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Ease of finance with an all-in-one app: A Q&A with Maya Bank

By Bernadette Therese M. Gadon, Researcher

WITH THE EXITING of retail banks in the country that offers digital banking services, Filipinos have been looking for other banks to transfer to.

The rebranding of one of the largest digital wallets in the country to combine both e-wallet and banking all in one app, Maya Bank is a new addition to make finance easier and accessible to Filipinos around the world.

Maya, formerly called PayMaya, started in 2007 and was the financial and digital payments app used for ease of money remittance across the country under Smart Money.

The use of sending money via phone was an introduction to easier process compared with going to physical payment centers.

Over the past years, Maya has been improving in e-wallet services when the coronavirus disease 2019 (COVID-19) pandemic forced Filipinos to stay at home. This gave opportunity to rising digital banks and e-wallet apps to be introduced and for Filipinos to adapt to cashless transactions.

According to the Bangko Sentral ng Pilipinas (BSP), electronic payments have reached P8.45 billion and financial transactions have reached 1.4 million in the first half of 2022.

In the latest Financial Inclusions Survey, the number of banked Filipinos reached more than half of the population with 36% having digital wallet accounts, up from the 8% in 2019. Majority came from the low- to middle-income population putting 27.5 million Filipinos having digital wallet accounts.

Online financial transactions also surged by 60% in 2021 from 17% in 2019. According to the survey, the lack of awareness and weak mobile signal and slow internet connection were the main reasons for why other Filipinos are still not transacting online.

Last April 29, Maya announced its digital banking services via app. As one of the six digital bank licensees under the BSP, Maya’s edge against other banks is its all-in-one service from e-wallet, to banking, to investments via cryptocurrency with their upgraded app.

To know more about the new and improved Maya, BusinessWorld reached out to Shailesh Baidwan, PayMaya Group President and Maya Bank Co-founder, via e-mail interview.

Here’s the excerpt of the interview:

What are the new additions in the rebranding of PayMaya to Maya? How is the performance of the e-wallet and the banking of Maya since its reopening? How many users does Maya Bank have before and after its reopening?

Mr. Baidwan: Maya is the only all-in-one money app in the country and the response has been overwhelmingly positive. Today, Maya remains the highest-rated local finance app in both Google Play and App Store. As of end-June, Maya had over 50 million registered users across its consumer platforms. In less than three months after the new Maya app launched, more than 650,000 customers had opened a Maya Save account, making it the fastest-growing digital banking service in the country.

We seamlessly combined the power of our feature-rich wallet with digital banking services such as savings and credit powered by Maya Bank. Some of the features of Maya include:

• Maya Savings is a high-yield savings account with a 6% introductory interest rate, one of the highest offered by a local bank today.

• Personal Goals allows users to set up to 5 goals with a timeline while enjoying a 6% interest rate.

• Maya Credit is an instant credit line that lets customers borrow up to P15,000 within the app.

• Maya Crypto where customers can buy, hold, and sell 15 coins, including the most popular ones like Bitcoin, Ethereum, and many more, for as low as P1.

• Maya Wallet, the most reliable payments wallet with a 99.94% uptime and a refreshed customer experience.

What specific services/promotions has Maya made to be an inclusive digital bank to Filipinos?

Mr. Baidwan: We’re significantly changing financial services for Filipinos. A key value we’re providing is easier access. In an instant, you can have an interest earning financial account. All you need to do is register to the Maya app and upgrade your account with just one government ID. You can open a savings account with just P1 and there is no maintaining balance.

On the credit side, we’re able to offer instant loans to both our consumers and MSME (micro, small, and medium enterprises) partners all within our apps because we have a view of their payment transaction history.

We also made the experience seamless. Because the Maya has banking, payments, and e-wallet all in one money app, we’re making it hassle-free for consumers to deposit, withdraw, and maximize their earnings for credit, payments, and crypto investment. Moreover, our savings and credit are powered by Maya Bank, our own digital bank, so you don’t need to submit new requirements to another third-party provider.

We’re also offering the best rates. The Maya Save is a high-yield savings account, with up to 6% interest rate that can be enjoyed until September 2022.

We introduce digital finance features through groundbreaking campaigns that are both rewarding and educational. We were the first to offer an Early Access Challenge with gamified missions, allowing customers to earn cashback as they discover and use the Maya app features. We are making investments more exciting, starting with easy and seamless crypto. We did the country’s first Bitcoin millionaire promo and we have embedded educational tutorials and how to’s in our Maya crypto feature. Today, our promos are not just rewarding, they also promote financial fitness and digital adoption.

As one of the six license holders of digital banking in the Philippines, what is the difference of Maya Bank compared with other digital banks? How many Filipinos have opened a bank account through Maya? And how does Maya make digital banking easier for its customers?

Mr. Baidwan: What makes Maya so powerful and unique is the all-in-one money experience we provide customers. Apart from offering progressive digital banking services like high-yield savings and credit, we also have a feature-rich wallet that they can use for convenient cashless payments, and even to start their crypto journey. No other fintech in the Philippines can offer all these services in one platform.

Another important key differentiator for Maya is our on-ground touchpoints, boosted by our agent network Maya Center (formerly known as Smart Padala), with over 65,000 touchpoints all over the country. With this, cashing in and out of Maya is as easy as going to your neighborhood sari-sari store, with Maya Center.

Because we’re also the leading payments processor for all types of businesses, customers can pay in over 760,000 registered merchants nationwide — whether via QR (quick response code), their Maya card at all Visa and Mastercard-accepting stores worldwide, or via their mobile number online. Even customers of other banks integrated with QR Ph, the national standard for QR payments, can pay merchants using our Maya QR as we lead in the deployment nationwide.

Maya has introduced cryptocurrency services. Given this, how is the performance and reception of customers to cryptocurrency for the past two months? Has cryptocurrency been booming for e-wallet consumers?

