BANKS and similar firms must “keep pace” with emerging financial technology (fintech) in the face of rising competition, the country’s central bank chief said, while ensuring that firms maintain prudence as they venture into the new field.
Banks should keep up with emerging technology for financial institutions to be more competitive. — BW FILE PHOTO
Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. said the influx of electronic financial products stands to help broaden financial inclusion in the country, with the central bank keen on embracing such technology.
“Banking products, financial services and needs, technology and consumer preferences are always levelling up. We have to keep pace,” Mr. Espenilla said in a speech before the Bankers Institute of the Philippines on Friday. “We do this with training and education. We do this with updated and relevant regulations.”
“We at the BSP have raised the bar of prudential standards to promote resilience in the banking system and market discipline for risk-taking activities.”
The BSP chief said the central bank is bent on allowing new financial products, particularly those that make use of digital channels in the Philippines, as these are expected to help more Filipinos gain access to formal banking channels. Mr. Espenilla said the central bank has been welcoming of such innovations as it continues to update rules on corporate governance and risk management, specifically to allow fintech players to offer their services in the Philippines.
“New sophisticated players such as financial technology solution providers have entered the market. This is a good thing as these bring about a notable and gradual unbundling of the traditional value chain in the Philippines and intimately links banks closer to customers,” Mr. Espenilla said, while flagging that the concern now is on cybersecurity.
Embracing new financial products will likewise make economic growth more inclusive and “meaningful,” the BSP chief added.
The new governor said in June that the central bank is currently drafting enhanced rules on information technology, as part of a general thrust to tighten rules to guard against cyber threats. — Melissa Luz T. Lopez
The level of interconnection in today’s digital ecosystem has created tremendous opportunities for organizations to work together by extending capabilities and sharing data. However, having an interwoven ecosystem — of service providers, contact centers, distributors, licensees, joint ventures and other third parties — has created a much larger flank allowing attackers to skirt around security measures by targeting less secure connections among third parties. For example, recent security breaches that affected Target and Yahoo prove how dangerous unsecured third parties can be and that an organization can be blamed for security vulnerabilities it had little to do with.
In the Philippines, the third-party problem is real. Security risks can come from vendors that use poorly conceived, insecure business processes to manage systems. For example, service providers may connect through remote backdoor access for maintaining and supporting their clients’ internal systems. In some cases, service providers would use software that is no longer supported, full of vulnerabilities and impractical to patch. Vendors could also be using administrative passwords in systems installed at all their customers’ sites. And there could be instances when contact center agents put sticky notes around their cubicles with passwords to the organization’s systems or customers’ credit card information and personal information.
These situations may sound dismal but third-party service providers are not entirely to be blamed for this mess. Due to dynamic business requirements, speed-to-market pressures and a highly competitive environment, organizations simply purchase third-party services and software with operational benefits in mind while neglecting security and data privacy. We have seen organizations that do not pay close attention during contract negotiations. Some agreements do not even clearly identify who is responsible for safeguarding the organization’s information or notifying the organization in case of a data breach.
Organizations only realize the broken trust after a vendor’s fraudulent or unsecured activities are uncovered, like when a customer informs the organization that his or her personal information has been used for some dubious activity, or when management salaries are suddenly shared inappropriately.
The EY Global Information Security Survey 2016-17 confirms that third-party risk management is a major area of risk which is often overlooked, as evidenced by the following findings:
• 68% of respondents disclosed that they would not increase their information security spending even if a supplier was attacked — even though a supplier may provide attackers with a direct route into the organization.
• 58% said they would not increase their spending if a major competitor was attacked — despite the fact that cyber criminals often attack organizations that are similar in infrastructure and operating frameworks.
The report thus encourages organizations to be more mindful of the impact that their external network has on how they protect their crown jewels. With the increased risk from third parties, a comprehensive risk management system becomes essential in order for organizations to validate the trust they place on third parties — which should cover the entire life cycle of the relationship, from selection to implementation to exiting. This system should include the following elements:
1. KNOW YOU THIRD PARTIES
Understand your ecosystem. Maintain a database of third parties, relationship owners, contract terms, reputation and locations of operations. What level of access do they have to your critical information? Which business processes are outsourced to them? What security and privacy measures are in place? Are these third parties further subcontracting activities to their own vendors?
