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ADB approves technical assistance grant for EDSA decongestion

THE Asian Development Bank (ADB) has approved a technical assistance grant for the decongestion of Metro Manila’s main artery, Epifanio de los Santos Avenue (EDSA).

However, a loan to fund actual infrastructure and transport systems remains up for approval by the ADB Board.

On its Web site, the bank said it approved on Dec. 1 the $1.5-million technical assistance special fund that the government can tap, to “address the key issue of high cost of transport across Manila.”

Its project documents show that the project aims to reduce travel time, increase passenger  throughput; improve connectivity between different transport modes and the surroundings areas, and improve the ability of government to operate transport systems.

The grant will help prepare for a comprehensive transport project on EDSA.

“The indicative loan amount of $500 million will improve all major transport modes along EDSA,

Metro Rail Transport Line 3 (MRT-3), buses, and private vehicles, as well as improve pedestrian facilities,” the document read.

The projected approval date for the infrastructure loan is Oct. 28, 2018, according to the ADB.

“The proposed loan is directly aligned with the Manila transport plans and will augment the major infrastructure proposals through support for system management and operations improvement, notably along the main transport corridor in the city,” it added.

ADB said the cost of congestion on EDSA is estimated at P2.4 billion a day, with Metro Manila accounting for 36.6% of the country’s gross domestic product (GDP).

The transportation project was initially the Metro Manila Bus Rapid Transit (BRT) line 2, or the EDSA line. Under its 2018-2020 Country Operations Business Plan for the Philippines, the ADB broadened its scope, while shifting the project from “standby” in 2017, to “firm” in 2018.

On the list of the government’s flagship infrastructure projects provided by the National Economic and Development Authority (NEDA), the approved BRT is estimated to cost some P37.76 billion, to be funded by Official Development Assistance (ODA) from South Korea, and additional financing from the Asian Infrastructure Investment Bank.

The project is an alternative mass transit system that runs from Monumento in Caloocan to the Diosdado Macapagal Avenue/Roxas Boulevard area at the other end of EDSA. It includes integrated routes between the Ortigas Business District, Bonifacio Global City, and the Makati Business District.

Another BRT system approved by the NEDA Board is the P4.789- billion line 1 plying España Boulevard to Quezon Avenue, which will be funded by the World Bank and the French development agency AFD.

Though it has yet to be approved by NEDA’s Investment Coordination Committee, the proposed BRT line 3 runs from Bonifacio Global City (BGC) to Ninoy Aquino International Airport (NAIA), with an estimated cost of P40 billion, which is being lined up for China ODA financing. — Elijah Joseph C. Tubayan

Good governance for SMEs

As a practitioner dealing with small to medium (SME) enterprises with great business models or ideas for their ventures, it is very clear that the business proposition alone is not sufficient to spell success. Even with a good product or service and a well defined customer base, the small business will still flounder if it does not pay close attention to good governance practices.  Poor governance practices are often identified as the main  reasons leading to  business performance, fraud and unanticipated failures. The landscape is littered with stories of well developed business models and propositions failing because of conflict of interest, inadequate controls and absence of checks and balances.

Corporate governance is defined as the structure and processes by which companies are managed, directed and controlled.  It refers to the existence of clear reporting lines and clarity about how decisions are made and risks controlled. It includes the relationship between board members, the company’s shareholders, officers and staff, customers and other stakeholders. A  good corporate governance framework also deals with internal controls and process that lead to discipline, accountability and transparency.

The corporate governance framework includes elements that will ensure decisions made by accountable individuals are fair and transparent. There should be clear reporting lines and clarity about how decisions are made and how risks are controlled. The responsibility lines and limits of authority of the accountable officers are defined and well-balanced. Appropriate internal controls are established and linked to key risks. Boards have good visibility of management actions and decision makings.

