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Bank stress tests ordered

BANKS must conduct regular stress tests to monitor liquidity positions for a variety of funding crunch scenarios, as the central bank tightens its watch on liquidity-related risks.

The Bangko Sentral ng Pilipinas (BSP) has required a minimum five-day stress period for banks and quasi-banks in monitoring liquidity positions under Circular 981 signed on Nov. 3.

“Stress tests should enable a bank/quasi-bank (QB) to assess its ability to generate sufficient liquidity from the asset side, liability side, and contingent items of the balance sheet to meet funding needs under adverse conditions and to ensure that exposures remain in accordance with the bank’s/QB’s liquidity risk tolerance,” the issuance read.

These standards update guidelines issued back in 2006, with the central bank citing the need to upgrade standards to ensure “smooth” operations among banks and quasi-banks during period of normal times and stress scenarios.

The new rules on liquidity risk management ensure that financial firms can maintain enough money supply to meet “both expected and unexpected cash flows and collateral needs” for its day-to-day operations, without placing their financial footing in peril.

“Fund management practices shall ensure that liquidity is not consistently maintained at a high costs, from concentrated sources, or through undue reliance on funding sources that may not be available in times of financial stress or adverse changes in market conditions,” the BSP circular read.

The central bank requires banks to conduct stress tests on a regular basis “for a variety of short-term and protracted stress scenarios” in order to point out potential sources of strain which could affect a firm’s funding profile.

In particular, banks need to craft stress tests assuming institution-specific and market-wide crisis scenarios, as well as a combination of both. This rule extends to thrift, rural and cooperative banks, including acute deposit runs and increasing requests from customers to redeem time deposits ahead of maturity date.

Firms must assume at least five business days as the minimum stress period for a bank-specific crisis period, while a one-month duration should be assumed for a market-wide assumption, the BSP said.

However, lenders can choose to impose a longer minimum stress period depending on their risk profiles.

The stress tests must likewise cover exposures in all currencies, as well as for individual currencies where a bank has “significant” positions.

Liquidity-related risks must be a board-level concern, citing the need to establish internal protocols for monitoring, measurement, and control.

The tighter standards will kick in by September 2018, allowing room for banks to adjust to the new standards. — Melissa Luz T. Lopez

How PSEi member stocks performed — November 10, 2017

Here’s a quick glance at how PSEi stocks fared on Friday, November 10, 2017.

Financial inclusion in the age of digital disruption

A study conducted by the Bangko Sentral ng Pilipinas (BSP) showed that only two out of 10 households have bank accounts and, with an economy that has been growing 6% to 7% in recent years, this shows a disparity between consumption spending and actually saving for the future. Given this situation, confronting the challenge of inclusive growth requires a discussion on financial inclusion. If the flow of capital from financial institutions to important industries has contributed to the country’s economic growth, how then can those on the fringes of the society be included in this growth?

Some schools of thought consider the ‘brick and mortar’ approach to financial inclusion as passé. However, in a country dominated by cash transactions and with a number of technological glitches among big banks in recent months, physical access to financial institutions remains relevant. People still prefer face-to-face interaction with bank personnel — an interaction that creates a sense of assurance that their money is safe with the bank.

It is encouraging to see that the BSP, as regulator, has been putting enablers in place such as circulars on the establishment of other banking offices (OBOs), micro banking offices (MBOs) and the easing of bank branch rules in strategic locations in order to address physical accessibility. In fact, BSP data show that 1,052 cities and municipalities have a banking presence. Other financial service access points (such as microfinance entities, cooperatives, remittance agents, and pawnshops) have also significantly covered other areas that are unserved or underserved by banks.

Hindrances to access include geographical distance and documentary requirements for opening accounts and applying for loans. This is clearly illustrated in areas where there are banks and yet, borrowers prefer informal money lenders. Solutions do not simply lie in easing requirements (which is an important Know-Your-Customer control as espoused by the regulators), but in complementing physical presence with a virtual one. Traditional access points must not be completely replaced by technological solutions, but upgraded instead by technology.