Using the gathered information, the organization should then take steps to determine the risk profile for each third party in its ecosystem.
2. INCLUDE SECURITY AND DATA PRIVACY PROVISIONS IN AGREEMENTS
By creating a risk profile for the third party, the organization can determine the level of security controls and activities that the third party should have in place. These security requirements should also become mandatory terms during agreement negotiations. Should the agreement involve the sharing or outsourced processing of personal data, the organization must include the required data sharing or outsourcing stipulations of the Data Privacy Act of 2012 to ensure that proper safeguards are in place to ensure the confidentiality, integrity and availability of personal data processed; and prevent its use for unauthorized purposes.
Cybersecurity, data privacy, legal and compliance teams should always be present during purchasing, contracting, onboarding and exit discussions. These steps can go a long way toward setting the tone of discussion about the seriousness of cybersecurity and data privacy to the organization.
3. TRUST, BUT VERIFY
Third parties, as well as the security and data privacy provisions in their contracts, should be reviewed on an ongoing basis throughout the relationship with the organization. The frequency of reviews should be dependent on the risk profile, regulatory requirements or changes in the threat environment.
We should note that contract terms and imposition of penalties are important, but should not be the focus of these periodic reviews. Ultimately, security is a joint responsibility. Putting a third party on the defensive may just push them to refute all findings and provide excuses just to avoid penalties. Instead, the organization should set the tone of trust and transparency in their third-party relationships.
Organizations should also consider using assurance options as proof of independent assessments of their third parties’ security and privacy practices such as the Service Organization Control 2, the Payment Card Industry Data Security Standard, or ISO 27001:2013.
4. NEVER BE COMPLACENT
Given the increasing complexity of the cyber world, organizations can no longer rely solely on ad hoc processes and one-time assessments of their third parties. The organization must maintain effective processes to manage risks and incorporate lessons learned from third-party relationships in a way that is consistent with its goals, organizational objectives and risk appetite.
5. INVOLVE LEADERSHIP AND THE RIGHT RELATIONSHIPS
In the digital world, trust in third parties is rapidly becoming a strategic foundation for any business. This necessitates that the responsibility for third-party risk management should move from operational staff to organizational leadership. At the end of the day, management will be accountable for third-party risks and breaches. As a rule, most companies vet the business integrity and performance of third-party vendors and business contacts before granting accreditation. In the same way, reviewing the third party’s security and data privacy systems should become a standard operating procedure for companies to further manage and mitigate the new risks arising in the digital age.
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 author and do not necessarily represent the views of SGV & Co.
Alvin G. Manuel is a Director from the
Advisory Services Group of SGV & Co.
THE GOVERNMENT’S outstanding debt may breach the P7 trillion mark next year, according to the Treasury bureau.
Amid preparations for the Budget Expenditures and Sources of Financing report for next year, National Treasurer Rosalia V. De Leon said that they have given the Budget department a P7.05 trillion debt forecast to be programmed in the general appropriations act.
“For 2018, its P7.05 trillion,” she told reporters late last week when asked for its debt program next year.
The projected rate of increase for the 2018 debt is 8.96% against the downward-adjusted P6.47 trillion outstanding debt in 2017. The growth rate compares to 6.24% between 2016 and 2017.
However in terms of the share of the country’s economy, the projected total is 39.7% of gross domestic product (GDP) from the 40.76% ratio for this year and 42.18% in 2016.
Asked for the economic implications of higher debt, Finance undersecretary Gil S. Beltran said that the growing economy will outpace the rise in debt.
“It’s just a number. Actually it’s nominal so even if the number increases the value of that debt decreases, because over time it’s subject to inflation. So the best measure is actually percentage of GDP because that is the level of resources that a country generates,” he said.
“Payments come out from production — the goods and services that are produced. It is always measured in terms of percent of GDP. And (the share) is going down,” said Mr. Beltran, who is also the Finance department’s chief economist.
He said that the globally accepted standard of a safe debt ratio is 50%.