Governance can provide the set of tools that SME’s can use to support their survival and growth. Among the many issues considered would include: (a) the roles played by family members in the business; (b) the necessity of developing a clear  governance structure, especially in family businesses and cooperatives/associations;  (c) the role, structure and composition of the board of directors (including the role of independent directors); and (d) the impact of senior managers, the incentive and penalty structures, the performance monitoring and the importance of developing succession plans.

Although SME’s are not regulated in the same way as big, listed companies and therefore there is no real compunction to adopt strict good governance practices, putting such a framework to help the organization achieve success and create value will ensure long-term sustainability. It is a journey SMEs should embark on for their growth and stability. It is an investment to prevent pitfalls as it prepares the organization for growth and innovation.  Building clear reporting lines and defining decision making processes will provide checks on power and balance on responsibilities. The failures we have seen in both big businesses and SMEs alike find their root in undefined and unclear corporate governance systems, where decisions are made outside of authorities and there is absence of alert mechanisms when things go wrong. Transparency and visibility of critical decisions is opaque when the governance structures are not firmly in place.

The benefits of corporate governance for SMEs are plenty. Several articles have expounded on these and the following is just a sample of why governance matters.  A proper governance system improves a company’s ability to obtain external funding and improve its ability to grow. It leads to more effective management with clearly delineated roles and responsibilities and easily understood business processes.  Governance improves the management of risk and can lead to appropriate innovations as it embarks on entrepreneurial initiatives more confidently. Good governance in an SME can be a major selling point and improves company reputation, especially in an era where failures abound due to poor governance systems. The long-term value of the company is enhanced  and risks are properly identified, monitored and mitigated.

Benel D. Lagua is Executive Vice-President at the Development Bank of the Philippines. He is an active FINEX member and a long time advocate of risk-based lending for SMEs.

Nation at a Glance — (12/29/17)

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

Joan Baez returns to peace theme in first album in decade

NEW YORK — Folk legend Joan Baez last week announced her first album in a decade, a collection of covers that returns to her longtime theme of global peace.

The 76-year-old singer and activist, who earlier this year was inducted into the Rock and Roll Hall of Fame, said Whistle Down the Wind will come out on March 2.

It will be her second straight album to take its title track from a cover of a song by Tom Waits, the somber and famously raspy-voiced songwriter, following Baez’s 2008 Day After Tomorrow.

The new album also features covers of songs by Americana singers Josh Ritter and Joe Henry, who produced Whistle Down the Wind.

In one of the lesser-known covers, Baez performs Zoe Mulford’s “The President Sang Amazing Grace,” a piano ballad about the 2015 massacre by a white supremacist of African-American churchgoers in Charleston, South Carolina, and the subsequent eulogy at which then president Barack Obama sang that well-known Christian hymn.

‘AMAZED AND HONORED’
Mulford, a little-known folk singer from Philadelphia heavily influenced by Baez, said she was “amazed and honored” and that Baez has already received standing ovations when performing “The President Sang Amazing Grace” in concert.

“If only one of my songs ever reaches a larger audience, I’m glad it’s this one,” Mulford wrote on her Web site after Baez selected the song.

Baez also covers “Another World” by Antony and the Johnsons, a mournful meditation on the world’s destruction by the mellifluous singer now known as Anohni, and ends with “I Wish All Wars Were Over,” originally by folk singer and musicologist Tim Eriksen.

The album news came after Baez said that 2018 will mark her last year of touring.

She has already announced a European tour that will open on the album’s release date in Stockholm and include a 10-night stretch in June at the Olympia in Paris.

Baez was one of the major musical figures behind social justice movements in the 1960s, becoming a confidante of Martin Luther King, Jr. and performing songs including the iconic “We Shall Overcome” at the 1963 March on Washington. — AFP

IFC eyes more tourism exposure

By Elijah Joseph C. Tubayan
Reporter

THE INTERNATIONAL Finance Corp. (IFC) is looking to expand exposure to Philippine tourism given the sector’s “huge potential” to generate jobs especially in the provinces, a ranking official of the World Bank Group unit said.

