PSBank posts higher profit

October 30, 2018 | 12:01 am

PHILIPPINE Savings Bank (PSBank) saw its net income grow to P2.03 billion as of September, supported by sustained loan growth and higher fee-based revenues.
In a disclosure published yesterday, the thrift lender said its bottom line rose 8.1% from the P1.878 billion it made during the comparable nine-month period in 2017, driven by the strong growth of its core businesses.
Net interest income went up by 5.6% year-on-year to reach P8.7 billion. This came on the back of an 8.1% increase in the bank’s loan portfolio now worth P153.9 billion.
The Ty-led lender’s deposit base likewise expanded by 7.2% to hit P197.7 billion, according to the regulatory filing to the Philippine Stock Exchange. As a result, PSBank’s total assets amounted to P231.091 billion.
This led to a return on equity ratio of 11.7%, while return on assets stood at 1.2%.
According to the bank’s quarterly report, PSBank booked P677.089 million net profit from July-September, three percent lower than the P698.368 million it made during the same period last year.
Gross revenues hit P4.863 billion in the third quarter, up by 6.1% from the P4.568 billion raked in a year ago. These gains were offset by higher operating expenses worth P4.114 billion, nearly a tenth higher than the P3.757 billion costs incurred previously.
Still, the bank posted a capital adequacy ratio at 13.8%, which is well above the 10% requirement set by the Bangko Sentral ng Pilipinas.
The bank operates 250 branches and over 580 automated teller machines nationwide.
In a statement, PSBank President Jose Vicente L. Alde attributed the robust credit growth to the lender’s push towards innovation, which they said allowed them to “provide excellent customer service” and “maintain growth despite industry challenges.”
The listed lender said they were first to offer a one-day credit decision for property loans to purchase brand-new homes or condominium units from accredited developers.
PSBank is the thrift lending arm of the Metropolitan Bank & Trust Co. Earlier this month, the bank announced its plan to raise roughly P8 billion via a stock rights offering in the first three months of 2019.
Mr. Alde said the fresh capital will be used to “support the projected growth of the bank,” particularly the consumer loans segment.
This follows the plan to offer P10 billion worth of medium-term notes and long-term negotiable certificates of time deposits worth P5.08 billion issued in August.
PSBank shares closed at P78.35 each yesterday, up P7.05 or 9.89% from P71.30 last Friday. — Melissa Luz T. Lopez

PhilRealty 9-month earnings soar despite Q3 drop

October 30, 2018 | 12:01 am

EARNINGS of Philippine Realty & Holdings Corp. (RLT) soared in the first nine months of the year, even as profits slowed during the third quarter.
In a regulatory filing, the property firm said net income attributable to the parent dropped by 78% to P13.83 million in the July to September period, slipping from the P64.63 million posted in the same period a year ago.
Revenues for the quarter also went down by 12.24% to P379.88 million.
Despite the overall drop in the company’s financials for the third quarter, attributable profit for the nine-month period climbed by 1,664% to P45.49 million. The company’s revenues also surged to P1 billion, 55% higher than the P647.37 million recorded in the same period a year ago.
The company attributed the higher real estate sales — which grew by 56% to P895.77 million for the first three quarters — to its luxury residential properties in Metro Manila, namely SkyVillas and SkyLine Towers in Quezon City and the Icon Plaza in Bonifacio Global City.
“The increase in sales in 2018 is due to the aggressive sales and market efforts of the parent company,” RLT said in a filing.
Rental income also expanded by 220%, rising to P68.1 million during the nine-month period, due to additional leasing agreements entered into by the company.
“We are very hopeful that the awareness and the momentum generated by our sales group will spill over to the fourth quarter,” RLT Chief Financial Officer and Treasurer Edmundo C. Medrano said in a statement.
With the positive reception for its products, RLT said it is preparing new projects in the pipeline.
“We are happy with how our basic products are selling at this point. However, we are bound to surprise the market with the exciting projects that we will be doing in the next few months and years,” RLT President and Chief Executive Officer Alfredo S. del Rosario, Jr. said in a statement.
Shares in RLT rose by 4.88% or two centavos to close at 43 centavos each at the stock exchange on Monday. — Arra B. Francia

How PSEi member stocks performed — October 29, 2018

October 30, 2018 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Monday, October 29, 2018.