Mr. Baidwan: Three months since launching our crypto feature, we’ve registered an outstanding surge in crypto usage and volume, exceeding our initial goals. It’s because Maya Crypto offers an all-in-one experience with low barrier to entry. All you need is an upgraded account, and you can start buying crypto with just P1.00. We’re changing the game with exciting features and more coins soon.

How do you promote cryptocurrency for those who have no knowledge about it? Does your learning guides for cryptocurrency in the app been helpful for your customers? And what promotions do you currently have to convince your customers to try crypto?

Mr. Baidwan: While there is a lot of interest on crypto among Filipinos, it remains to be a daunting subject for many, so we made sure that Maya Crypto includes a Learn tab. Maya is the only app with this helpful guide. We also produce educational content via our own social media channels and via content partnerships with finance experts.

The pandemic has been tough to most businesses and banks, a few retail banks moved out of the country this year. How is Maya Bank handling pressures and the current economic landscape to avoid ending up like other digital banks stopping operations while also continuing to promote digital banking?

Mr. Baidwan: The opportunity for Maya is big as the Philippines still has a large population of underserved and unbanked consumers and MSMEs. We have moved beyond payments with digital banking. We pursued our own digital banking license because we have a deep understanding of the market that we want to serve. At the same time, Maya offers much more than digital banking because of our unique payment ecosystem.

We have set up Maya with customers at the front and center. Thanks to our digital payments business, we have a ready base of 50 million customers and over 760,000 merchant touchpoints ready to leap forward into digital banking. We are using insights and data from the payment transactions to create the next level of relevant products for the customers.

Second, we are a digital-first company, so this gives us a way to innovate very fast and roll out very quickly. For example, we do app releases every two to three weeks as our standard sprint. This gives us extraordinary agility, even among banks and other fintechs.

Third, we are used to a very high frequency of transactions, and our digital capability enables us to handle micro transactions on a broad scale.  Because we’re digital, it also gives us the ability to offer innovative products with higher margin and more extensive use cases.

Lastly, we’re leveraging on our existing nationwide ecosystem that we built over the years to sustain and accelerate our digital banking system. We’re bringing digital banking closer to our Maya app customers, Maya Business partner merchants, and Maya Center agents. On top of that, we are scaling our efforts faster as we leverage our key partnerships with various conglomerates, starting with the MVP group of companies and key large merchants.

What are your plans for the rest of the year, as well as the medium- and long-term goals of the rebranded Maya? Are there other products/services Maya is planning to make banking easier for its customers and to include other unbanked Filipinos in the digital banking landscape?

Mr. Baidwan: We’re extremely pleased with our fast growth and progress. Over the next months, expect more exciting services and a better experience from Maya. On the consumer side, we’re expanding the use cases for our wallet as we introduce new digital banking services, including more investment and lending products. On the enterprise side, we’re going heavy on new offers for MSMEs as we also strengthen our payment acceptance presence nationwide.

Maya has separate offers for businesses such as Maya Business and loaning through Maya Credit. How affordable is this? What specific offers do these have to help businesses and borrowers and how are you making the process easier compared with other banks?

Mr. Baidwan: Through our Maya Business, we’re making it much easier for all types of merchants to grow their businesses. We enable them to accept digital payments with our end-to-end omnichannel solutions. We offer the most competitive rates as we’re a direct acquirer of major payment schemes like Visa, Mastercard, JCB, Bancnet, and QR Ph.

We are also offering a fully digital business deposit account that offers free PESONet transfers and a 1.5% interest rate, four times higher than traditional banks. We’re already providing credit lines for MSMEs, starting with our agent networks and soon, we’re going to offer more lending products.

Businesses can also easily disburse employee payroll, settle taxes, and pay their suppliers with our platform. With our all-in-one platform, merchants can efficiently run their day-to-day operations so they can focus on growing their business.

Any advice you want to give to Filipinos using e-wallet and digital banks for the rest of the year and the coming years?

Mr. Baidwan: Choose a simple and seamless money experience. For instance, with Maya, you just need one app to save, spend, invest, and more.

Use it for everyday transactions. As you earn more rewards, you’re also building your digital credit footprint and providers like Maya can offer you the most relevant offers.

Safeguard your account. Securing your finances starts with basic principles — don’t share your account passwords with anyone else, be careful with sharing personal information, and review carefully any transactions.

Have a money maker mindset. Start saving money so you can earn from your interest, which you can maximize for savings, credit, insurance, and more.

What other products or services you are planning to launch in the near term? Anything else you would like to share with us?

Mr. Baidwan: We’re very excited about Maya and how we’re creating the end-to-end digital financials services platform of the Philippines. We’re going big on our ‘personalized finance’ thrust with game-changing offerings. We have our Dark Mode feature –— ideal to reduce eye strain that comes with prolonged screen time. We will also introduce a feature that will allow users to send or receive money just by typing a username, instead of a mobile number. We’re bringing more innovative lending and investment products to consumers and we’re changing the game for crypto with our retail payments ecosystem.

For Maya Business clients, we’re offering a business deposit account that offers free PESONet transfers and a 1.5% interest rate, four times higher than traditional banks. Soon, we will also introduce more credit products to our merchant partners and to their customers.

Rate hikes to boost PHL banks’ margins

REUTERS

BANKS in the Philippines and most of the Southeast Asian region will see better margins amid higher interest rates, but rising inflation could cause more borrowers to default on their loans, Moody’s Investors Service said on Monday.

“Relatively benign inflation in ASEAN (Association of Southeast Asian) countries has enabled central banks in the region to prioritize economic recovery over monetary tightening. Yet they will step up efforts to contain price appreciation as inflationary pressure grows,” the debt watcher said.

“Rises in interest rates will lead to a widening of banks’ net interest margins (NIMs). However, asset risks for banks also increase when interest rates rise. We expect increases in interest rates in the region will be gradual and growth in problem loans will be modest,” it said.

The report, which focuses on six ASEAN economies, namely Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam, said while banks in these economies may face pressure to keep lending rates low to support recovery from the impact of the coronavirus pandemic, those in the Philippines and Singapore will see the largest increases in margins as interest rates rise.