“Tourism is something that we’d like to do a lot more in the Philippines because we clearly think there’s a huge potential in tourism in the Philippines, and I don’t think the Philippines is reaching its full potential,” Vivek Pathak, IFC regional director for East Asia and the Pacific, said in a Dec. 8 interview.

“I think it’s an important area. If you look at the benefits of tourism — international tourists provide foreign exchange, you provide employment, skilled employment, you create a value chain for agriculture, and services sectors.”

IFC is a global development institution forming part of the World Bank Group that provides financial resources and technical expertise to support private businesses worldwide.

Mr. Pathak cited an IFC case study that found that higher quality hotels generated the most employment — up to three jobs per room — or twice as many as do budget hotels.

“If you look at beaches at Palawan, Boracay, the water is as good as any other… Trust me I’ve been to a lot of beaches all over the world,” he said.

IFC eyes more tourism exposure

“But I just don’t find enough tourists.”

The Department of Tourism reported last Dec. 12 that foreign visitors grew 11.54% to 5.474 million as of October from 4.908 million in 2016’s corresponding 10 months. Tourism Secretary Wanda Corazon Tulfo-Teo said that she was “optimistic” the sector could hit a 6.5 million visitor target set by the 2017-2022 National Tourism Development Plan.

Furthermore, Philippine Statistics Authority data show that tourism’s share in gross domestic product has been on a steady rise since at least 2011 to 8.6% in 2016.

Mr. Pathak, however, cited lack of roads as one of the biggest hurdles to developing tourism sites and attracting more foreign visitors. “I think what’s critical for tourism that we’ve been talking with government about is infrastructure. You need to have connectivity. That is how you’re going to attract tourists,” said Mr. Pathak.

Nomura Senior Economist Euben Paracuelles, meanwhile, said that despite the government’s efforts to develop tourism in recent years, there is still plenty of room for improvement compared to the efforts of Southeast Asian neighbors.

Apart from infrastructure development — which Mr. Paracuelles said would be vital to developing hard-to-reach spots — the government should also bolster tourism campaigns.

“Beyond infrastructure, I think the government is under-utilizing the 10 million or so overseas Filipinos who can be the best promoters of the Philippines as a holiday destination,” he said in an e-mail yesterday.

“The ‘bring a friend’ program is a step in the right direction, but in my view the government needs to be more aggressive in running a campaign with similar initiatives, alongside more progress in infrastructure implementation,” the Nomura analyst added, noting that the country gets some of the lowest numbers of international visitors in Southeast Asia.

Moreover, Mr. Pathak said that tourism impact from the five-month battle in Marawi City, central Mindanao, between government forces and Islamic State-inspired militants should be minimal. “We haven’t seen adverse impact from that in the economy as a whole,” he said.

Last month, Discovery World Corp. signed a subscription agreement with IFC for the latter to infuse up to P650 million into the property firm “to meet the growing demand for hospitality infrastructure in the Philippines.” The leisure property developer will use the funds to finance construction of two hotels: one in El Nido, Palawan and another in La Trinidad, Benguet.

Apart from tourism, the IFC official said his group has been working with private firms here that are involved in infrastructure, manufacturing and financial services.

IFC’S overall committed portfolio in the Philippines totaled some $550.53 million as of July, according to its Web site.

DoF to strengthen local gov’t finances through tax reform

THE DEPARTMENT of Finance (DoF) is moving to further strengthen local government finances — this time including through tax reform — to reduce these units’ dependence on annual national government doleouts.

“There is a much needed balance here: LGUs must build their revenue base to fund their projects, and the effect on the national government’s fiscal space as a result of continued dependence of LGUs on national transfers,” Finance Undersecretary Antonette C. Tionko said of local government units (LGUs) in a press release on Wednesday.

She said that LGUs rely on Internal Revenue Allotment (IRA) — their annual share in national taxes — to fund up to 99% of their operations and programs.

According to Ms. Tionko, locally generated revenues account for less than one percent of the country’s gross domestic product (GDP).