Philippine Stock Exchange’s most active stocks by value turnover — October 29, 2018

Which regions saw the biggest growth in labor productivity?

October 30, 2018 | 12:00 am

PHL, China to sign at least five agreements during Xi Jinping’s visit

October 29, 2018 | 10:14 pm

DAVAO CITY — The Philippines’ economic managers met on Monday with a delegation from top trading partner China, led by State Councilor and Foreign Minister Wang Yi, to prepare the groundwork for at least five deals that are expected to be signed during President Xi Jinping’s November visit.
“We would like to take this opportunity to discuss the status of the cooperation agreements and documents to be executed during the visit of President Xi Jinping,” Finance Secretary Carlos Dominguez III, who led the Philippine party, said in his opening statement prior to the closed-door meeting held at the Marco Polo Hotel in Davao City.
In a statement after the meeting, Mr. Dominguez described it as a “productive dialogue” that focused on the status of agreements, particularly those relating to Chinese funding support for the administration’s Build, Build, Build program.
Mr. Dominguez said the agreements planned for signing are all “on track.”
Several members of President Rodrigo R. Duterte’s Cabinet were present, including Budget and Management Secretary Benjamin E. Diokno, Transportation Secretary Arthur P. Tugade, Public Works and Highways Secretary Mark A. Villar, Bases Conversion and Development Authority President and Chief Executive Officer Vivencio B. Dizon, and Assistant Secretary Roderick M. Planta on behalf of Socioeconomic Planning Secretary Ernesto M. Pernia. Ambassador to China Jose Santiago L. Sta. Romana was also present.
“Both our governments expressed full commitment to our shared goals of implementing the important consensus reached between our leaders, as well as bringing our bilateral relations to a higher level through enhanced cooperation in the areas of infrastructure, trade, investment and people-to-people exchanges,” Mr. Dominguez said, referring to the high-level bilateral meetings held in Beijing in August.
“We greatly appreciate the Chinese Government’s assistance in translating this into concrete actions,” he added.
Mr. Dominguez said an Exchange of Notes is also being drafted for financial assistance through the China International Development Cooperation Agency (CIDCA).
During the August meeting, Mr. Pernia presented several projects for CIDCA financing, including future phases of the Mindanao Railway Project; Ipo Dam No. 3 in Norzagaray, Bulacan; the Port Irene Development-Navigational Channel in Cagayan; the Cabadbaran Small Reservoir Irrigation Project in Agusan del Norte; the River Basin and Watershed Management Project in Camarines Sur; the Luzon-Samar (Matnog-Allen) Bridge; the Dinagat-Leyte-Surigao Link Bridge; the Camarines Sur-Catanduanes Friendship Bridge; development of the Luzon Eastern Seaboard; the Bohol-Leyte Link Bridge; the Cebu-Bohol Link Bridge and the Negros-Cebu Link Bridge.
Mr. Wang, for his part, said “economic cooperation” is an integral part of bilateral relations.
Improving economic cooperation, he said, is important in “realizing the long-term stable friendship between our two countries.”
Wang cited the significant growth of two-way trade between the two countries as well as the rise of Chinese investment in the Philippines, which, he said increased “by more than 500%” in the first six months of 2018.
Data from the Philippine Statistics Authority show China at the top spot among the country’s trading partners in the first half of 2018, with $14.08 billion , accounting for 16.6% of the period’s total trade.
This excludes Hong Kong, considered a Special Administrative Region of China, which ranked 5^th with a trade value of $6.29 billion.
Mr. Dominguez said “China, including Taiwan, Hong Kong and Macau, is now the Philippines’ biggest trading partner with total trade amounting to $44.8 billion in 2017 and $33.5 billion from January to August this year.”
Meanwhile, three bilateral documents were signed after Monday’s meeting. These are: the Exchange of Letters for the Feasibility Study of the Davao River Bridge (Bucana) Project; the 50 million yuan grant for the Supply of Law Enforcement-Related Materials/ Equipment to the Philippines; and a $1 million grant for the victims of typhoon Vinta (international name: Tembin) in 2017. — Marifi S. Jara