Industries perceive emerging technological solutions as disruptive and, therefore, a threat to their existing businesses. This is particularly the case for technologies that ride on the platform of peer-to-peer (P2P) connectivity. What started with P2P file transfers are now full-blown P2P service business models that connect people to services directly, bypassing traditional platforms. This model has encroached on industries such as hospitality, transportation, media, retail consumer goods, and even lending.

In the area of financial inclusion especially in the countryside, technological platform solutions have been on the rise where crowd funding mechanisms have placed the farmers closer to retail investors. An industry that, for the longest time, has been seen as a high-risk market by the financial sector, has been made viable by technology. Rather than being seen as a threat, the banking industry (as well as the whole financial institution apparatus) must take this as a challenge. It is encouraging to see the increase in institutions using technological enablers in their operations, such as mobile and internet banking. It is just a matter of improving services, security and ensuring operability amidst system interruptions. The Internet of Things has been the buzzword for this fourth industrial revolution, and the banking and financial sectors need to take this into account.

While the use of online payment systems is growing, particularly among the younger demographic, majority still prefer cash transactions. This is primarily evident when dealing with micro, small, and medium enterprises (MSMEs), which comprise almost 90% of registered businesses in the Philippines as well as with overseas Filipinos workers and their dependents.

In 2016, total remittances hit a record $26.9 billion. Remitted through financial access points, what started as cash in their country of origin was converted to virtual “money” and then converted back to cash upon reaching the country of destination. Only a small portion of the virtual money, if any, is used for online transactions. There are key opportunities that can be gleaned from this situation. First, an ecosystem may be created where virtual cash is used for purchases, payments or remain in deposit accounts as savings. Second, more cash conversion access points such as ATMs or point-of-sale (PoS) terminals may be created. These solutions, while not entirely new, can create fee-based income opportunities.

About a decade ago, there were pioneering moves to integrate mobile banking platforms with microfinance operations in the country. Its main vision was to create an ecosystem at the barangay level where loan proceeds were disbursed via mobile wallet and could be spent using online payment systems of merchants. It envisioned a system where mobile money revolves around individuals in an entrepreneurship ecosystem where it does not need to be converted to cash — as converting mobile money to cash entails cost. While the business model has not yet materialized, the idea of a seamless, cashless ecosystem was beyond its years. At the time, apps and cloud computing were not as mainstream as they are today and short message system syntaxes were the way to operate — what one-click/tap access is for apps now were long lines of SMS commands sent to dedicated 4-digit numbers before.

Creating an ecosystem — where cash and online transactions intermingle — is an ideal environment for financial institutions. Financial service access points can be a rich source of data which can be used for decision making and strategy formulation. However, data alone will not amount to anything if it is not analyzed and presented well. Therefore, data analytics has emerged as one of the most, if not the most, important skills that an institution must develop. Advanced analytical models can be used to strategize and scale the presence of banks in certain locations (e.g., full-blown branch, MBO, OBO, or just ATM/PoS terminals). It can even be used to create predictive algorithms to assess credit viability among individuals or SMEs — which in turn can be used for risk-based pricing. The prospects for this latent tool are enormous and it has seen increased usage in various industries, most notably, in surge pricing among transport network vehicle services (TNVS).

The two-pronged strategy of physical accessibility and technological enablement can provide financial institutions with the tools to make banking more reachable to the unbanked/under-banked sector. However, it should also be noted that digital may not always be the best solution; in some cases, a refreshed, innovative, and pragmatic way of thinking can propound traditional solutions to new and emerging problems.

For example, in far-flung communities, the simple act of owning an ATM card (which is sometimes repurposed to double as an identification card) can be a source of fulfillment. Support mechanisms must be in place so that usage is ensured for that ATM card, such as appropriate infrastructure (accessible ATMs), deposit-taking mechanisms, and most importantly, financial education. Financial education, if implemented well, can empower individuals to accumulate useful lump sums — which can be used for personal development and education, business, and asset acquisition.