IRAs are automatically earmarked funds for LGUs equivalent to 40% of national taxes collected three years prior to the planned fiscal year, as mandated by Republic Act (RA) No. 7160, or the Local Government Code of 1991.

About 34% of the IRA are given to municipalities, while provinces and cities receive 23% share each, while barangays get the 20% balance.

Local Budget Memorandum No. 74 set the IRA level this year at P486.885 billion, 13.59% more than P428.62 billion in 2016.

For 2018, IRA set by Local Budget Memorandum No. 75 is at P522.75 billion, up 7.37% from 2017.

RA 7160 also authorizes LGUs — provinces, cities, municipalities and barangays — to levy taxes, fees or charges on any base not covered by the National Internal Revenue Code.

In this regard, Ms. Tionko noted that the Finance department is also preparing property valuation and taxation reforms under the third package of the comprehensive tax reform program.

The first tranche of up to five planned tax reform packages — estimated initially to yield more than P90 billion in additional revenues in the first year of implementation in 2018, from P130 billion initially — was signed into law last Dec. 19. That package consists of reduced personal income, estate and donors’ tax rates. Foregone revenue will be offset by the removal of some exemptions from value-added tax; increased tax rates for fuel, automobiles, tobacco, coal, minerals, documentary stamps, foreign currency deposit units, capital gains for unlisted stock, and stock transactions; as well as new taxes for sugar-sweetened drinks and cosmetic enhancements.

“The DoF is one with the LGUs in promoting fiscal decentralization and advancing their interests by way of strengthening foundations,” Ms. Tionko said. — Elijah Joseph C. Tubayan

World’s richest gain $1 trillion in 2017 on market exuberance

NEW YORK/PRINCETON — The richest people on earth became $1 trillion richer in 2017, more than four times last year’s gain, as stock markets shrugged off economic, social and political divisions to reach record highs.

The 23% increase on the Bloomberg Billionaires Index, a daily ranking of the world’s 500 richest people, compares with an almost 20% increase for both the MSCI World Index and Standard & Poor’s 500 Index.

Amazon.com, Inc. founder Jeff Bezos added the most in 2017, a $34.2 billion gain that knocked Microsoft Corp. co-founder Bill Gates out of his spot as the world’s richest person in October.

Mr. Gates, 62, had held the spot since May 2013, and has been donating much of his fortune to charity, including a $4.6-billion pledge he made to the Bill & Melinda Gates Foundation in August.

Mr. Bezos, whose net worth topped $100 billion at the end of November, currently has a net worth of $99.6 billion compared with $91.3 billion for Mr. Gates.

George Soros also gave away a substantial part of his fortune, revealing in October that his family office had given $18 billion to his Open Society Foundations over the past several years, dropping the billionaire investor to No. 195 on the Bloomberg ranking, with a net worth of $8 billion.

By the end of trading Tuesday, Dec. 26, the 500 billionaires controlled $5.3 trillion, up from $4.4 trillion on Dec. 27, 2016.

“It’s part of the second-most robust and second-longest bull market in history,” said Mike Ryan, chief investment officer for the Americas at UBS Wealth Management, on Dec. 18.

“Of all the guidance we gave people over the course of this year, the most important advice was staying invested.”

The 38 Chinese billionaires on the Bloomberg index added $177 billion in 2017, a 65% gain that was the biggest of the 49 countries represented.

Hui Ka Yan, founder of developer China Evergrande Group, added $25.9 billion, a 350% jump from last year, and the second-biggest US dollar gain on the index, after Mr. Bezos.

Technology billionaire Ma Huateng, co-founder of messaging service Tencent Holdings, became Asia’s second-richest person when his fortune nearly doubled to $41 billion.

The number of Asian billionaires surpassed the US for the first time, according to a UBS Group AG and PricewaterhouseCoopers report.

The US has the largest presence on the index, with 159 billionaires who added $315 billion, an 18% gain that gives them a collective net worth of $2 trillion.