“The reason why margins will increase more for banks in the Philippines than the rest is that the former has larger shares of current and savings accounts (CASA) deposits in total deposits and modest proportions of market funds in total funding mixes,” Moody’s added.

It said the more a bank uses CASA deposits for funding, the smaller increases in interest expenses will be when rates rise, which will boost the bank’s NIM.

“In addition, we expect interest rates in the Philippines will rise the most among the six ASEAN economies,” Moody’s added.

The debt watcher said it expects credit demand to be stable in most parts of ASEAN in the coming year as these countries continue their recovery from the pandemic, but China’s slowdown could pose a risk to this outlook, as the world’s second-largest economy is a major trading partner for most of Southeast Asian countries.

“An acceleration of inflation and corresponding rate hikes can also hurt credit demand, limiting banks’ ability to grow lending at higher interest rates. Further, rise in inflation leads to increases in personnel and other operating costs for banks. Banks will also face mark-to-market losses on investments, though the impact on profitability will be lower because ASEAN banks do not rely heavily on trading and investment income,” Moody’s said.

Inflation’s impact on banks’ asset quality could also offset the expected improvement in margins, the debt watcher said, as the resulting slowdown in economic activity due to rising rates could increase repayment burdens among borrowers.

“There is a close correlation between inflation and NPL (nonperforming loan) growth across the ASEAN region. The link is the strongest in Indonesia and the Philippines because periods of high inflation rates in the two countries have been accompanied by economic slowdowns and volatility in foreign-exchange rates,” Moody’s said.

“However, we expect increases in NPLs will be modest across the ASEAN region because inflationary pressure will abate in all six economies in 2023 and the pace of rate hikes will be gradual, while the ASEAN economies will continue to recover. Banks will not have to increase loan-loss provisions substantially also because banks have made substantial forward-looking provisioning at the peak of the pandemic,” it added.

Inflation could also lead to an increase in credit costs, the debt watcher said.

“Banks’ credit costs are typically more prone to increases in economies where borrowers’ debt burdens are already heavy and interest rates rise sharply when inflation accelerates. In such countries, higher interest rates significantly reduce borrowers’ cash flow, which are also negatively impacted by weakening consumer demand and business sentiment,” it said.

The Bangko Sentral ng Pilipinas’ (BSP) policy-setting Monetary Board has increased benchmark rates by a total of 175 basis points (bps) so far this year as it battles rising inflation.

Headline inflation picked up to 6.4% year on year in July from 6.1% in June and 3.7% a year ago. This was the fastest in nearly four years and exceeded the central bank’s 2-4% target band for a fourth straight month.

This brought the seven-month average to 4.7%, still below the BSP’s full-year forecast of 5.4%.

Meanwhile, latest BSP data showed the gross NPL ratio of the Philippine banking industry dropped to 3.6% in June, from 4.48% a year ago and 3.75% in May. The June bad loan was the lowest since 3.5% in September 2020.

Bad loans dropped by 12.7% to P421.311 billion in June from P482.991 billion a year earlier. This was also 1.8% lower than P429.106 billion in May.

The Philippine central bank earlier said the NPL ratio of banks might peak at 8.2% this year. — K.B. Ta-asan

Film screenings, workshops, mark Philippine Film Industry Month

FREE film screenings, networking events, a book launch, and workshops will mark the second Philippine Film Industry Month (PFIM), a month-long celebration of the heritage and legacy of Philippine Cinema. The Film Development Council of the Philippines (FDCP) will be hosting local and international events in September.

With the theme “Tuloy Ang Kuwento: Ang Pagbabalik ng Pelikulang Pilipino (The Story Continues: The Return of Philippine Movies),” the celebration aims to gather the different stakeholders and rally behind the Philippine film industry as it regains its momentum upon the easing of pandemic-related restrictions and as cinemas and theaters become fully operational. Most of the events will be held in-person.

In honor of their significant contribution to the industry, films of National Artists for Film actor-director Fernando Poe, Jr., actress Nora Aunor, screenwriter Ricky Lee, and director Marilou Diaz-Abaya will be screened for free.

PPP will also be returning, featuring the finalists from Sine Kabataan Short Film Lab and Festival and Sine Isla: LuzViMinda Short Film Competition.

Former President Rodrigo Duterte proclaimed September as Philippine Film Industry Month through the Presidential Proclamation 1085, s. 2021.

FPJ FILMS AND KIDLAT TAHIMIK
In line with the celebration of the 83rd birthday of the late actor-director Fernando Poe, Jr. — often referred to as The King of Philippine Movies — the Philippine Film Archive (PFA) will hold free screenings of four of his films from Aug. 31 to Sept. 3 in FDCP Cinematheque Centres nationwide. The films are Ang Padrino, Ang Panday, Pagbabalik ng Lawin, and Asedillo (directed by Celso Ad Castillo).

Meanwhile, the FDCP will hold the “Tuloy Ang Kuwento: PFIM Opening Ceremony” at Cinema 6 of TriNoma Mall in Quezon City, to be hosted by Dianne Medina, with guests Dr. Nicanor Tiongson and Dik Trofeo. Part of the opening includes a special screening of the newly restored film, The Moises Padilla Story by National Artist Gerardo de Leon.

There will also be a Cinema Books Expo featuring books by Ricky Lee, Doy del Mundo, Nick Deocampo, and Nestor Cuartero in cooperation with DLSU Publishing House and UST Publishing House.

On Sept. 7, the FDCP will officially open National Artist Kidlat Tahimik’s exhibit Indio-Genius: 500 Taon Labanan Kontra Magellan, Marilyn, Mickey at Padre Damaso, at the Cinematheque Centre Manila. The exhibit features art installations and a special screening of Mr. Tahimik’s film Balikbayan #1: The Silent Movie.