Union Bank of the Philippines chief economist Ruben Carlo O. Asuncion said his asessment of the debt will depend on the success of tax reform.
“It is fiscally sound, as long as the government sticks to its targets, particularly that of the needed reforms in taxes and improvements in the general collection of taxes. In all fairness, government has been collecting more and is expected to collect more when the new taxes are in place,” he said.
“Fiscal discipline is important moving forward. If the fiscal reforms are not instituted as expected and planned, there might be difficulty meeting the targets and the overall plan of making lives better for all will be undermined.”
The tax reform program aims to raise government revenue by making the tax system more efficient, by removing some tax exemptions, harmonizing estate and donor taxes, increasing petroleum and automobile excise tax rates while reducing personal income tax rates.
The government had a P6.345 trillion debt as of end-May, growing 7.8% from a year earlier. The outstanding debt was at 98.07% of the P6.47 trillion programmed for this year.
Over 65% or P4.14 trillion of this amount is owed to domestic lenders, while the P2.21 trillion remaining obligation was borrowed from external sources.
The government borrows to plug its fiscal deficit, and to likewise pay down maturing debt. It aims to maintain an 80-20 borrowing mix, in favor of domestic sources.
The government has secured official development assistance (ODA) packages and concessional loans from regional partners such as China, Japan and South Korea, noting their willingness to participate in building up the country’s infrastructure.
“[The debt] has to increase because we are building infra,” said Mr. Beltran. — Elijah Joseph C. Tubayan
THE HOLDING FIRM of Davao-based businessman Dennis A. Uy has finalized its acquisition of Enderun Colleges, Inc., furthering its foray into the education sector.
In a statement issued on Wednesday, Udenna Corp. said it closed the transaction to purchase the private educational institution in Fort Bonifacio, Taguig City. Independent investment banking advisory firm Evercore acted as Enderun’s sole financial adviser for the transaction.
“Enderun Colleges provides us another opportunity to support the Philippine economy’s growth. We believe that quality education and skills training are what make our human capital more productive and competitive,” Mr. Uy was quoted as saying in the statement.
Established in 2005, Enderun Colleges initially offered academic programs solely in the hospitality management and culinary arts track. It expanded its offerings in 2009 by including business administration, entrepreneurship, and economics.
Its 1.8-hectare campus houses six buildings and an additional 8,2000 square meters of classroom space. The institution also operates food and beverage outlets within and outside its campus, while providing management services and marketing solutions to the hospitality sector through its consulting division, Enderun Hospitality Management.
“Enderun Colleges has built an impeccable reputation and has surpassed all its quality goals, but the time has come to explore new growth opportunities, which the new ownership may be able to accelerate,” the school’s President Edgardo Rodriguez was quoted as saying.
Enderun Colleges is the Udenna group’s second foray into the education sector, after investing in a maritime training school to support its shipping and logistics businesses.
“Our acquisition of Enderun Colleges comes at an opportune time. It supports our aggressive expansion in industries vital to the Philippine economy’s further growth,” Mr. Uy said.
With the acquisition, Udenna noted that it will retain the corporate management of Enderun’s school administration, working closely with the founders to facilitate the transfer of ownership.
“We are committed to the mission of Enderun Colleges to equip students with the academic training, professional competencies and character necessary for success in the global workplace,” Mr. Uy said.
The Udenna group’s diversified portfolio includes oil and gas through Phoenix Petroleum Philippines, Inc., real estate through the Udenna Development Corp., and shipping and logistics through soon-to-list firm Chelsea Logistics Holdings, Corp.
Chelsea Logistics is currently awaiting approval from the Securities and Exchange Commission to list 546.59 million shares worth as much as P8 billion in the main board of the Philippine Stock Exchange. Proceeds of the firm’s maiden offer will be used to fast-track its expansion, as other conglomerates also enter the logistics business. — Arra B. Francia
THANKS TO its unique location in the world’s southern hemisphere, Australia has had the luck of having everything going on in there. Bustling cities sit close to great agricultural land, and its sheer size makes for a unique climate, enabling it to grow varied produce. Earlier this week, BusinessWorld, along with other guests were taken to several restaurants by the Australian embassy, the Australian Trade and Investment Commission (Austrade), the Victorian State Government, and Meat and Livestock Australia (MLA) to partake in one of Australia’s prized products: beef. This is part of a promotion by the aforementioned institutions, which will run until Aug. 20.