What sets apart doing business in the 21st century is that disruption is the new norm. Traditional business models are constantly being challenged. Innovation has been fast-paced and ideas can easily be converted into marketable products and services, with an unprecedented time-to-market. The key takeaway is not to go against the new wave, but ride it.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

Christian G. Lauron is a Partner and Ruben D. Simon, Jr. is a Manager of SGV & Co.

Trump warned on Duterte fist salute in Manila

When US President Donald Trump and other world leaders meet in the Philippines from Sunday, Nov. 12, copying their controversial host’s signature fist salute could land them in hot water.

Philippine President Rodrigo Duterte has adopted a clenched fist, often stuck out in front of his chest or sometimes at eye level, as his trademark gesture.

Duterte often seeks to have visitors pose for photos with him doing the salute, with Chinese internet tycoon Jack Ma and Hollywood actor Steven Seagal among those pictured doing so.

But critics warn the gesture has come to represent the brutalities of Duterte’s drug war, which has claimed thousands of lives.

They also say it has uncomfortable similarities with Nazi leader Adolf Hitler’s salute.

“Foreign leaders should recognise that the fist… symbolises a purposeful attack by Duterte on rule of law that has inflicted a human rights calamity on thousands of Filipinos,” Phelim Kine, Human Rights Watch deputy Asia director, told AFP.

“(They) should deny the architect of this human rights calamity the international recognition he undeservedly craves.”

Australia’s spy chief, Nick Warner, was criticized when he returned home from Manila in August to find the Philippine government had released photos of him clenching his fist with Duterte.

“Completely inappropriate photo for the head of one our most important intelligent (sic) services to be in,” federal opposition member of parliament Anthony Byrne said in a Twitter post.

With the photos becoming a major news item in Australia, Foreign Minister Julie Bishop was forced to publicly defend Warner. Bishop had previously criticised the drug war.

Trump and Duterte are expected to hold a one-on-one meeting in Manila on Monday on the sidelines of a 20-nation summit of Asia-Pacific leaders.

Eyes will be on whether Trump does the fist pump, having told Duterte in April he was doing a “great job” in his drug war.

Arriving back in Manila early Sunday, Duterte seemed confident he had Trump’s backing for his deadly war on drugs.

“He said something about: ‘You know, you handle it very well’,” he told reporters.

Duterte might also expect support from Japanese Prime Minister Shinzo Abe, who struck the pose when the pair met in Tokyo last year.

A photo posted by Duterte’s aide on Facebook showed the two men smiling along with their officials, who also raised their fists against the backdrop of Japanese and Philippine flags.

Abe, whom Duterte has called a “true friend”, has not criticized the drug war. — AFP

IN PHOTOS: Leaders arrive in Manila for the 2017 ASEAN Summit

LEADERS from 19 countries, plus the heads of the United Nations and European Union, arrive in Manila for the 31st Association of South East Asian Nations (ASEAN) Summit.

‘Ban Trump’

A protester shouts slogans during a protest against U.S. President Donald Trump’s visit at the Philippine International Convention Center, venue of the upcoming 31st Association of Southeast Asian Nations (ASEAN) Summit in Manila on November 11, 2017. — REUTERS

Front lines

Philippine riot-policewomen stand guard during a protest against US President Donald Trump ahead of the 31st Association of Southeast Asian Nations (ASEAN) Summit in Manila on November 11, 2017. / AFP

Misspelled

Pedestrians walk past a welcome signage for the 31st ASEAN Summit in this photo taken at the corner of UN Avenue and Taft in Manila on Nov. 10 ,2017. — MIGUEL DE GUZMAN/PHILIPPINE STAR

Duterte tells Putin PHL wants to buy weapons from Russia

Rosemarie A. Zamora

President Rodrigo R. Duterte on Friday, Nov. 10, had a bilateral meeting with Russian President Vladimir Putin at the sidelines of the 25th Asia-Pacific Economic Cooperation (APEC) in Da Nang, Vietnam.

