for the roughly 9% that’s recycled and 12% that’s incinerated, all of it ends up somewhere in the environment, whether in a landfill or scattered through our streets, soil, and oceans. Do everything feasible to stop that runaway train and we might cut output by about 40% by 2040, according to one influential study. Even such an ambitious scenario would leave more than 10 billion tons of waste by mid-century. How you feel about that depends on how you weigh the contradictory evidence about the costs and benefits of plastics. It’s not enough to point at a large number and worry about it: Each year we manufacture four billion tons of cement, two billion tons of steel, pump 4.5 billion tons of oil from the ground, and release 35 billion tons of carbon dioxide into the atmosphere. Whether you consider that a problem depends on whether you think the waste is damaging (like CO2) or largely harmless, like concrete.

Plastics, furthermore, have real advantages over the alternatives. They’re light, largely inert, and in many cases do less environmental damage than metal and glass (whose carbon footprint tends to be higher) and even paper (whose effluent pollutes fresh water). Packaging, the main bogeyman for consumers, only comprises about 31% of the plastics we consume. The rest is split between a dizzying array of uses, from water pipes to car dashboards, domestic appliances, clothing, and medical devices. Our reflexive dislike of polymers blinds us to the countless ways modern life would be impossible without them.

All that said, with each passing year we see more studies showing how plastics are accumulating in the natural environment and the tissues of humans, animals, and plants. Hard evidence of the harm this causes is scant, but the pathways are well understood — from toxic additives that can be leached out over time, to pollutants absorbed in the environment the way static picks up dust, and then released deep inside the body. Few regret the precautionary approach that previous generations took in the face of early evidence about the harmful effects from tobacco, ozone-depleting chemicals, or greenhouse gases. Given the immense difficulty we will have reining in our polymer habit, a similarly proactive policy makes sense.

What would a global cap on plastics production look like? It’s unlikely to be the most important part of any upcoming treaty. The setting of international standards to eliminate toxic additives like BPA and phthalates (used to make polymers, respectively, more rigid and more flexible) will likely make the biggest difference to human and animal health. Efforts to standardize production processes to ease recycling will have more of an impact on the environment. Support for waste management in fast-growing emerging economies will have the largest bearing on marine pollution. A hard cap, however, could be the sort of difficult-to-achieve target that concentrates minds and unlocks human ingenuity.

Those reductions shouldn’t be impossible to achieve. Most would argue that Japan and South Korea have comparable living standards to the US, but the latter consumes two-and-a-half times as much plastics per capita. If the world as a whole could reduce our usage to roughly the level China sees today and increase reuse toward the rates at which the European Union recycles polymer packaging, we might hold production of new plastics below 500 million tons a year.

That might not sound like much, but it would still be a phenomenal achievement, especially when put against forecasts by the Organisation for Economic Cooperation and Development that we might be heading to more than double those levels.

If you think it’s been hard dethroning fossil fuels’ centrality to our energy system, be prepared for many decades of struggle. Electricity from wind, solar, batteries, and nuclear power provides a compelling alternative to coal, gas, and oil. There are few substitutes waiting in the wings that could repeat that trick with polymers. Plastics are woven through the fabric of modern life quite as intricately as their waste materials are scattered through the natural environment. It won’t be easy to replace them, but the first step is to try.

BLOOMBERG OPINION

Analysts expect better second half for SMIC

SM Investments Corp. (SMIC) is expected to have a better second half as its retail business is projected to benefit from higher consumer spending, the conglomerate said on Monday, citing reports from analysts.

“There was notable recovery in consumer spending in discretionary items such as fashion and home in the second quarter,” Philippine Equity Partners, Inc. Research Analyst Russ Vasilius Toribio was quoted as saying in the press statement e-mailed by SMIC.

During the second quarter, SMIC said that sales in the fashion segment rose by 10.5% year on year, led by back-to-school shopping, while home segment sales grew by 4.6% annually due to warmer weather.

“Moderating inflation increases the purchasing power of consumers, which will drive growth in retail and leisure business,” Mr. Toribio said.