Palace backs Dominguez but he is ‘driving his own TRAIN’

October 29, 2018 | 10:13 pm

PRESIDENT Rodrigo R. Duterte on Sunday reiterated his support for Finance Secretary Carlos G. Dominguez III, while also suggesting that Mr. Dominguez was ultimately responsible for the effects of the Tax Reform for Acceleration and Inclusion (TRAIN) Law.
“I pray that we will improve our situation with Sonny Dominguez there driving his own train,” Mr. Duterte said in a televised speech during the birthday and thanksgiving party of former foreign affairs secretary Alan Peter S. Cayetano in Davao City on Sunday night.
He added that many are “crying” about the tax reform law but that he stood by Mr. Dominguez, a friend from childhood.
“(A)ng train mo [Mr. Dominguez], maraming umiiyak,” Mr. Duterte said. “I believe in you. (I have said that) I stand by him, I have known him since childhood, he is a very good friend and he can do wonders for the country.”
In a speech last week, Mr. Duterte noted that rising world oil prices are mainly the reason for high inflation.
“We do not have the buffer (for oil price volatility). We do not have a reserve that we can (tap). We do not have that luxury. And that is why inflation is very high,” Mr. Duterte said.
The President said the main factor driving world oil prices is the attempt by the United States to isolate Iran economically and diplomatically.
“You can crucify me if you want. Behead me if you want in public. I cannot do anything about the oil. And it’s getting worse because Iran is about again to make a surprise move simply because [United States President Donald J.] Trump does not like Iran,” he said.
He suggested that it is not the Philippines’ fight but it is nevertheless feeling the impact — “Damay tayo.”
He expressed the hope that an oil exploration agreement with an Israeli company bears fruit “even beyond my term” noting that a successful discovery would give Filipinos “a break.”
In a statement on Sunday, Presidential Spokesperson Salvador S. Panelo said: “For the time being, the government has decisively acted to tame inflation. Our people are beginning to feel the effects with the price of rice starting to go down, and just yesterday, the Suggested Retail Price (SRP) program and prescribed labelling for milled rice have been launched by the Department of Agriculture and the Department of Trade and Industry to protect consumers from profiteers.” — Arjay L. Balinbin

ALU-TUCP says NCR wage positions far apart

October 29, 2018 | 10:13 pm

THE leading mainstream labor organization said negotiating positions on the minimum wage increase in Metro Manila remain far apart ahead of the wage board’s upcoming decision for the region.
In a phone interview with BusinessWorld, Associated Labor Unions — Trade Union Congress of the Philippines (ALU-TUCP) Spokesperson Alan A. Tanjusay said that the biggest labor coalition in the country is skeptical that the Regional Tripartite Wages and Productivity Board for the National Capital Region (RTWPB-NCR) will grant a wage adjustment that will satisfy workers.
ALU-TUCP sought a wage hike of P334, based on its estimate of a living wage for a worker in the region beyond the current pay scale of P512 a day.
Mr. Tanjusay added that ALU-TUCP upgraded its initial counter-offer of P80, as reported earlier this month, to P100 when the NCR wage board had a private meeting on Friday after a public hearing. He described the new P100 offer as “take it or leave it.”
“Anything less than P100, the ALU-TUCP will boycott the proceedings.”
Employers Confederation of the Philippines (ECoP) Acting President Sergio R. Ortiz-Luis, Jr. said that his organization will honor any “reasonable” outcome of the wage decision.
“We will respect and comply with their decision given that they make a reasonable one,” he said in a phone interview with BusinessWorld.
ECoP was present during the management consultation and public hearing held by the NCR wage board last week. The employers have been warning that an excessive increase in the minimum wage will have adverse effects not only on business but also employment.
Last week, ECoP Governor Antonio H. Abad, Jr. called on the wage board during its meeting with management to not use inflation as the only basis for raising wages because inflation fluctuates while wages are not subject to reduction.
Mr. Ortiz-Luis said he expects the RTWPB-NCR to make a rational decision.
“I believe the board won’t decide on political and emotional driven motives,” he said.
On Sunday, Presidential Spokesperson Salvador S. Panelo said that he also believes the NCR wage board will make a reasonable decision.
Mr. Tanjusay noted that Mr. Panelo failed to spell out what he considers reasonable.
“Mr. Panelo did not define, did not qualify what an acceptable wage order is,” the ALU-TUCP spokesperson said.
“We know that the Board is dominated by government and the employers and they always connive to outvote the labor representatives and members of the board to (arrive at) a meager wage increase. It is in the interest of businesses to keep wages to the barest minimum regardless of workers’ worsening condition,” Mr. Tanjusay said in a message to BusinessWorld on Monday. — Gillian M. Cortez