During the bilateral meeting, Mr. Duterte expressed his gratitude to Mr. Putin for its donation of military equipment to the Philippines.

“And I would like to convey to you the gratitude of the Filipino people for your timely assistance, especially the trucks and the arms that you sent because we have to replenish — the supplies were getting low,” he said.

On Oct. 25, the Russian government has turned over 5,000 Kalashnikov rifles, 20 units of military trucks, one million units of 1943-cartridges with steel core bullets, and 5,000 units of steel to the Philippines.

Mr. Duterte also said that he intended to buy arms from the United States but because of the “almost equal power of the US Congress and the President, it is always stymied by the legislators.”

“So the 23,000 that I ordered was scrapped and your timely assistance to my country helped us replenish the old arms and the spent bores that were fired repeatedly and we have a new stock,” he said.

“So, the new arms that I got from you, Sir, were given to the special units of the Armed Forces of the Philippines. In a way, you helped us turn the tide and to shorten the war there because of your assistance,” he added.

He also said that he wants to build a strong armed forces and a strong police during his term, and to be able to do so, he would buy arms from Russia, as the military said that the arms donated were accurate and were able to help neutralize snipers of the ISIS-inspired Maute Group.

In October, the governments of the Republic of the Philippines and the Russian Federation signed two agreements on the sidelines of the 4th Association of Southeast Asian Nation (ASEAN) Defense Ministers Meeting-Plus, including the Agreement for Military-Technical Cooperation between the two countries, which contained provisions on various areas of military and technical cooperation.

Another agreement signed was a contract for the Philippines’ procurement of defense articles from Rosoboronexport, a Russian state-owned company

Mr. Putin, meanwhile, has lauded Mr. Duterte for the latter’ actions to quell the rebellion in Marawi.

“I do remember how you had to cut short your visit to Russia due to terrorist attack in your country,” he told Mr. Duterte.

“Now, I do remember your final words. You told me while you were leaving Russia, you told me that you had to go back and install law and order to attack terrorists that’s why I’d like to say that you managed to do just that,” he added.

On Oct. 17, Mr. Duterte declared Marawi City liberated from terrorists after 154 days of fighting, which killed more than 1,000 people and displaced nearly 400,000 residents.

FDI, trade, factory data pull Q3 GDP growth in opposite directions

By Elijah Joseph C. Tubayan, Reporter, Jochebed B. Gonzales, Senior Researcher, and Minde Nyl R. dela Cruz

THE GOVERNMENT on Friday released foreign investment, trade and manufacturing data showing third-quarter gross domestic product (GDP) growth, which will be reported on Nov. 16, could go either way compared to the preceding two quarters.

GDP grew by 6.4% and 6.5% in the first and second quarters, respectively, resulting in a 6.45% first-semester average that compares to the government’s 6.5-7.5% full-year target for 2017.

Moody’s Analytics on Friday gave a 6.6% estimate for third-quarter GDP growth, saying in a note that “[d]omestic demand likely remained firm, as consumers benefited from steady inflows of overseas worker remittances and a healthy job market and investment stayed firm on the back of government-led infrastructure projects”.

FDI
The Bangko Sentral ng Pilipinas (BSP) on Friday reported that net foreign direct investment (FDI) inflow was biggest in 16 months at $1.203 billion, 70% more than the year-ago $708 million and nearly four times July’s $307 million.

It was the largest net inflow since April 2016’s record-high $2.244 billion.

“This reflected continued favorable investor sentiment in the Philippine economy on the back of the country’s strong macroeconomic fundamentals,” the central bank said in a statement.

A surge in net equity other than reinvestment of earnings to $611 million in August from just $8 million a year ago offset a 15.7% drop in lending by foreign firms to their local affiliates to $533 million and a 12.8% fall in reinvested earnings to $59 million.