BONDI & BOURKE’s rib eye
And it’s not just any beef, mind you: while other countries (such as the US) rely on feeding their cows with grain, Australia takes pride in the fact that 97% of its cattle are grassfed. Cows roaming about great plains munching on grass makes for a great image, but according to a press release by the Australian embassy, this diet gives cows a lower level of fat and cholesterol, as well as offering higher levels of Omega 3 fatty acids, “known to lower blood pressure and reduce the risk of certain cancers.”
Since there were more than 40 restaurants on the list, the institutions listed above thought it prudent to divide the tour into several legs: BusinessWorld attended the fifth “trail,” which included New World Makati’s Cafe 1228, Prime 101, Bondi & Bourke, and Pink’s. (Other restaurants participating in the promotion will be listed below).
CAFE 1228
The tour kicked off with the first stop at New World Makati. It’s a shame perhaps for the restaurants which followed it, for it stuffed the guests full to bursting with a five-course meal, four of those dishes almost entirely consisting of beef, and lots of it. The meal began with a cold Thai beef salad, which, despite the obvious flavor of the beef, had an almost light refinement, thanks to the light, spicy Asian dressing. Next came Steak Tartare, raw meat that was simply dressed, sliced thinly and lighty pounded to get just the right texture. Despite the lacy form of the beef, its delicate taste, and its mushy, comforting texture, one got the sense of the cow’s vitality right before it was served to you. A beef ramen followed this, and it was savory and flavorful, and almost comforting, with a rich, cloudy broth saturated with depth and flavor. While waving our hands to protest no, the restaurant brought out about five slices each of a roasted beef shank, and who were we to refuse, now that we had seen its ruby-red center? The roast was firm, and the juices well-kept, bleeding out into the mouth, and not on the plate.
PRIME 101
While reeling from the meat sweats and everyone feeling a bit drowsy, we were whisked off to the next stop — Chino Roces’s Prime 101, located above an auto shop. Those in the know are aware that the private dining setting offers the freedom (but not the cost) of having a private chef, for the restaurant listed its offerings not as cooked dishes, but raw ingredients waiting to be cooked according to your desires.
Included in the list, of course, was Australian grassfed beef (though an interesting item was a Mayura wagyu variety, apparently the cows are finished with gummy bears and Cadbury chocolate in their feed — the few times it’s nice to be bovine). The restaurant brought out a pumpkin soup first, rich and creamy, and a salad — but we knew what we came for, and the restaurant teased us first with fried siopao, filled with a thin stripe of braised and flaked beef, its strong flavor accenting an almost delicate fried bun.
Finally, we got the beef: a roasted Australian grassfed cube roll. Everything that the knife touched had some flavor of beef, like there was no mistaking it, announcing it for all to hear: this is, indeed, beef. The roast was flavored with bone marrow, which explained the soft hint of a buttery flavor, and had a touch of luxury with a dollop of truffle and foie gras sauce. Despite the pronounced flavor of the beef, it maintained a sort of femininity and delicacy with its soft tenderness. It was a regret to finish it in a few bites, and one wishes that it lasted forever.
BONDI & BOURKE
What could you expect from a restaurant named after a combination of Australia’s iconic beach, and one of its most famous streets? An Australian-raised (but New Zealand-born) chef who thinks nothing of serving any other beef but Australian.
If Prime 101’s offering had a bit of a delicacy in it, Bondi & Bourke’s rib eye offering was aggressive and definitely, definitely masculine. Served on a tray, dripping with juices, studded with bits of garlic, with bits of char that seemed to hint at a crust, we knew we were in for a ride. One felt the animal’s heft even though it now yielded to quite a sexy curved steak knife. It was firm, but tender, and had a self-assured flavor. According to chef Wade Watson, the crust was not made of herbs, but was born from a really good sear, and its juice and flavor comes from a well-deserved 30-minutes rest.