The exhibit, which was shown for six months in Spain’s Palacio Cristal last year, will be fanned out across six venues: the National Museum of the Philippines, Museo Pambata, the Rizal Park Visitor’s Center, the Intramuros Administration, the headquarters of the National Commission for Culture and the Arts, and at the FDCP’s Cinematheque Centre Manila.

PISTA NG PELIKULANG PILIPINO
The FDCP’s flagship film festival, Pista ng Pelikulang Pilipino (PPP), officially opens on Sept. 9. Now on its 6th edition, the festival will screen restored films in its PPP Classics section and short films in its Sine Kabataan and Sine Isla: LuzViMinda sections.

The PPP Opening Ceremony will feature free screenings of restored classic films starring Nora Aunor: Atsay, directed by Eddie Garcia, and Tatlong Taong Walang Diyos, by Mario O’Hara, at the TriNoma Cinema in Quezon City.

After the opening ceremony in TriNoma, PPP Classics and Sine Kabataan and Sine Isla: LuzViMinda short films will be screened for free at Cinematheque Centres nationwide from Sept. 10 to 24.

Under PPP Classics, the feature films Atsay and Tatlong Taong Walang Diyos, will be shown on Sept. 10; Cain at Abel and Gumapang Ka Sa Lusak, both written by Ricky Lee, will be shown on Sept. 15; and Brutal and Karnal by the late director Marilou Diaz-Abaya will be shown on Sept. 16. These screenings are supported by Solar Films, ABS-CBN’s Sagip Pelikula, and Viva Films.

PPP Classics’ films will also be screened, together with Sine Kabataan and Sine Isla short films, from Sept. 17 to 24 in all Cinematheques Centers.

GALA NIGHT
Sept. 12 is a significant day for Philippine Cinema — it was the day the first Filipino-produced and directed film, Dalagang Bukid by Jose Nepomuceno, was released in 1919. In line with this, the FDCP will hold the Awit at Pelikula: Philippine Film Industry Month Gala at Teatrino in Promenade, Greenhills in San Juan City.

The gala will feature soundtrack songs from some of the great Filipino classic films, to be performed by some of the country’s top performers like Christopher de Leon, Anna Feleo, Jed Madela, and Bituin Escalante. There will also be a tribute to the actress Cherie Gil who passed away on Aug. 5. The event will be hosted by actor-singer Piolo Pascual.

The Gala will also feature a new original composition by National Artist of the Philippines for Music Ryan Cayabyab, and written by Jose Javier Reyes.

SINE KABATAAN AND SINE ISLA: LUZVIMINDA
On Sept. 16, PPP 6 will premiere the 10 short films from Sine Kabataan and the 10 short films from Sine Isla: LuzViMinda, to be followed by the Awards Night, and a special screening Martika Escobar’s Leonor Will Never Die at the TriNoma Cinema in Quezon City.

On Sept. 17 to 18, free screenings of the in-competition short films will be held, with a talkback session with the Sine Kabataan and Sine Isla filmmakers at TriNoma. The Sept. 18 schedule will include a free screening of the feature film John Denver Trending by Arden Rod Condez.

BOOK LAUNCH, QUIZ NIGHT
FDCP, in partnership with the South East Asia Pacific Audio-visual Archive Association (SEAPAVAA), will hold a book launch and a film archiving forum on Sept. 21 at the Cinematheque Centre Manila. The book Keeping Memories: Cinema and Archiving in the Asia-Pacific, edited by filmmaker and historian Nick Deocampo, is a joint publication of SEAPAVAA, FDCP, Ateneo Press, and the Vietnam Film Institute.

Meanwhile, on Sept. 24, the FDCP Channel will host the FDCP Channel Anibersaya Game Night, an online game night which the public can join and win prizes. This will be streamed live from 7 to 8 p.m. via FDCP Channel, and FDCP’s official Facebook and YouTube pages.

UFLIX RELAUNCH, WEBINAR
The FDCP will be relaunching UFlix — an exhibition platform for student filmmakers — on Sept. 24 by announcing an upcoming incentive program for student filmmakers. The UFlix inauguration will hold screenings for student films for the day at Cinematheque Centers nationwide.

To raise awareness about the film incentives and funding programs that filmmakers can apply for, on Sept. 28 the FDCP Film Philippines Office (FPO) will hold a Webinar In Film Incentives (WIFI) to discuss its Film Location Incentive Program (FLIP), International Co-Production Fund (ICOF), ASEAN Co-production Fund (ACOF), Film Location Engagement Desk (FLEX), and CreatePHFilm Funds for Development (Script Development and Project Development), Production (Small Budget and Large Budget), and Post-Production. FPO will also announce the opening of their new cycle for their incentive and funding programs.

CLOSING EVENT
Capping off the month-long festivities on Sept. 20 is the Filmmakers and Shakers Night: Closing Event of the Philippine Film Industry Month program, which will be hosted by Robi Domingo and feature tributes to the “Queen of Visayan Movies” Gloria Sevilla and “Queen of Philippine Movies” Susan Roces. The closing event also serves as an opportunity to honor and thank all the partners, stakeholders, and filmmakers who supported the Philippine film industry.

Beyond film month, the FDCP will hold the International Film Industry Conference (IFIC), an annual conference that brings together experts from the local and international film industries as panelists and speakers in a series of sessions and masterclasses. The hybrid conference will be held in October.

PHILIPPINE FILMS IN ITALY
Philippine films will also be celebrated in Italy in September.

To mark the 75th anniversary of the formal establishment of diplomatic relations between the Philippines in Italy, the Philippine Embassy in Rome and Sentro Rizal Rome, in partnership with the FDCP, will hold the third edition of the Festival del Cinema Filipino in Italia (Philippine Film Festival in Italy) on Sept. 10 and 11. Meant to promote Philippine culture, tourism, cinema, and creative industries in Italy, the festival carries the theme “Philippines-Italy: Rising Together.”

The Philippines will also be present on one of the most film festivals in the world, the Venice International Film Festival (VIFF). The country will present two Filipino co-produced films and one Out of Competition film. There will also be one FDCP-led panel discussion at the Venice Production Bridge, the networking side of the festival.