“The bulk of equity capital placements during the month originated from the United States, Singapore, the Netherlands, Hong Kong and Japan,” the BSP said in a statement, noting these funds went “mainly to manufacturing; real estate; wholesale and retail trade; transportation and storage; and electricity, gas, steam and air conditioning supply activities”.

Angelo B. Taningco, economist at Security Bank Corp., said that the surge in foreign funds was due to the current administration’s efforts to ramp up spending, especially on public infrastructure, and a stable monetary policy stance.

“I think foreign investors continue to have a positive outlook on the Philippines in light of the government’s fiscal stimulus efforts and accommodative monetary policy measures, enabling them to actively invest for the long-term,” Mr. Taningco said in an e-mail.

Mr. Taningco said that he expects net FDI inflows to continue to grow for the remaining months of this year, and even surpass 2016’s $7.93 billion total.

“My outlook for FDI — to continue its upward trajectory for the remaining months of the year — stems from my view that foreign investor sentiment will turn more positive on the back of improving prospects for pickup in infrastructure spending, passage of first tax reform package and improvements in peace-and-order situation,” he said.

Michael L. Ricafort, head of the Economics & Industry Research Division of Rizal Commercial Banking Corp., said in an e-mail: “The increase in FDIs vs. a year ago was partly due to increased foreign investment pledges… amid improved Philippine ties/relations with the biggest economies of the world — China, Japan, US — compared to a year ago.”

“The Philippines remains among the fastest growing economies in Asia/ASEAN, reflecting improved economic and credit fundamentals, as well as favorable demographics,” he added.

July and August data show a boost to third-quarter GDP from a 25.729% year-on-year increase in cumulative net FDI inflows to $1.51 billion in those two months from $1.201 billion a year ago.

The eight months to August, however, still saw a 5.2% drop in net FDI inflows to $5.107 billion, as a 40.3% drop in net equity placements to $833 million offset an 8.4% hike to $3.678 billion in debt instrument investments and a 6.4% drop in reinvested earnings to $546 million.

“Equity capital infusions during the period came mostly from the US, Singapore, Japan, the Netherlands and Hong Kong,” the BSP said of inflows in those eight months, adding that funds “were invested mainly in manufacturing; real estate; wholesale and retail trade; financial and insurance; and electricity, gas, steam and air conditioning supply activities”.

TRADE
Other government data released on Friday show merchandise exports slowing down and manufacturing output declining in September, posing risks to the country’s third-quarter economic growth in the third quarter.

Sales of Philippine-made products slowed in the final month of the third quarter. According to a report from the Philippine Statistics Authority (PSA), merchandise export sales, which account for as much as 40% of GDP, grew 4.3% to P5.594 billion — its tenth straight month of growth — but was slower than the 9.6% uptick in August and 8.1% increase in the same month last year.

Year-to-date, the total value of exported goods increased 12.2% to $47.712 billion from $42.518 billion, way above the government’s official five percent target for 2017.

On the other hand, import payments came in at $7.509 billion, growing 1.7% compared to the 10.4% growth last August and 18% in September 2016. On a cumulative basis, imports totaled $66.654 billion, up 7.4% from the same period last year and below the official 10% target for this year.

Consequently, the country’s balance of trade in goods in September registered a net deficit of $1.915 billion, narrower than the $2.020-billion gap registered in September last year. The first nine months saw a $18.942-billion trade deficit, improving from the year-ago $19.520 billion.

Total trade, which is the sum of exported and imported goods, was $13.103 billion in September, up 2.8% from the $12.743 billion registered during the same month last year.

MANUFACTURING
In a separate report, the PSA reported a decline in September factory output, its lowest in almost six years.

In its latest Monthly Integrated Survey of Selected Industries, the PSA reported that the volume of production index — a measure of factory output — declined 3.7% in September year-on-year, a reversal from the 1.6% growth posted in August and 11.2% in the same period last year.