Russia’s 27 richest people put behind them the economic pain that followed President Vladimir Putin’s 2014 annexation of Crimea, adding $29 billion to $275 billion, surpassing the collective net worth they had before western economic sanctions began.

It was also a banner year for tech moguls, with the 57 technology billionaires on the index adding $262 billion, a 35% increase that was the most of any sector on the ranking.

Facebook, Inc. co-founder Mark Zuckerberg had the fourth-largest US dollar increase on the index, adding $22.6 billion, or 45%, and filed plans to sell 18% of his stake in the social media giant as part of his plan to give away the majority of his $72.6 billion fortune.

In all, the 440 billionaires on the index who added to their fortunes in 2017, gained a combined $1.05 trillion.

The fortune of French telecommunications billionaire Patrick Drahi fell $4.1 billion to $6.3 billion, a 39% drop.

Prince Alwaleed Bin Talal, the richest person in Saudi Arabia, dropped $1.9 billion to $17.8 billion after he was detained in a crackdown against corruption led by Crown Prince Mohammed bin Salman that targeted royals, government officials and business leaders.

There were 60 billionaires who fell from the ranking, including South African retailer Christo Wiese, whose fortune dropped to $1.8 billion from a peak of $7.7 billion, in August 2016, after news of an accounting scandal at his Steinhoff International Holdings NV broke on Dec. 5.

Sumner Redstone, 94, also fell off the list as CBS owner Viacom, Inc. continued to grapple with a bitter battle for control between his daughter and other executives, while Rupert Murdoch, 86, sidestepped succession concerns with a December deal to sell much of 21st Century Fox, Inc.’s entertainment assets to Walt Disney Co. Redstone shed $90 million. Mr. Murdoch added $2.7 billion.

In all, the 58 of the 500 billionaires who saw their fortunes shrink in 2017, lost a combined $46 billion.

The Bloomberg index discovered 67 hidden billionaires in 2017.

Renaissance Technologies’s Henry Laufer was identified with a net worth of $4 billion in April.

Robert Mercer, 71, who plans to step down as co-CEO of the world’s most profitable trading fund on Jan. 1, couldn’t be confirmed as a billionaire.

Two fish billionaires were caught: Russia’s Vitaly Orlov and Chuck Bundrant of Trident Seafood.

A Brazilian tycoon who built a $1.3-billion fortune with Latin America’s biggest wind developer was interviewed in April.

Two New York real estate moguls were identified, Ben Ashkenazy and Joel Wiener.

Several technology start-up billionaires were identified, including the chief executive officer of Roku Inc. and the two co-founders of Wayfair, Inc.

Investor euphoria created a number of bitcoin billionaires, including Tyler and Cameron Winkelvoss, with the value of the cryptocurrency soaring to more than $16,000 Tuesday, up from $1,140 on Jan. 4. The leap came with a chorus of warnings, including from Janet Yellen, who called the emerging tender a “ highly speculative asset” at her last news conference as chair of the Federal Reserve, on Dec. 13.

With wealth surging to new highs, billionaires may quickly learn that a billion dollars doesn’t buy what it used to. The price of housing has topped $300 million, the cost of divorce has hit $1 billion and a rediscovered painting by Leonardo da Vinci sold for $450.3 million at a Christie’s auction in November, the most expensive work ever sold.

“Would you believe it?” Eli Broad, who has a $7.4 billion fortune and his own museum in Los Angeles, said after the sale.

“It’s wild.” — Bloomberg

Seven-day term deposits attract higher demand

By Melissa Luz T. Lopez,
Senior Reporter

LENDERS opted to place more funds under the central bank’s term deposit facility (TDF) this week, driving yields lower for week-long instruments.

Demand for the seven-day tenor rose to P59.808 billion on Wednesday, up from the P46.212 billion in tenders received the previous week. This also shot beyond the P40 billion which the Bangko Sentral ng Pilipinas (BSP) placed on the auction block.