Autobiography by Makbul Mubarak – a co-production between Indonesia, France, Germany, Poland, Singapore, Qatar, and the Philippines which is an FDCP FPO ASEAN Co-production Fund grantee — will compete in the Orizzonti section of the Venice Film Festival. Meanwhile, the Romanian film To The North by Mihai Mincan, which stars Filipino actors Soliman Cruz and Bart Guingona, will also compete in the same section.

Filipino auteur Lav Diaz’s film, Kapag Wala Nang Mga Alon (When the Waves are Gone), an International Co-production Fund grantee of the FPO, will have its world premiere under the Out of Competition section of the festival.

The FDCP will host the panel discussion “Fostering Creative Collaborations — Common Strategies and Opportunities” at the Venice Production Bridge, in collaboration with Directorate General for Cinema and Audiovisual – Ministry of Culture of Italy, Philippine Embassy in Rome, and FDCP’s UniPhilippines Office.

Singapore mulls crypto leverage rules to reduce sector’s risks

THE MONETARY Authority of Singapore (MAS) is considering more ways to protect consumers who trade cryptocurrencies, joining a push by policy makers and financial regulators across the globe aimed at mitigating the risks of the sector, which remains largely unregulated.

The MAS’ new rules may include customer suitability tests and cutting the use of leverage and credit facilities by retail investors for trading these digital assets, Managing Director Ravi Menon said in a speech on Monday, elaborating on earlier remarks that authorities were planning to expand rules in the sector. It plans to publicly consult on the proposals by October, he said.

“Banning retail access to cryptocurrencies is not likely to work. The cryptocurrency world is borderless.” Menon said in front of a room of more than 50 industry players, with the event also streamed online. “There is greater impetus now among global regulators to enhance regulations in this space. MAS will also do so.”

The pitfalls of such lack of oversight globally have come sharply into focus over the past few months, with a series of high profile company failures triggering and exacerbating a $2-trillion market meltdown. Singapore’s regime for crypto companies has garnered particular attention, given that several entities including disgraced hedge fund Three Arrows Capital and platforms Vauld, Zipmex and Hodlnaut, operated out of the country.

Mr. Menon reiterated a stance that cryptocurrencies’ volatility makes them unsuitable for use as money and “highly hazardous” for retail investors. Tokenization and distributed ledgers, that record the ownership and transfer of ownership of digital assets, offers economic potential however, he said.

MAS had already started tightening crypto investments rules early this year when it required virtual-asset providers to be licensed locally even if they only do business overseas. The central bank further stepped up scrutiny of the sector in recent weeks, sending a questionnaire to some applicants and holders of its digital-payments license seeking highly granular information about their business activity and holdings.

Singapore was early to study blockchain technology and tout its ambitions as a crypto hub. It is now trying to achieve a delicate balance between encouraging blockchain innovation and protecting investors from some of the risks of participating in a nascent market. So far more than 10 entities have permits to operate as digital service token providers out of nearly 200 applicants. — Bloomberg

Tax court affirms geothermal firm’s refund claim

CTA.JUDICIARY.GOV.PH

THE Court of Tax Appeals (CTA) has affirmed a division ruling which partially granted Philippine Geothermal Production Co., Inc.’s refund claim worth P4.24 million of its excess input value-added tax traced to zero-rated sales for the 2014 fiscal year.

In a 16-page decision on Aug. 17 and made public on Aug. 26, the CTA full court said it found no legal basis to overturn its decision granting the VAT refund.

“Based on the foregoing judicial pronouncements, the power of the CTA to exercise its appellate jurisdiction does not preclude it from considering evidence that was not presented in the administrative claim in the Bureau of Internal Revenue,” according to the ruling penned by Associate Justice Erlinda P. Uy.

“Accordingly, the court may give credence to all evidence presented by the taxpayer claimant, irrespective of whether or not they were submitted at the administrative level.”

The commissioner of internal revenue (CIR) argued the tribunal made an error in considering documents submitted by the company that were not submitted at the administrative level.

The CTA  partially granted the firm’s petition to refund P4.24 million out of its P5.26-million claim of excess input VAT.

The court asserted that it was within its discretion to grant a petition based on the evidence presented.

It also cited the country’s revenue code as it provides that it is not required for a taxpayer to directly attribute its claimed input tax to zero-rated sales to be creditable.

Under the law, zero-rated sales are transactions made by VAT-registered taxpayers that do not result in any output tax.

The tribunal ruled that the CIR failed to provide evidence to support its argument, as the court maintained it did not abuse its discretion in its ruling.

“The mere general averment of the CIR failed to convince this court en banc that a reversible error was committed by the court in division that would warrant the modification or reversal of the assailed decision and resolution,” said the tax court. — John Victor D. Ordoñez

Football field to be built in Bridgetowne

ROBINSONS Land Corp.’s (RLC) Bridgetowne Destination Estate will soon have a football field and sports lounge.

In a statement, RLC said the Bridgetowne football field is targeted to be launched by the second quarter of 2023.

The 105-meter x 650-meter football pitch will be installed with the highest-grade turf that complies with standards of the Federation Internationale de Football Association (FIFA).

The facility will be a collaboration among RLC, Miguel V. Gutierrez and partners, former University of the Philippines (UP) Diliman varsity players and members of the UP Football Alumni.

“We are very much excited and thankful to Robinsons Land and its Bridgetowne Destination Estate for giving us the opportunity to build an official size FIFA-preferred turf football field. This facility will not only afford more access to but also expand awareness of the sport and hopefully, incite passion among enthusiasts,” Mr. Gutierrez said in a statement.

Mr. Gutierrez, co-founder of Anytime Fitness Philippines and owner of Studio 300, noted there is a shortage of football venues in the country.

“With football’s growing popularity, we are looking forward to having a full calendar of activities and events in Bridgetowne: development camps, international games and tournaments, professional trainings, friendship cups and football clinics for children and youth among others,” Mybelle V. Aragon-GoBio, senior vice-president and general manager of Robinsons Integrated Developments, said in a statement.