This was the worst turnout since December 2011 when factory output declined by 7.7%.

Year-to-date factory output growth averaged 4.7%, but the negative September turnout pulled output to a 1.9% decline in the third quarter, which could pose a downside risk to GDP in those three months.

The average capacity utilization rate in September — the extent by which industry resources are used for the production of goods — averaged 83.8%, with 11 out of the 20 major sectors operating at capacities of at least 80%.

“Decreases in the production of petroleum, transport equipment and export-oriented products led to the decline in manufacturing output for September 2017,” the National Economic and Development Authority (NEDA) said in a statement.

“Production continued to grow, however, in construction-related manufactures and food manufacturing.”

For Security Bank’s Mr. Taningco, the contraction in factory output may be attributed to higher production and import costs “amid a depreciation in the peso as well as lower business confidence.”

“[T]he sluggish manufacturing output performance may have likely tempered the growth of both the industry sector and GDP in the third quarter. This is because manufacturing accounts for a relatively large contribution to industry and GDP,” Mr. Taningco explained.

OUTLOOK
Ruben Carlo O. Asuncion, chief economist at the Union Bank of the Philippines, Inc., said the contraction in the trade in factory figures “may have come from temporary reasons” that are seasonal in nature.

He added that the trade figures will have an important contribution to third-quarter growth.

“In previous years, the level of exports have languished due to the stronger peso and depressed external demand. This year, though, is quite different. The weak peso has made exports cheaper thus more competitive, while the government’s plan to ramp up infrastructure spending has also increased the level of imports via capital goods,” he said.

On manufacturing, Mr. Asuncion said that the contraction may “marginally and temporarily impact industry contribution for third-quarter GDP, but the government’s planned increase of infrastructure spending supported by further tax reform will underpin robust industry growth heading into 2018.”

Likewise, NEDA officer-in-charge and Undersecretary Rosemarie G. Edillon remains hopeful on trade’s contribution to growth in the coming months. “The third quarter growth performance of several major economies such as the Eurozone, US and China reflects an upbeat outlook for the global economy,” Ms. Edillon said. “Given this, we are optimistic that Philippine trade will pick up in the last quarter due to higher demand in the holiday season.”

She was also optimistic on manufacturing’s rebound, citing the BSP’s latest Consumer Expectation Survey showing consumers were generally more upbeat about prospects in the fourth quarter as they expect higher salaries and more jobs, along with improved peace and order.

It was noted in that survey that consumer confidence slipped to 10.2% in the third quarter from a record-high 13.1% in the previous quarter amid concerns on what was then ongoing conflict in Marawi City, as well as higher expenses.

UnionBank’s Mr. Asuncion shared this sentiment, saying: “With infrastructure investments expected to grow in the medium-term, the manufacturing sector output is expected to grow.”

“Domestic demand, as the Christmas season nears, is anticipated to increase, an upside moving into the last quarter of 2017.”

More holding firms turn in positive results

FIVE MORE conglomerates reported favorable results on Friday, firming a generally positive picture of listed holding companies in the third quarter and the nine months to September.

AYALA CORP.
Ayala — whose share price rose 1.87% to finish P1,050 apiece on Friday — said in a statement that its net income went up by 39% year-on-year to ₱8.2 billion, “driven by robust earnings from Ayala Land, Inc… and AC Energy Holdings, Inc.” as well as Globe Telecom, Inc.’s transaction gains from its investment in Ant Financial Services Group via financial technology unit Mynt.

The third quarter pushed Ayala’s nine-month profit that went to controlling equity holders up 18% annually to P23.235 billion, fueled by a 22% rise in revenues to P201.531 billion.

Among the conglomerate’s units, nine-month profit of Ayala Land grew 18% to P17.8 billion; Bank of the Philippine Islands slipped by 1.9% to P17 billion in the “absence of significant one-off securities trading gains… realized in June 2016”; Globe increased by 11% to P13 billion; Manila Water Company, Inc. was flat at P4.9 billion as higher operating costs and expenses tempered the impact of a three percent rise in revenues to P13.8 billion; AC Energy surged 73% to P2 billion; while that of AC Industrial Technology Holdings, Inc. rose by five percent to P1 billion.