Mr. Watson had a definite answer as to why he chooses to go Australian (aside from the fact of his origins). In a low growl, he said: “Flavor.” He said: “With grass, you get a stronger flavor,” adding, “Generally, I prefer this over the US,” citing that while its cattle-raising practices may yield a softer, more tender, beef, Australia wins it due to its flavor. “And of course, it’s Australian.”
PINK’S
We were stumbling into more familiar territory with Pink’s, the Philippine license of LA legend Pink’s, the hotdog stand that even Hollywood stars wouldn’t pass on. The premise was simple: Wildflour Café and Bakery is also behind Pink’s in the Philippines, and its executive sous chef, BJ Montuano, had a very simple premise: a burger, part of its normal offerings in Pink’s. Despite the huge amount of beef consumed that day, we couldn’t pass it up.
It was a perfect last stop, for all the preparation and fluff and fancy on the first three legs, we could give our palates a rest with a simple cheeseburger we thought. Boy, was I wrong. Beneath a combination of a brioche and potato bun, and secret sauce, the burger gave out a flavor of subtlety and politeness, in an item not usually associated with those merits. While the burger patty goes through many processes, as opposed to the more straighforward roasts that we had, it seems almost frippery to look for flavor and a sense of place in meat that has been ground, mixed up, and then fried. Mr. Montuano, despite that, has a simple reason why he chooses Australian beef, “The Australian grassfed beef, it’s a bit leaner.” Perhaps it takes a man who knows his meat to notice, but then he continues, “The way that they treat their cows in general, it’s kind of like along… what we have.”
RAISING A GOOD COW
During one of the stops, Elodie Journet, senior Trade commissioner and counsellor (Commercial) for the Australian Trade and Investment Commission, elaborated on the importance of raising a good cow to be able to produce good meat. “If you have an animal that’s really stressed, then that’s going to reflect on their meat. Because the stress level is going to… make the meat a lot harder, because they’ll just get stressed out, and it will make the meat a lot more tense.” As such, the Australian government works with countries they export the cattle to ensure that the abattoirs and the shipping conditions are what “we would expect in Australia,” said Ms. Journet.
The last food promotion of this sort by the same institutions back in 2015 confined itself to Manila, but now Cebu and Davao have gotten into the fun, with four restaurants, namely Anzani, Anzani Prime, and Circa 1900 in Cebu, and another branch of Bondi & Bourke, located in Davao participating. “Really, I think it’s just the evolution of the food scene in the Philippines,” said Ms. Journet. “It’s just recognizing that you have so much more diversity outside of Metro Manila.”
She said that Australia is the number one beef supplier in the Philippines, cornering about 40% of the market share. “A lot of the beef is coming into the fastfood chains and those kinds of productions, so we’re wanting to actually try to introduce more, kind of core ingredients around the healthier side.”
The list of participating restaurants in the promotion also rose from about 20 in 2015 to about 40, with some restaurants with multiple branches. “We wanted to make sure that people understand that when it comes to Australian grassfed beef, it doesn’t mean that it has to be a super-expensive meal. You can actually have very affordable, quality beef… served in all kinds of dining settings,” she said.
Australia isn’t all about beef: according to her, Australia has a strong presence in the wheat, grain, and dairy world, adding that their wheat has whetted quite an appetite in the Philippines. “There’s that growth in terms of consumption, of more bread, and also more noodles.
“We kind of qualify as being kind of the bread basket of the world, because we obviously share a lot of our food products to actually be exported overseas.”
Next on the country’s list? Fruits. “The other component where we’ve actually seen a massive increase… is citrus.” Since more carriers now fly between the Philippines and Australia, “We’re seeing the ability to actually bring in more fresh produce.” They started out with oranges, and according to her, “We went from zero — there were no [Australian] oranges… available here in the market — to now, there’s about $20 million worth of export of oranges into the Philippines.” — Joseph L. Garcia
Restaurants participating in the Australian Grassfed Beef on the Menu Culinary Trail 2017
THE 5.2-liter twin-turbo V12 that came with the Aston Martin DB11 upon its 2016 release is still available. Beginning June 28 the car offers a second engine choice — a 4.0-liter twin-turbocharged V8.