Senator, citing polls, casts doubt on TRABAHO bill passing by end-2018

October 29, 2018 | 10:12 pm

A SENATOR said the second phase of tax reform, known as the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) bill may face obstacles that will hinder its approval before the end of the year because of the upcoming elections.
“I’m not so optimistic that it will be approved within the year,” Senator Sherwin T. Gatchalian said in an interview in Manila City when asked if the Senate can pass the bill within the year, in time for its provisions to take effect in 2019.
“Next year is election year, [which makes things] even worse. It’s hard to pass tax reform in an election year, especially when there is a risk of job losses,” added Mr. Gatchalian, who chairs the Senate’s Economic Affairs Committee.
Half of the Senate is subject to re-election to another six-year term.
The Senate suspended its review of the bill due to the lack of information on potential job losses.
Business groups have cautioned that the bill’s proposal to remove some investment incentives will lead to downsizing.
The bill sets aside P45 billion for a five-year structural adjustment fund that will be distributed as cash grants and will fund training for displaced workers of affected firms and industries.
“The ball is in the court of (the labor and finance departments). We’re giving them a reasonable amount of time to submit the required paperwork. It is important to have a simulation of potential job losses because (job losses are) not the intention of the bill. Just look at the name of the bill,” he added.
Mr. Gatchalian is hoping for the jobs report to be made available to the Senate once it convenes on Nov. 12.
The TRABAHO bill seeks to reduce the corporate income tax rate gradually from 30% currently to 20% by 2029 while repealing redundant incentives and limiting their enjoyment to a maximum of five years to industries identified in the Strategic Investments Priority Plan.
The House of Representatives approved the TRABAHO bill, or House Bill No. 8083, on final reading in September, while the Senate has yet to come up with a committee report. — Janina C. Lim

Hog farmers oppose pork free trade deal with US

October 29, 2018 | 10:10 pm

THE National Federation of Hog Farmers Inc. (NFHFI) said it opposes free trade in pork products between the Philippines and the US after the US hog industry expressed interest in expanding its footprint in the Philippines.
“We must reject this proposed US-Philippine free trade agreement (FTA) on pork products,” NFHFI chairman and president Chester Warren Y. Tan said in a text message, when asked for his response to a statement from the US National Pork Producers Council (NPPC) that the US government should initiate an FTA with the Philippines.
“Truly, it is a most competitive US export product but at the expense of domestic producers in this case. The domestic hog industry has millions of hog producers and allied industries depend (on it) for their livelihoods,” Mr. Tan added.
According to Mr. Tan, the Philippines has to protect its interests.
“We have long demanded an increase in the tariffs on pork that was conceded during the rice QR (quantitative restriction) negotiations with the WTO (World Trade Organization),” according to Mr. Tan.
“The tariff is the last line of defense of the local agriculture industry against the highly-subsidized agriculture products of other countries, especially the US,” Mr. Tan said.
Earlier, the NPPC said that US shipped nearly $100 million worth of pork to the Philippines in 2017, with the potential to grow in the event of an FTA, which would remove tariff and non-tariff barriers to trade.
“The Philippines is a large pork-consuming nation, with a fast-growing population and a burgeoning middle class. It also has some of the highest food prices of any Southeast Asian nation and would benefit from a free trade agreement,” NPPC president Jim Heimerl said.
“Pork is one of the most competitive US export products,” according to Mr. Heimerl.
Agriculture Secretary Emmanuel F. Piñol declined to comment on an FTA other than to say that he will leave the Philippine negotiating position to the Department of Trade and Industry (DTI). — Reicelene Joy N. Ignacio