The term deposits fetched an average interest rate of 3.3995%, lower than the 3.4004% posted during last week’s offering.

The central bank has kept the weekly term deposit auctions limited to the week-long instruments in light of a smaller surplus of cash held by financial players over the holiday season.

The 28-day tenor was last offered on Dec. 13, during which the P40-billion auction volume was met by just P33.005 billion in total demand.

The weekly term deposit auctions are currently the central bank’s primary tool to capture excess funds in the financial system by allowing banks to park the extra cash they hold under the window, in exchange for a small margin.

Through this, the BSP expects to usher market rates closer to the benchmark borrowing rate at 3%, coming from below the 2.5% floor of the interest rate corridor when the TDF auctions started in June 2016.

For next week, the central bank decided to keep the TDF offerings at P40 billion with a seven-day term, given indications that banks are choosing to hold on to more cash than usual given greater demand among depositors.

“This is the holiday season, so the banks have reserved some liquidity for any contingency,” BSP Deputy Governor Diwa C. Guinigundo said in a text message.

“Naturally, they would prefer to go very short term as the banks continue to service their clients’ needs for loans, investment and even FX (foreign exchange) for imports, debt payments and outward investments.”

The central bank official has said that the shorter tenor provides more “flexibility” for banks to manage their funds and service client demands over the Christmas season, when families withdraw more cash to spend for celebrations and gift-giving activities.

This is a more viable option for banks rather than lock in money under the facility for a month.

Developers to ramp up projects outside Manila

By Arra B. Francia, Reporter

PROPERTY DEVELOPERS will be ramping up developments outside Metro Manila next year, keeping pace with the government’s aggressive infrastructure program that aims to improve connectivity from the metro to the provinces.

This is according to the local arm of real estate consultancy firm Colliers International, which noted the government’s infrastructure projects will  dictate the strategy of property developers in 2018.

“The ushering in of the golden age of infrastructure lends support to the government’s decentralization push which should unlock land values in areas outside of Metro Manila and stimulate business activities in the countryside,” Colliers said in a report.

More townships or satellite communities, which include a mix of residential, office, and commercial developments, will soon pop up in areas outside of Metro Manila. Colliers noted townships offer a better value proposition for buyers, since residents can adopt the “live-work-play-shop lifestyle” without leaving the area.

“We see developers pursuing more township projects in areas outside of Metro Manila such as Cavite, Laguna, Bulacan, Pampanga, Cebu, and Davao over the near to medium term as land values are being unlocked by an aggressive expansion of road networks,” according to Colliers.

Cavite, for instance will benefit from the expansion of road networks by Cavitex Infrastructure Corp., which is behind the 7.7-kilometer Cavite Expressway C-5 South Link Project. This highway links the central business districts in Makati and Taguig to southern cities, including Parañaque, Las Piñas, and Cavite.

The government’s push to develop Pampanga as the location of the next central business district is expected to bring more companies in North Luzon.

Earlier this year, Megaworld Corp. unveiled its P30-billion mixed-use development in San Fernando, Pampanga called Capital Town. The property giant said this is the first township in the north, located just 30 minutes away from Clark International Airport and accessible through the North Luzon Expressway.

“Given the increasingly competitive environment, we believe that developers need to distinguish their projects from others,” Colliers said.

In terms of stand-alone residential projects, the real estate consultant said developers may tap second-tier and third-tier cities, noting that demand from these locations primarily come from end-user buyers, making it more stable in terms of end-user housing demand.

“Completions in the fringe locations have also been rising, exerting upward pressure on overall vacancy,” Collier said.

Meanwhile, in Metro Manila, the residential condominium leasing market will face challenges in 2018. Colliers noted vacancy rates in condominiums are expected to rise to about 14-16% in the next 12 months, as over 21,400 units come online.

For the warehousing and logistics market, Colliers reported warehouses operate at a 98% occupancy rate in the metro, pushing companies to locate in North or Central Luzon.