“Most of our business units have continued to achieve solid growth this year. We are pleased to note that even excluding the transaction gains from various strategic initiatives for the period, Ayala’s nine-month income still expanded 18% from the previous year,” Ayala President and Chief Operating Officer Fernando Zobel de Ayala said in the statement.

SAN MIGUEL CORP.
San Miguel — which did not disclose third-quarter results and whose stock price dropped 1.71% to P115 each — reported a 21% hike in consolidated recurring net income (excluding the impact of foreign exchange transactions and one-time gain from the sale of its telecommunications business last year) to P43.8 billion in the nine months to September.

Revenues rose by a fifth annually to P597 billion in the same period “on higher sales mainly from its core food, beverage and packaging business”, while consolidated operating income grew 13% to P82.8 billion.

The food and beverage segment — consisting of San Miguel Brewery, Inc.; Ginebra San Miguel, Inc. and San Miguel Purefoods Company, Inc. that are now the subject of consolidation into one holding company — accounted for over third of the conglomerate’s revenues in those nine months at P180 billion, up 11% year-on-year.

Strong sales volumes of Petron Corp.’s local and Malaysian operations fueled a 27% rise in consolidated revenues to P313.5 billion and a 31% hike in operating income to P22.1 billion that led to a 58% year-on-year increase in profits to P11.8 billion.

San Miguel’s packaging business under San Miguel Yamamura Packaging Group posted 13% growth in terms of both revenues and operating income to P22.4 billion and P2.2 billion, respectively. The conglomerate has been ramping up its presence in Australia, most recently with the acquisition of 100% of the issued capital of Best Bottlers Pty. Ltd.

GT CAPITAL HOLDINGS, INC.
GT Capital — whose share price shed 0.75% to finish P1,194 apiece — saw profit that went to controlling shareholders increase by 12% to P3.58 billion in the nine months to September and core net income increase by 19% to P11 billion, fueled by a 16% increase in consolidated revenues to P169.5 billion.

“Our core businesses continue to deliver steady growth across all sectors,” GT Capital President Carmelo Maria Luza Bautista was quoted as saying in a statement that cited contributions from Toyota Motor Philippines Corp. (TMP), Toyota Manila Bay Corp., as well as higher equity in net incomes of associates AXA Philippines and Metro Pacific Investments Corp.

“Based on the strong macroeconomic fundamentals, we remain optimistic that the positive momentum will be sustained for the remaining months of 2017.”

Under GT Capital, Metropolitan Bank & Trust Co. (Metrobank) saw unaudited consolidated net income grow five percent year-on-year to P13.2 billion, TMP reported P9.9 billion in consolidated net income as consolidated revenues grew 14% to P130.7 billion, while property units Federal Land, Inc. and Property Company of Friends, Inc. (PRO-FRIENDS) saw an aggregate net income of P1.9 billion as combined consolidated revenues increased by 13% to P12.9 billion and combined real estate sales grew 16% to P10.9 billion.

Metrobank and TMP together accounted for 71% of the parent’s profit in that period.

AXA Philippines grew net income by 31% to P1.3 billion as total sales in annualized premium equivalent rose by 26% to P4.7 billion.

Metro Pacific had reported last Nov. 8 a 22% rise in consolidated core net income to P11.3 billion in the nine months to September on expanded presence in the power industry.

LT GROUP, INC.
LT Group — whose stock price ended Friday flat at P17.40 each — saw a 36% hike in profit that went to controlling shareholders to P2.3 billion in the third quarter, fueling a nine percent increase to P6.83 billion as of September on the back of its tobacco business that accounted for 42%, at P2.87 billion, of total attributable profit in those nine months.