Gilbert Y. Lopez, Macquarie Capital Securities (Philippines) research head, said SMIC’s key businesses “typically have a seasonally stronger second half.”

He added that SMIC’s first-half net profit, which rose by 10% to P40.2 billion, was ahead of the brokerage firm’s forecast but in line with available full-year consensus.

Mr. Lopez noted the sequential improvement in earnings across all of SMIC’s major businesses in retail, banking, and property.

He also mentioned the improvement in retail sales, which reflected consumption recovery. The standout was the health & beauty segment of SM Retail, which grew 16% year on year for both the second quarter and the first half.

SMIC’s retail operations consist of grocery stores, department stores, and specialty retail stores. It also has a presence in the property sector via SM Prime Holdings, Inc., which has interests in malls, residences, offices, hotels, and convention centers, as well as tourism-related property developments.

The conglomerate is also in the banking segment via BDO Unibank, Inc. and China Banking Corp.

On Monday, SMIC shares rose by 0.9% or P8.50 to end at P948.50 apiece. — Revin Mikhael D. Ochave

TransUnion credit scores now accessible on Lista

PRIVATE CREDIT REFERENCE firm TransUnion has partnered with Lista to enable credit scoring on the latter’s financial management app.

The partnership is expected to improve Filipinos’ access to essential consumer credit information, it said in a statement on Monday.

“By leveraging our strengths in information and insights to empower individuals and businesses in decision-making, alongside Lista’s digital finance management platform, we can enhance credit access, improve financial literacy and promote greater financial inclusion in the Philippines,” TransUnion Chief Operating Officer (COO) for Asia-Pacific Amrita Bhattacharya said in the statement.

Under the partnership, Lista users can request credit reports, validate identity documents and settle payments through the app.

Users can receive their credit reports within five minutes of making the request, TransUnion said.

The reports also include insights to improve credit standing, build financial literacy and foster healthy credit habits.

“With credit card ownership growing and more Filipinos looking to borrow or use credit both in the short and long terms, we believe this strategic partnership supports the National Government’s goal of becoming an upper middle-income economy,” Ms. Bhattacharya said.

“At Lista, we are committed to fostering financial literacy by helping Filipinos recognize the importance of fiscal responsibility as early in their financial journeys as possible,” Lista co-founder and COO Khriztina Lim said in the same statement.

“Through our collaboration with TransUnion, we aim to bridge the gap in financial literacy and accessibility to credit information in the Philippines,” she added.

Ms. Lim said they could help Filipinos use the information to build better relationships with their credit and other financial products.

“We believe that everyone should have equal access to financial opportunities, and this partnership will help bring that belief to life,” she added. — Aaron Michael C. Sy

Manila leads in Prime Global Cities Index

The Philippine capital’s luxury residential prices grew by 26% year on year in the second quarter, based on the latest edition of the Prime Global Cities Index by real estate consultancy firm Knight Frank. Manila bested 44 residential markets for the fourth consecutive quarter.

Manila leads in Prime Global Cities Index

D&L Industries completes redemption of P3-B fixed rate bonds

LISTED D&L Industries, Inc. has completed the redemption of its Series A fixed rate bonds worth P3 billion.

“These bonds were issued in 2021 and matured today,” D&L said in a regulatory filing on Monday.

The P3-billion Series A fixed rate is part of D&L’s P5-billion fixed-rate bond offer issued in September 2021 to partly fund the company’s Batangas plant, which started commercial operations in July 2023. The Series A bonds carried a rate of 2.7885%.

The remaining P2-billion Series B is priced at 3.5962% per annum and has a five-year tenor.

For the first half, D&L Industries logged a 6% jump in its net income to P1.32 billion from P1.24 billion last year.

January-to-June sales rose by 17% to P18.98 billion from P16.23 billion last year, with export sales up by 57% year on year.

D&L is engaged in the production of customized food ingredients, specialty raw materials for plastics, and oleochemicals for personal and home care use.