WB notes ‘well-developed’ PHL safety nets but finds inefficiencies in execution

October 29, 2018 | 10:07 pm

THE WORLD BANK (WB) said that the Philippines’ social protection measures are “well-developed” with increased coverage for the marginalized, but noted gaps in inter-government coordination.
“The Philippines has achieved relatively good coverage of the poor and extreme poor in its social welfare schemes,” the World Bank said in its Social Protection Review and Assessment report for the Philippines.
The bank has identified over 60 social protection programs mostly relating to social assistance, social insurance, and labor market interventions.
“Institutionally, the SP sector seems to be well-developed and has a clear framework of laws and regulations with different actors with well-defined roles and controls in place to ensure good governance,” it said, while noting that the country has “achieved relatively good coverage of the poor and extreme poor.”
It also said that the Philippines’ social protection programs are “flexible,” and can respond to emergencies, shocks, and other crises.
However, it said that there are some inefficiencies in the government as some functions relating to social protection are redundant due to the lack of coordination.
“The review also shows that the Philippines suffers from a weak level of coherence of SP (social protection) programs, which results in fragmented and overlapping or duplication of programs. While some programs exhibit internal coherence (i.e. complementarity of policies and programs, and delivery mechanisms within a national agency), most existing SP programs are not aligned to an all-embracing SP system that establishes institutional arrangements that promote coordination across institutions,” the World Bank said.
It also noted that while there are notable projects that cover a significant number of people, some need to have “clear and robust” implementation rules and regulations.
“There are still many programs with overlapping mandates and target populations, and a lot of gaps in their monitoring systems. Having an integrated social protection information system would allow policy makers to better monitor inputs, outputs and outcomes (e.g. who are beneficiaries, what are they receiving, at what frequency, what are the existing gaps, etc). The development of an integrated information system would be critical for the country going forward,” it added.
The Department of Budget and Management (DBM) said separately in a statement that it has allotted P2.3 billion of the Department of Social Welfare and Development’s P136.8 billion budget for 2019 to the Sustainable Livelihood Program (SLP).
The programs involve workshops on micro-enterprise development, access to credit, technical-vocational training, pre-employment assistance services, and other support services.
“This is open to every poor and disadvantaged Filipino family, including Listahanan-identified households,” Budget Secretary Benjamin E. Diokno was quoted as saying.
“The government stands firm in its belief that promoting the right conditions for human capital development in the country is a key factor in sustaining socioeconomic stability,” he added.
The government aims to cut poverty incidence to 14% in 2022 from 21.6% in 2015. Its Ambisyon Natin 2040 goal also aims to be an upper-middle income country with zero poverty. — Elijah Joseph C. Tubayan