“We see logistics and warehousing to be a major driver of Northern or Central Luzon economy over the medium term, especially in light of the planned expansion of Clark airport and construction of Subic-Clark cargo railway,” the property consultancy firm said, adding the SM Group and Udenna Corp. of Davao-based businessman Dennis A. Uy are the most bullish in this sector.

Industrial parks, such as the one being built by DoubleDragon Properties Corp. in Luisita Industrial Park in Tarlac, are also moving out of Metro Manila. Other companies that have launched projects in Pampanga are Ayala Land, Inc. with its 31-hectare industrial park within its Alviera estate in Porac, and Filinvest Land, Inc.’s 100-hectare industrial estate in Clark Green City. 

Nonperforming loans of thrift banks climb at end-Oct.

BAD DEBTS held by thrift banks picked up by nearly a tenth as of October, although slower than the growth in total loans extended during the period, latest central bank data showed.

Nonperforming loans (NPLs) incurred by thrift banks reached P41.159 billion as of the month, 9.3% higher than the P37.67 billion tallied during the comparable period in 2016, according to the Bangko Sentral ng Pilipinas (BSP).

This amount inched higher from the P40.32 billion in soured loans tallied at end-September.

NPLs refer to debts left unpaid at least 30 days past due date, which are considered as risky assets as these have high risk of default.

The higher NPL stash came on the back of an 11% increase in total loans granted by the lenders, which brought the running tally to P848.746 billion from P764.452 billion a year ago.

Thrift banks are focused on lending to consumers and small-scale firms, which sets them apart from the operations of the bigger universal and commercial banks who cater mostly to corporate clients. This explains the higher NPL ratio compared to the 1.46% held by big banks, as the retail segment is deemed more prone to defaults.

Meanwhile, the value of non-performing assets declined to P21.578 billion compared to P22.537 billion worth of idle properties a year ago. These refer to items of value seized by thrift units from non-paying borrowers which have been posted as collateral, allowing lenders to recover losses from credit defaults.

With the bigger NPL stash, banks chose to raise the buffers they set aside for possible credit losses to P28.287 billion, 5.3% higher than the P26.873 billion as of October 2016. However, the amount is still not enough to cover the entire P41.159 billion in soured debts, as it only accounts for 68.7% of the total.

Despite this, thrift banks saw strong growth in its asset base and bottom line during the period. Deposits grew by 11.6% to hit P941.451 billion, slightly faster than the expansion in loan books. Of the amount, over 90% have been deployed to lending.

Thrift banks also saw bigger profits this year with P12.271 billion in cumulative net income from January to September, jumping by 17.2% from P10.47 billion booked during the same nine-month period last year.

As of June, there are 57 thrift lenders operating in the Philippines.

The BSP monitors loan and asset quality of banks and financial firms in order to maintain the soundness of the local financial system.

International credit raters have cited the banking system as a pillar of strength for the Philippine economy, even as some raised concerns over rapid credit growth seen in recent months. — Melissa Luz T. Lopez

Golden Haven buys Bria Homes

THE VILLAR GROUP is reorganizing its property business, disclosing on Wednesday that Golden Haven, Inc. will take over the operations of Bria Homes, Inc.

In a disclosure to the stock exchange on Wednesday, Golden Haven said its board of directors approved the acquisition of Bria Homes from Cambridge Group, Inc., a Villar company.

The transaction was priced at P3.01 billion, comprising 9.99 million shares of Bria Homes at P301.42 apiece. This was based on the adjusted book value of Bria Homes as of end November.

Golden Haven and Cambridge Group signed the deed of absolute sale of shares for the transaction on Wednesday.

At the same time, the company’s board authorized the issuance of 150 million common shares to Cambridge group out of the unissued capital stock of Golden Haven by way of private placement. The shares were priced at P20.09 apiece for an aggregate subscription price of P3.01 billion. 

Golden Haven targets to submit the listing application to the Philippine Stock Exchange by Jan. 10, 2018, with listing of the common shares on the bourse by March 30, 2018.