On Monday, D&L shares rose by 1.27% or eight centavos to P6.38 apiece. — Revin Mikhael D. Ochave

Insurers eye guide rates for motorcycle taxis, EVs

PHILIPPINE STAR/EDD GUMBAN

THE NONLIFE insurance industry is looking at setting guide rates for new products that will cover motorcycles and electric vehicles (EV) because companies that cover these sectors are selling at a loss, the Philippine Insurers and Reinsurers Association (PIRA) said.

PIRA Executive Director Michael L. Rellosa told reporters last week that for one, they have very little information about how motorcycle taxis are doing. “So we’re learning as we go. And apparently, some of the early companies who wrote it first, are starting to get losses.”

He also said motorcycles used in ride-hailing apps have coverage already, but companies that cover them have been experiencing losses that continue to rise.

“So, we have to look into how best we can rate it going forward,” he said. “Now, the Insurance Commission is also asking the industry to come up with guide rates, but right now, we’re still in the process of collecting information.”

Latest data from the Insurance Commission showed net premiums from the motor sector rose by 8.42% to P13.82 billion at end-June from a year earlier.

“The information that we need is premiums versus losses, so we can arrive at the technical rate — the rate that covers the risk itself,” Mr. Rellosa said.

He added that insurers need to factor in not just the driver of motor taxis, but also the passengers because motorcycles are more prone to accidents.

Mr. Rellosa said only about five companies have started writing coverages for motorcycle taxis, while others are still looking into it.

“The others are waiting to see how it goes, if it’s going to be a profitable line for them to go into. And the jury’s still out. They need more information to make a decision,” he added.

PIRA has reached out to the Metropolitan Manila Development Authority (MMDA), Land Transportation Franchising and Regulatory Board (LTFRB) and Land Transportation Office (LTO) for data on accidents related to the sector, he said.

“We also wrote to the companies that have initially written that kind of business and they haven’t gotten back to us yet,” he said. “But once we have some semblance of data we can rely on or trust, we can make the correct assumptions and we can extrapolate the rate, pass it through actuarial analysis and all that.

Mr. Rellosa said the industry is also evaluating the rates needed to cover electric and hybrid vehicles.

“We know the cost [of combustion engines] and all that,” he said. “We’re used to that. While for electric vehicles, the battery itself costs 50% of the vehicle. So the valuation is off.”

Aside from rates, the industry is also formulating the proper coverage for EVS. “Again, we cannot use the normal motor policy because it just doesn’t add up. There are different or new kinds of risks that come with the electric and hybrid vehicles,” Mr. Rellosa said.

EVs are also more affected by potholes, road bumps and flooding because most models are built with the battery at the bottom of the car, he added.

“There are so many new issues that are coming with the new types of vehicles. But the industry has to catch up. We’re a little slow,” Mr. Rellosa said.

Total net premiums written by nonlife insurance companies rose by 7.14% to P32.89 billion in the first half from a year earlier, based on data submitted by 52 out of 56 licensed firms. — Aaron Michael C. Sy

Italy seizes €50M worth of counterfeit copies of vintage video games

COMMONS.WIKIMEDIA.ORG
COMMONS.WIKIMEDIA.ORG

MILAN — Italian tax police said on Friday they have seized counterfeit Chinese copies of vintage game consoles and video games from the 1980s and 1990s worth almost €50 million ($55.5 million).

New versions of video games and gaming consoles popular decades ago have recently been re-released in a phenomenon known as “retrogaming.”

The Guardia di Finanza tax and customs police in the northwestern city of Turin said in a statement that they had seized around 12,000 gaming consoles in several provinces across Italy starting from late 2023. The consoles were “all from China,” the police statement said.

The consoles contained more than 47 million pirate copies of old video games, lacked proper EU-mandated health and safety labels and were equipped with non-certified batteries and electrical circuits, police said.

They were sold in shopping malls, online marketplaces, and Italian company websites.

Nine people, all Italian nationals, have been placed under investigation for various crimes connected to fraudulent trading and copyright infringement, while the seized video games were all destroyed. — Reuters

Overseas Filipinos’ Cash Remittances

MONEY SENT HOME by overseas Filipino workers (OFWs) rose to a seven-month high in July, data from the Bangko Sentral ng Pilipinas (BSP) showed. Read the full story.

Overseas Filipinos’ Cash Remittances

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