Aston Martin said the new engine makes the DB11 sportier and expands the car’s global appeal through a “combination of exceptional performance and improved efficiency.”
The car maker said the V8 outputs 503hp and 675Nm, enough to propel the DB11 from rest to 100kph in four seconds flat, and on to a top speed of nearly 300kph. Besides performance and low emissions, Aston Martin said the new V8 also offers benefits in markets where car taxation policy is structured around engine capacity, such as China.
Another advantage is that the V8 is lighter and more compact than the V12, slashing 115 kilograms off the DB11’s weight, which is now pegged at 1,760 kilograms. Aston Martin said this reduced mass within the car’s wheelbase makes the V8 DB11 more agile, especially after the revisions to its suspension bushings, geometry, anti-roll bars, springs, dampers and ESP software settings.
Visually differentiating the V8 from the V12 DB11 are its wheel finish, dark head lamp bezels, and a pair of vents on the hood — two less than on the V12 — which can come in either black or titanium mesh. Inside, the V8 and V12 DB11 pack the same standard equipment levels, and color and trim options. The brand’s Option Packs and Designer Specification packages, plus a suite of Q by Aston Martin — Collection options, can be ordered in both variants, too.
“The DB11 is the most complete and sophisticated car Aston Martin has ever made. Now, with this new V8 engine option, we have broadened its appeal,” said Andy Palmer, president and CEO of Aston Martin.
Aston Martin Manila, which started selling the DB11 in February, said it would bring the V8 version into the country in the fourth quarter of the year, or the first quarter of 2018 at the latest.
TRUST FIRMS will soon be allowed to invest pooled funds in more instruments under new rules released by the Bangko Sentral ng Pilipinas (BSP), as it also adjusted reporting standards relative to decision-making protocols in place.
The BSP introduced two new investment instruments wherein trust firms can allocate assets under management, under Circular 966 signed by Governor Nestor A. Espenilla, Jr. on Tuesday.
Under the circular, trust entities may now invest funds in traditional deposit products offered by big banks operating in the Philippines, as well as in tradable securities issued by a foreign country. These add to the current options of investing in government-issued debt papers, state-guaranteed loans, debts secured via hold-out on deposits, and in fully-secured loans by real estate and chattels.
On the other hand, the BSP removed the provision that allows trust firms to place the funds in the central bank’s term deposit facility, in keeping with the phase-out of their access to the auctions which took effect June 30.
The new guidelines accord “greater flexibility” for trust entities in managing a client’s portfolio, while making a distinction between discretionary and non-discretionary arrangements.
“As the revised rules give trust entities more latitude in managing the funds of clients, higher standards are set in terms of managing the accounts and in protecting the interest of the investors,” the central bank said in a statement yesterday.
The changes cover trust entities which make the decision as to where they will deploy the fund placements on behalf of the client, which will have to report their balance sheet, income statement, investment activity, and return on investment to clients on a quarterly basis, on top of the details of the trust account under a firm’s watch.
On the other hand, non-discretionary deals — or trust firms which act based on an investor’s specific instructions — will simply have to “confirm” each purchase and sale transaction.
Both arrangements would need to disclose the issuer’s name, type of instrument, collateral, principal amount, market value, marking-to-market gains of losses, yield, amount of earning, transaction date, and maturity date.
“The revised policy is consistent with the thrust of the BSP to adopt a differentiated regulatory approach based on the major business activities and investment mandate of trust entities particularly ‘trust,’ ‘advisory,’ ‘advisory with execution’ and ‘execution only’ mandates,” the BSP added, noting that the new scheme would “improve operational efficiency” and “promote greater investor confidence.”
As investment avenues were liberalized, the BSP also streamlined the regulatory standards to make firms with discretionary powers more accountable of their investment decisions, versus the expectations set for those simply carrying out client instructions.
Trust firms must adopt a “disciplined” investment strategy, the central bank said, as it gave the asset managers six months to adjust internal procedures to align with these changes.