Adjacent to the football field will be an enclosed sports lounge and entertainment venue. It will feature an indoor sports bar and restaurant with provision for al fresco dining and state-of-the-art game halls and equipment for billiards, a golf simulator, arcade games, bowling alley, a rehabilitation facility and gym.

The football field will be located across the Bridgetowne Obstacle Park, a 6,000-square meter park with 25 obstacles, scheduled to be launched in October.

Ben&Ben releases international single, preps for North American tour

Ben&Ben

NINE-PIECE folk pop band Ben&Ben released their new international single, “The Ones We Once Loved,” and are preparing for their send-off concert prior to their US tour.

Since the Ben&Ben’s debut in 2015, the group has amassed a total of 3.5 million listeners on Spotify.

The band is composed of twin brothers Paolo Benjamin (lead vocals, acoustic guitar) and Miguel Benjamin Guico (lead vocals, acoustic guitar), Poch Barretto (lead guitar, backing vocals), Jam Villanueva (drums), Agnes Reoma (bass), Andrew de Pano (percussion, backing vocals), Toni Muñoz (percussion, lead vocals), Keifer Cabugao (violin, vocals), and Patricia Lasaten (keyboard). The nine-piece collective recently won the Best Asian Band at the 2022 BandLab NME Awards, and reaped multiple recognitions for their work on their second album, Pebble House, Vol. 1: Kuwaderno.

NEW SONG
Following the release of the songs “Doors” and “Leaves” in 2020 — which were done in collaboration with Korean singer-songwriter Young K of Day 6 — Ben&Ben returns with another single.

Released under Sony Music, the new song is a confessional ballad written by Paolo Benjamin Guico. The track offers a perspective on love, forgiveness, and breakups.

“[The song is about] something we often hear about, but we don’t get enough closure in our lives,” he said at an online press launch on Aug. 23.

“Minsan iyung mga tao dumadaan sa buhay natin, hindi man para mag-stay pero para may maidulot na lesson. (Sometimes, people come into our lives, not to stay but to teach us a lesson). Bitter and sweet, who knows? But lessons nonetheless, in our lives,” Mr. Guico said, adding that the song was based on his personal experience from a past relationship. “We hope that you feel something that could bring something good in your life because of this song.”

The song, he continued, is “a letter to the people who have come and gone in our lives. It’s something that we rarely express but we wanted to verbalize it more in this song than we usually do.”

Produced by Johnoy Danao and Jean Paul Verona, the song’s arrangement maintains depth, weight, and storytelling within instrumentation.

“Supporting the vocals is the staple piano sound, as one would hear when being sung… slowly followed by more and more melodic instruments as the singer opens up and exposes vulnerability,” the band explained. “At the end of the day, we wanted to make an arrangement that would provide no barrier to taking in each meaning of every word of a song that has so much to say.”

“The key is to just keep making songs for the sake of making songs and for the love of it because you’ll never know when a hit comes,” Paolo Guico’s twin brother, Miguel, said on the challenge of writing hits. “The pressure sometimes gets to you that you have to follow this up with something,” he added.

As a group they always remind themselves of the reason that brought them together: “the love for music that we love performing and we love sharing [with] others,” Miguel Guico said.

CONCERT AND TOUR
The group will be holding a send-off concert the Cultural Center of the Philippines Open Grounds on Sept. 3 before embarking on a tour of North America.

“It’s going to be explosive, tasteful, and colorfully musically. We’ve been rehearsing a lot,” the group’s violinist Keifer Cabugao said of the Sept. 3 concert.

It will be their first live concert since the coronavirus pandemic halted live performances in their tracks. Last December, the band held an online concert, Kuwaderno, which was shot and recorded at the SMART Araneta Coliseum.

“Excited ako, kasi ngayon pa lang iba na iyung energy. Usually, iyung energy namin is a reflection kung kamusta iyung audience (I’m excited because, at this point the energy is different. Usually, our energy is a reflection of energy from the audience),” bassist Agnes Reoma said.

After the send-off concert, the band will travel to North America where they will perform in venues across nine cities in the United States and Canada.

“As we head for the first time in the US, we want to start the whole process with this major send-off concert,” Miguel Guico said.

Ben&Ben’s “The Ones We Once Loved” is available on all digital music platforms worldwide. For tickets to the Ben&Ben send-off concert, visit www.ticketnet.com.ph/events/detail/Ben-%26-Ben-Send-Off-Concert or https://www.ovationtickets.com/benandben2022. — Michelle Anne P. Soliman

Study formulates ‘nowcast’ model for data

A STUDY has recommended a new model to help reduce the lag in reporting official macroeconomic statistics, which can help the Bangko Sentral ng Pilipinas (BSP) in setting monetary policy.

The study titled “An Application of Large Bayesian Vector Autoregressive (BVAR) Model in Nowcasting the Philippine Economy,” which is part of the BSP’s Working Paper series, formulates a model to nowcast macroeconomic data to reduce the “significant lags” in reporting.

“In an inflation-targeting country like the Philippines where the BSP considers forward-looking indicators in the setting of monetary policy, nowcasts set the initial tone of the near-term path of the economy,” the study said.

The research said policy makers rely on real-time information to determine relevant actions over the forecasting horizon.   

However, official statistics are released with lags and are subject to revisions after their initial release.

Given this, there is a need to efficiently gather data from multiple sources to be able to predict macroeconomic variables in a timely manner, the study said.

“We introduced a nowcasting model using mixed-frequency indicators as an additional tool in assessing the real-time growth of the Philippine economy,” it said.

Results of the study’s forecast exercises showed the BVAR outperformed the benchmark models on the shorter horizon. The reduction of the lag structure also outperformed the benchmark model.