Continued perks backed for renewables, exploration

October 29, 2018 | 10:06 pm

SENATOR Sherwin T. Gatchalian on Monday said he will seek the retention of incentives provided to the renewable energy and oil exploration industry, amid proposals to withdraw them under the second package of the tax reform program.
He said incentives will help the country achieve energy security and self-sufficiency.
“What industry proponents wants is status quo… incentives given to oil and gas as well as renewable energy… are very important for our energy security,” he told reporters in a mix of English and Filipino after the legislative hearing on energy security and self-sufficiency.
“I will fight for it because this is important for the future of our country… We would be pitiful as a country if we continue to import. We have a big potential for renewable energy as well as oil and gas in our country,” he added.
The second package of the tax reform eliminates the fiscal incentives provided under Presidential Decree 87 for the oil exploration industry and Republic Act No. 9513 or the Renewable Energy Law of 2008.
Mr. Gatchalian said the keeping the incentives would allow more private investors to venture into oil exploration and to build facilities for renewable energy resources. This, in effect, would lower the country’s dependence on imported energy sources.
According to the Department of Energy (DoE), the Philippines imports more than 90% of its petroleum products, primarily from the Middle East and Malaysia but also processed items from Thailand, Singapore, Taiwan and South Korea.
During the Senate hearing, stakeholders pointed to unstable policies in the power industry that hindered the country from achieving energy self-sufficiency and security.
Petroleum Association of the Philippines (PAP) Vice-President Ed Cutiongco urged Congress to ensure that the perks in Presidential Decree 87 are “as stable as possible” to attract more companies to the oil exploration industry.
“We are confident that renewed exploration and development incentives and programs of the government (will bring) in more capital (and ultimately) we can reduce energy dependency by a substantial amount if we get good support and incentives from government,” he said.
Aside from incentives, Developers for Renewable Energy for Advancement, Inc. (DREAM) President Jose M. Layug, Jr. cited the bureaucratic process of obtaining permits to operate in the power industry as well as the lack of uniformity in the policies of energy agencies.
“When you talk about uniform regulation, uniform competitive selection process rules. All the investors have been asking because DoE has its own set of rules, ERC (Energy Regulatory Commission) has its own set of rules, NEA (National Electrification Administration) and of course the Senate has its own bill. There’s no uniformity,” he said.
Department of Finance (DoF) Fiscal Policy and Planning Director IV Elsa P. Agustin said, “The Department of Finance is of the opinion that it doesn’t want anymore the grant of piecemeal incentives. It would like to place all incentives in just one law and (leave) the Department of Trade and Industry and the Board of Investment to pick the winners based on performance…. The game now is with the Senate.” — Camille A. Aguinaldo

Malacañang orders abolition of Philippine Sugar Corp.

October 29, 2018 | 10:06 pm

MALACAÑANG has ordered the abolition of the Philippine Sugar Corp. (PhilSuCor) because “it no longer performs the objectives and purposes for which it was originally created.”
Executive Secretary Salvador C. Medialdea, on behalf of President Rodrigo R. Duterte, signed the Memorandum Order (MO) No. 30 on Oct. 25, authorizing the abolition of the PhilSuCor.
The Palace noted in the memorandum that the Governance Commission for GOCCs (GCG) “has recommended the abolition of the PhilSuCor.”
The functions and purposes of the company, according to the GCG, “duplicate or unnecessarily overlap with the functions, programs, activities or projects of the Sugar Regulatory Administration (SRA) and government financial institutions.”
It also said that the PhilSuCor “is no longer effectively performing the objectives and purposes for which it was originally created.”
The SRA is authorized by Republic Act (RA) No. 10659, also known as the Sugarcane Industry Development Act of 2015, to extend financial assistance through socialized credit to sugar cane stakeholders.
The memorandum noted as well that much of the financing needs of sugar mills at present “are already being provided by banking and financial institutions in addition to the lending facilities offered by the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LANDBANK).”
To implement this order, the GCG will be assisted by a Technical Working Group composed of representatives from Department of Agriculture (DA), Department of Finance (DoF), Department of Budget and Management (DBM), SRA, and Privatization and Management Office (PMO).
The PhilSuCor, according to its Web site, was established on Nov. 14, 1983 by virtue of Presidential Decree No. 1890.
“Its creation was brought about by the need to support the sugar industry at that time, it being one of the biggest and most reliable sources of foreign exchange earnings of the country. During that time, many of the obligations of the sugar mills, refineries and other sugar facilities acquired after the war at heavy financing cost to rehabilitate the damaged sugar industry remain unpaid and in arrears; it created an onerous burden, not only to their owners, but to the local financing institutions as well. PhilSuCor was thus, created, specially charged and empowered to design and implement a program for sugar mills, refineries and other sugar facilities,” according to the company’s profile. — Arjay L. Balinbin