The tobacco business — under PMFTC, Inc. — saw income rise 60% to P2.88 billion in the nine months to September.

Philippine National Bank — whose share price edged up by 0.78% to end P58.50 apiece — saw net income fall by 22% to P4.64 billion mainly due to lower gains from the sale of real and other properties acquired (ROPA) at P518 million, compared to the P2.3 billion booked in 2016’s comparable nine months. Net interest income increased by 10% to P16.16 billion on the back of a 22% rise in loans and receivables, while net service fees and commission income grew 18% to P2.36 billion due to higher deposit- and trade-related, arranger’s, bancassurance and underwriting fees.

Asia Brewery, Inc.’s net earnings sank by 49% to P455 million “primarily due to higher spending on new products”, with revenues rising 12% to P10.11 billion “with the higher contribution of bottled water and soy milk”.

Tanduay Distillers, Inc. saw net income fall by 35% to P438 million even as liquor revenues grew 22% to P10.91 billion. Revenues from ethanol were 24% lower at P1.44 billion as higher alcohol costs ate into margins.

Eton Properties Philippines, Inc.’s P246-million net income as of September was slightly less than the P249 million recorded in 2016’s comparable nine months, as revenues sank by a fourth to P1.66 billion “with lower sales due to the change in strategy to focus on increasing its recurring income base”. Revenues from leasing operations were 10% higher at P1.03 billion with the opening of 2,100 square meters of additional retail space in Eton Tower Makati and higher lease rates.

FILINVEST DEVELOPMENT CORP.
Finally, FDC — whose stock price edged up by 0.65% to end P7.75 apiece — reported a 33% year-on-year hike in net income attributable to controlling shareholders to P1.44 billion in the third quarter, as revenues grew 22.8% to P15.97 billion.

That brought FDC’s nine-month earnings attributable to the parent to P4.81 billion, 17% higher year-on-year, on the back of revenues of P48.39 billion.

East West Banking Corp. — whose share price dipped 0.16% to P32.15 apiece — saw year-to-date net income grow 60% to P3.7 billion as recurring earnings increased by a fourth to P18 billion on the back of a 22% hike in net interest income and 30% increment in fee-based income.

Property subsidiary Filinvest Land, Inc. grew net income by seven percent year-on-year to P3.7 billion in the nine months to September on the back of a seven percent hike in revenues to P14.5 billion. Rental revenues alone increased by 31% to P3.2 billion “as the company booked additional revenues from its new office and retail buildings”. — A. B. Francia

Sandiganbayan issues hold-departure order vs Aquino over Mamasapano case

By Camille A. Aguinaldo, InterAksyon

THE Sandiganbayan on Friday, Nov. 10, issued a hold-departure order against former president Benigno S.C. Aquino III after he posted a P40,000-bail in connection with the graft and usurpation of authority charges that were filed against him by the Office of the Ombudsman.

After posting bail and undergoing booking procedures, Mr. Aquino paid a courtesy call to Presiding Justice Amparo Cabotaje-Tang, an appointee of Mr. Aquino to the Sandiganbayan where the case against him was raffled off Friday morning to the Third Division.

The arraignment and pre-trial of Mr. Aquino’s case were tentatively set on Jan. 12, 2018, according to Sandiganbayan Third Division clerk of court Dennis Pulma.

According to the Ombudsman’s office, Mr. Aquino “willfully, unlawfully and feloniously” allowed in January 2015 then Philippine National Police chief Alan L.M. Purisima to participate in carrying out Oplan Exodus against Malaysian terrorist Zulkifli Abdhir also known as Marwan in Mamasapano, Maguindanao even though the PNP chief was suspended at that time.

The operation resulted in the death of 44 members of the PNP-Special Action Force in the hands of rebels belonging in part to the Moro Islamic Liberation Front, which had entered into a peace agreement with Mr. Aquino’s government.

At the Sandiganbayan, Aquino was accompanied by three of his sisters, his former spokespersons, and lawmakers of the opposition Liberal Party.

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