“Moreover, based on forecast evaluation, the nowcasting model also performs better on a shorter horizon even with a large specification in the lag order and a relatively small sample, which verifies results from various related literatures that data-driven approach and inclusion of large information set to capture key macroeconomic variables are useful to short- to near-term forecasting,” it said. — KBT

Federal Land sees sustained demand for The Seasons Residences

FEDERAL LAND, Inc. is seeing sustained demand for its Japanese-inspired luxury property, The Seasons Residences in Bonifacio Global City.

In a statement, Federal Land said it is optimistic about the upward trend in residential real estate demand.

The developer said only a few units are left in the first two towers of The Seasons Residences, prompting the launch of the third tower, Aki Tower.

“Investors continue to look for properties that would meet their needs in the long-term, from proximity, to commercial areas and green spaces, to access to lifestyle experiences. These factors are crucial as the country moves forward into a post-pandemic future. The demand for well-built and well-planned spaces is realized more these days. And this is what we offer with The Seasons Residences,” Federal Land Sales Group Head Margarita Saenz-Resurreccion said.

The Seasons Residences is the first residential project with a distinct Japanese concept in the country. It features Japanese innovations such as earthquake-resistant technology, sunken slab or below-floor drainage system for easy maintenance and repairs, air-washing tiles that minimize excess humidity and odor, kitchen floor storage, space-saving kitchen sink, and Japanese-branded shower toilets.

“We are raising the standards of property development with The Seasons Residences. Its architecture and design are like no other; its amenities cater to the various lifestyle needs of our future residents; and its value offers a sure ROI (return on investment) for our investors,” Ms. Saenz-Resurreccion said.

Maynilad customers reach 10M, up 64% after re-privatization

CUSTOMERS of Maynilad Water Services, Inc. increased by 63.9% to 10 million by end-2021 from 6.1 million in 2006 or before the company took over Metro Manila’s west zone water concession, it said in a media release on Monday.

After its re-privatization in 2007, the water provider noted that it managed to provide a 24-hour water supply for up to 97.5% of its customers by the end of last year from just 32% in 2006.

“The significant improvement in Maynilad services is due in great part to our employees, whose hard work and dedication enabled the company to withstand major financial, regulatory, operational and environmental challenges over the years,” said Maynilad President and Chief Executive Officer Ramoncito S. Fernandez.

Maynilad said that the increase in its customers also includes households and establishments in areas that used to be waterless.

Meanwhile, the company said that those who receive water supply at the acceptable pressure of 7 pounds per square inch (PSI) nearly doubled to 86.3% from 45% during the same period.

“We will continue to push on, so that service enhancements can be sustained despite new hurdles brought on by climate change and rising water demand,” Mr. Fernandez said.

Maynilad also noted that the company was able to exit court-administrated rehabilitation after prepaying $240 million worth of external loans and implementing a P210-billion capital expenditure program that improved water and wastewater services in the west zone.

Maynilad, a concessionaire of the Metropolitan Waterworks and Sewerage System, serves the cities of Manila, except portions of San Andres and Sta. Ana. It also operates in Quezon City, Makati, Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas and Malabon. It also serves the cities of Cavite, Bacoor and Imus, and the towns of Kawit, Noveleta and Rosario, in Cavite province.

Metro Pacific Investments Corp., which has a majority stake in Maynilad, is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Ashley Erika O. Jose

Banks’ earnings rebound sustained despite rate hikes

JULIAN PAOLO DAYAG-UNSPLASH

By Lourdes O. Pilar, Researcher

RISING INTEREST RATES and further reopening of the economy brought strong earnings to listed banks in the second quarter.

During the second quarter, the barometer Philippine Stock Exchange index (PSEi) lost 14.5% on a quarter-on-quarter basis, a reversal from the 1.1% growth posted in the first quarter and last year’s 7.1%.

Meanwhile, the financials subindex, which included the banks, also dropped by 14.9% quarter on quarter in the April-June period versus the 5.5% growth recorded in the first quarter. This was a turnaround from the 9.1% jump recorded at the end of last year’s second quarter.

Most of the banks’ stock performance dipped in the second quarter.

“With regard to price performance, most bank stocks slid into negative territory (on both a year-on-year and quarter-on-quarter basis) on general equity market weakness as investors’ risk appetite deteriorated against a backdrop of rising inflation and tightening liquidity due to hawkish monetary policy moves across the globe,” said Rastine Mackie D. Mercado, research director at China Bank Securities Corp.

Among the top 3 largest private banks in terms of assets, shares in BDO Unibank, Inc. (BDO) dropped by 16.7% quarter on quarter to P110.50 each in the second quarter. Metropolitan Bank & Trust Co. (MBT) also declined by 16.1% to P47.48 apiece, while Bank of the Philippine Islands (BPI) slid by 14.9% to P84.80 per share.

Bank of Commerce (BNCOM) which was listed in the PSE last March, dropped the most by 34.5% to P8.00 per share from P12.22 at the end of first quarter.

Meanwhile, listed banks that saw quarter-on-quarter growth in their stock prices were Asia United Bank Corp. (AUB), which went up by 2.3% to P44.80 each, and Philippine Bank of Communications (PBC), which inched up by 0.1% to P17.98 apiece.

Though most of the banks showed losses in their stock prices, lenders still showed strong earnings performance in the second quarter.

Rachelleen A. Rodriguez, research analyst at Maybank Investment Banking Group–Philippines, said that the reopening of the economy brought strong earnings in the second quarter.

“The sector’s strong second-quarter earnings results were mainly a function of the economic reopening, which not only improved borrowers’ credit profiles (which, in turn, led to lower NPL [nonperforming loans] incidence and lower provisions expense for banks), but also drove borrowing appetite across corporates and SMEs (small and medium enterprises),” Ms. Rodriguez said.

Cristina S. Ulang, research head at First Metro Investment Corp. (FMIC), said in an e-mail that yield spread is wider due to the rising benchmark interest rates by the central bank’s Monetary Board.

“That means more net interest income for the banks as they increase their lendings amid the strong GDP (gross domestic product) growth recovery story,” she said.