The company will then increase its public float to 14.83% from the current 11.38%.

The funds raised from the private placement will be used to finance Golden Haven’s acquisition of Bria Homes.

Bria Homes’ core business is in the development of mass housing projects across the country. According to its website, it currently has a total of 27 developments in areas such as Bataan, Pampanga, Bulacan, Cavite, Laguna, Camarines Sur, Negros Oriental, Cagayan de Oro, and Misamis Oriental.

“The company believes the Bria acquisition will diversify its real estate business by entering into the mass housing market, accelerate growth and enhance profitability through the creation of additional revenue streams independent of its current business, allow the company to maximize the value of its land bank by providing other avenues for its utilization,” Golden Haven said.

The company added this acquisition will also build shareholder value.

Golden Haven last September changed its corporate name, dropping the words “memorial park” in order to allow the company to expand its business outside the death care industry. The company then said it will build efforts to enter other areas of the property sector in the future.

Golden Haven booked a net income attributable to the parent of P164 million in the first nine months of 2017, 21% higher year on year, as it recorded a 19% increase in revenues to P724 million during the period.

Shares in Golden Haven jumped 9.53% or P1.74 to P20 each at the stock exchange on Wednesday. — Arra B. Francia

Peso climbs to six-month high on positioning before yearend

THE PESO soared against the dollar on Wednesday, hitting its strongest level in six months as it briefly breached the P49 level intraday, as it strengthened in the offshore market.

The local currency finished at P50.04 against the greenback yesterday, gaining 10 centavos from its P50.14-per-dollar close seen on Friday.

Wednesday’s finish was also the peso’s best level since it ended at P49.91-to-the-dollar last June 19.

The peso traded stronger the whole day after it opened the session at P50.03 versus the dollar, while its intraday high was seen at P49.96. Its worst showing for the day, meanwhile, was at P50.05 to the greenback.

Dollars traded declined to $523.1 million on Wednesday from the $740.8 million that changed hands in the previous session last week.

“The peso appreciated as the offshore dollar-peso market has been trading stronger,” a trader said over the phone.

Another trader shared the same sentiment, adding that the peso’s ascent is in line with the movement of other Asian currencies.

“The Asian currencies are moving higher as the peso is leading gains, where the offshore market has been aggressive in selling dollar-peso lately,” another trader said.

Asked for the main driver of the boost in offshore trading, the second trader noted reductions in long dollar positions following the weakness of the local unit this year.

“I think it’s an adjustment. For this year, we’ve seen the weakness of the peso was really significant. And towards the yearend, we’re seeing positions taken out. [I guess, they’re winding up their] position as the year ends,” the second trader said.

Meanwhile, another trader attributed the stronger peso to the lack of fresh leads in the US.

For today, two traders said the peso might play within P49.90 to P50.15 against the dollar, while the third trader gave a slightly wider range of P49.90 to P50.20.

“The local currency is likely to follow its appreciating trend as traders lock in profits before the year ends,” the third trader noted, adding that the December US consumer confidence data released early today will be monitored.

Most Asian currencies edged higher against the US dollar on Wednesday, with the Philippines leading the gains after posting a narrower budget deficit in November — the latest addition to a run of good economic news.

The US dollar was flat, with the dollar index which measure the greenback against six major rivals, down 0.07% at 0523 GMT.

Globally, sentiment was buoyed by oil prices rising to 2-1/2 year highs.

The South Korean won was up 0.08%, hitting its highest since April 2015.

The Taiwan dollar was unchanged by remarks from central bank Vice-Governor Yang Chin-long who said on Wednesday that the Taiwan dollar’s strengthening this year mostly reflects the weakening trend of the US dollar.

The Singapore dollar was up 0.2%, its highest since Sept. 20.

But China’s yuan extended its losses for a second session on a softer fixing and rising corporate dollar demand, traders said. — Karl Angelo N. Vidal with Reuters

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