The regulator said the new policy is one of a series of reforms covering trust and other fiduciary businesses. In June 2015, the BSP allowed bank trust departments to scale up as stand-alone trust corporations focused on portfolio management and investment.
THE Bank of Commerce (BanCom) saw its bottom line soar by more than half last year primarily driven by its robust core businesses, with the bank projecting to double its consumer loans for 2017.
In its 2016 annual report published on its Web site, the lender reported its net income stood at P610 million in 2016, surging by 85% from the P330 million booked in 2015.
“The last five years saw the Bank’s continuing profitability as Bank of Commerce accumulated P3.6 billion in audited net income from year 2012 to year 2016, of which P610.4 million was earned during the year 2016, which is an 85.09% growth from the 2015 net income of P329.8 million. ROE (return on equity) increased to 3.5% in 2016, from 1.9% in 2015. Earnings per share likewise increased to P5.44 in 2016, from P2.94 in 2015,” BanCom stated.
“Underlying this is the growth in the bank’s core businesses, the effectiveness of managing the cost of intermediation, and constant revisit of the cost of operations,” it added.
Meanwhile, its net loans and receivables by end-2016 also rose 18.4% year-on-year to P49.8 billion, bulk of which were consumer loans, which went up 35.4% year-on-year.
Its consumer and credit loans accounted for 14.91% of its total loan portfolio at end-2016 from the 13.04% seen in 2015.
“Consumer loans are further expected to double in 2017, as branches become more proactive in account origination. The roster of corporate accounts increased in tandem with the middle market segment.”
“The bank will further focus on increasing consumer loans for 2017, fuelled by a more efficient and decentralized backroom, diversified yet balanced distribution channels, and a more aggressive sales team in the head office,” it added.
Meanwhile, BanCom’s net interest income reached P863.3 billion, up from 2015’s P847.2 billion.
For this year, the bank also sees its deposit production expanding after it opened new branches in provincial areas in the second semester of 2016.
As of end-2016, BanCom had a total branching network of 132 and 262 automated teller machines situated across the country. — JMDS
THE PESO closed nearly flat versus the greenback on Thursday amid muted trading among market players after US Federal Reserve Chair Janet L. Yellen’s dovish remarks on Wednesday.
The local currency closed at P50.53 against the dollar yesterday, gaining by two centavos from its P50.55-per-dollar finish on Wednesday.
The peso opened Thursday’s session at P50.45 per dollar. Its intraday peak was at P50.40 versus the foreign currency, while its worst showing was at P50.56-to-the-dollar.
Traders attributed the local currency’s muted performance to a quiet market that was just consolidating.
“Basically we saw range trading because of a quiet market and it was seen in low volumes from yesterday’s trading,” one trader said by phone on Thursday.
Similarly, another trader said in a phone interview: “Basically the peso was just consolidating within the P50.40 to P50.60 levels and there was not much liquidity in the market.”
Dollars traded amounted to $372.5 million, down from the $595.7 million logged the previous session.
The trader said market players were quiet after the Ms. Yellen’s dovish comments on Wednesday and after the peso just tracked the direction of the dollar against a basket of currencies.
“There was not much market activities because some market were still digesting dovish statements of Yellen [on Wednesday] and amid broad dollar weakness across the board,” the trader said.
Reuters reported Ms. Yellen said the US economy is in good condition for the US central bank to hike interest rates gradually and not too fast to reach the neutral level and is on track with its plan of trimming its over $4 trillion bond portfolio.
However, the Fed Chair noted slower inflation and a neutral interest rate could leave the regulator with less room to act.
Meanwhile, the trader noted that the Bangko Sentral ng Pilipinas (BSP) was present in the market yesterday.
As regulator of the Philippine financial system, the BSP sometimes steps in currency trading to temper any sharp swings in the peso.
“Near the session’s close, we suspected intervention from the BSP,” the trader said.
For today, both traders see the peso moving within P50.40-P50.60 versus the dollar.
“The peso could still trade within that range unless there’s a surprise from Yellen, since it’s her second day of testimony in front of the US Congress. So whatever she postulates, dictates the direction of the dollar-peso,” one trader noted. — Janine Marie D. Soliman
While watching my 19-year-old daughter at home with her friends playing some arcane group games, while checking on their smartphones, I couldn’t help but think about this next generation of youngsters, collectively known as Generation Z or the 16-19 years of age group. What’s going to be their impact to society? How will they be as consumers and workers? There has been much talk about millennials, but businesses and institutions should start planning around the emergence of this distinct generation, also known as Gen Z in short, which is numbering numbers approximately two billion globally and comprising more than 20% of the population in the Philippines.
In her seminal book From Boomers to Linksters: Managing the Friction Between Generations at Work, author Meagan Johnson defines Gen Z or those born after 2002 (and therefore post-millennial) as the Linkster generation, because it is the first generation to be linked into technology from day one.
This is one of the characteristics of Gen Zs, that is, they are dependent on technology, smartphones and apps, and social media for help and expertise. As a result, the skill of face-to-face communication will deteriorate; hence, potentially there will be more misunderstandings and miscommunications among this group and within others.
In addition, “as each generation is believed to get more progressively liberal and tolerant, it is likely Linksters will be highly socially aware and accepting”; hence, Gen Z “will be more accepting and probably take the idea of different lifestyles to a different level.”
With these basic characteristics of Gen Z, coupled with my interaction with them in the university, organizations, and at home, here are some of my evaluations of Gen Z:
1. They are better at multi-tasking and split-tasking. Compared to millennials, performing multiple tasks at the same time is hardwired in their brains. They can create a document on their computer, do research on their tablet, take notes on a notepad, while talking to a friend virtually. They can quickly and efficiently shift between work and play, real and virtual in bursts of intense attention with multiple distractions going on in the background.
Many attribute this behavior to having less focus. That is true, but then again it doesn’t mean they are less effective and efficient. They are just an evolved generation who can perform multiple tasks. Just think about how this kind of behavior will reshape the workplace. Newer collaborative tools and interfaces should be fast and efficient enough to accommodate multiple tasks. Imagine the need for advertisers to work differently.
According to a landmark study of Kantar Millward Brown titled “AdReaction: Engaging Gen X, Y and Z”, which surveyed more than 23,000 consumers in 39 countries, brands need to work hard to capture the attention of Gen Z when they are consuming media — either traditional or digital — or risk being missed altogether. Moreover, according to this study, advertisers need to use humor in their ads to effectively capture the attention of Filipino Gen Zs.
2. More early-starters. Many employers are predicting that more Gen Z students go straight into the workforce, opting out of the traditional route of higher education, and, instead finishing school online, will go straight into apprenticeships or internships.
As an example, my 19-year old daughter has mastered analytics programming and tools in a short span of time. Her employers tracked her in social media and urging her to work for them even before graduation. Since Gen Zs easily and quickly learn new things, while there’s a gap of skill in the workforce, employers are willing to get them to fill the skills gap.
3. They have higher expectations. Since they were born with technology at their hands, what was deemed to be inspiring, innovative, and unique are now taken as a given among teens.
Engaging Gen X, Y and Z highlights that Gen Z in the Philippines are harder to impress in comparison to the older generations. According to the Kantar Millward Brown study, they expect more from brand advertising and are less easily impressed with new formats such as augmented reality or sponsored lenses than previous generations, favoring humor as the key characteristic of a successful ad.
4. They are more entrepreneurial. My daughter shared that many of her classmates have start-ups, some already successful. Gen Z’s access to technology and tools, and their ability to process multiple information has resulted in an entire generation thinking and acting more entrepreneurially. They desire more independent work environments. According to one survey in the US, 72 percent of teens say they want to start a business someday.
Generation Z is indeed a different crop compared to millennials. Businesses, marketers, and even institutions need to prepare for their rise into the mainstream workforce and consumer populace.
Reynaldo C. Lugtu Jr. is a senior executive in the information and communications technology sector. He is the Chairman of the ICT Committee of the Financial Executives Institute of the Philippines. He teaches strategic management in the MBA Program of De La Salle University. He is also Adjunct Faculty of the Asian Institute of Management.
Alvin G. Manuel is a Director from the
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