“Banks also took advantage of the excess liquidity in the system which means lower cost of funds for them even as the general level of interest rates rose,” Mr. Ulang said. “That’s because a large part of their funding were from cheap demand and savings account.”

Aggregate net income of universal and commercial banks went up 16.2% to P131.82 billion as of end-June from P113.49 billion last year, data from the Bangko Sentral ng Pilipinas showed.

Gross total loan portfolio of these big lenders rose by 11.3% to P10.96 trillion as of end-June from P9.84 trillion a year ago.

The big banks’ gross NPL ratio also improved to 3.25% in June from 3.38% in May and 4.03% in June last year.

The big banks’ net interest margin (NIM) — a ratio that measures banks’ efficiency in investing their funds by dividing annualized net interest income to average earning asset — improved to 3.29% in the second quarter from 3.23% in the first three months of the year. However, this was lower than 3.39% NIM recorded in the second quarter of last year.

Since March, most parts of the country have remained under the most lenient alert level.

In the second quarter, the Philippine economy expanded by 7.4% as rising inflation weighed on consumer spending, based on preliminary data released by the Philippine Statistics Authority.

The second-quarter growth print was slower than 12.1% a year earlier and 8.2% in the first quarter.

BANK STOCK PICKS
Analysts suggested that investors should pick those bank stocks showing strong income growth, their loan portfolio composition, and the ability to play with high interest rates.

For BDO Securities Corp., investors should look at banks that are able to maintain good asset quality and are better positioned to benefit from broadening economic activity and the rising interest rate environment.

“Banks that beat earnings expectations such as BPI and SECB (Security Bank Corp.) stood out, with their first half earnings up 73% and 100% respectively. Both banks also posted strong loan growth of 14%-15%, which are above industry average of 12%,” BDO Securities said in an e-mail.

“Healthy core operations were supplemented by asset sale gains and tax adjustments in the case of BPI. While SECB’s performance was boosted by significantly reduced provisioning costs and normalized tax expenses,” it added.

“Among the banks we follow, the names that beat our expectations were BPI and SECB. The common ground of the aforementioned is the significant reduction in their credit loss provisions and healthy expansion in their core business,” said Luis A. Limlingan, head of sales at Regina Capital Development Corp.

Mr. Limlingan added that the banks investors eyeing to get into position should consider the bank loan portfolio composition and have guided attractive NIM sensitivity to BSP’s rate adjustments.

FMIC’s Ms. Ulang said MBT stood out after its first-half earnings hit its pre-pandemic level, adding that the bank “got earnings momentum, which was 33% up year-on-year to P15.6 billion.”

“In terms of stock price performance, AUB and China Banking Corp. (CHIB) stood out as they managed to stay in positive territory in terms of year-to-date (YTD) gains at 3.6% and 3.5%, respectively,” China Bank Securities’ Mr. Mercado said.

“It is also worthy to note that both banks posted robust first half of 2022 bottom line performance as measured by RoE (return on equity) at 15.8% and 16.4% for AUB and CHIB, respectively, both among the top in the industry,” he added.

RATE HIKES
Last May, the Philippine central bank raised its key benchmark rate by 25 basis points (bps), the first time since 2018 followed by another 25 bps in June, to tame inflation and prevent the peso from further devaluation.

However, the BSP raised its key interest rates by 75 bps in a surprise move in July and kept the door open for further tightening. On Aug. 18, the central bank further tightened its policy rate by another 50 bps. The central bank has raised rates by a total of 175 bps so far this year.

The overnight reverse repurchase rate now stands at 3.75%, while the rates on the overnight deposit and lending facilities were also increased to 3.25% and 4.25%, respectively.

“Rising rates are generally positive for the banks, especially for the BDO, BPI, since over 70% of their loan portfolios have variable rates, 75-78% of their borrowers are corporates and their current account/savings account percentages are high, at 72-85,” Maybank’s Ms. Rodriguez said.

“It typically takes six months for banks to fully price in the incremental rate adjustment, so we expect banks’ NIMs to reflect the 75-bps rate hike in July by first quarter of 2023,” said Ms. Rodriguez.

Aniceto K. Pangan, trader at Diversified Securities, Inc., said in an e-mail that the recent rate hike to reign on inflation will positively increase interest loan margin in banks and further enhance banks earning’s growth.

“Though increase in interest rate may slow down economic activity, it may continue to provide growth for the banking sector on increase interest loan margin, as long as, this would not cause economic recession,” said Mr. Pangan.

Allyza L. Espiña, equity research analyst at RCBC Securities, Inc., expects the rate hikes to expand banks’ NIMs.

“We don’t see any substantial impact of the increased rates on loan growth as industry loan levels have been picking up even with rising interest rates,” said Ms. Espiña in an e-mail.

OUTLOOK
Moving forward, listed banks’ stock prices as well as net incomes would be sustained until next year, analysts said.

Ms. Rodriguez expects the increased lending activity, particularly in the corporate segment, which accounts of 75% of current exposures.

“This will be boosted by a collective expansion of the NIMs, particularly in the coming quarters as the banks reflect the incremental rate hikes to the predominantly variable-rate loan books. Although banks have begun to rebuild their securities portfolio which resulted higher interest income accruals, we expect trading to continue to be weak,” said Ms. Rodriguez.

Ms. Rodriguez also added that rate hikes dropped trading incomes by 20%-40% year on year, the downward impact on earnings was more than offset by better asset yields, given that 70% of banks’ loan books have variable rates, and higher foreign exchange (FX) trading volumes arising from the volatile FX during the period.

“We expect this trend to continue towards third quarter and until 2023,” she said.

“On the fundamental front, I think the current bottom-line growth momentum would just be sustained until next year. Although this assumes a couple of factors including continued loan demand restoration, proper timing of passing through rates to clients, and local economy stays on track to recovery,” Mr. Limlingan said.

“Banks shares are likely to remain firm given good earnings prospects amid a reopened economy and a likely peaking inflation based on BSP messaging,” Ms. Ulang said.

Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., said in an e-mail that the current monetary policy tightening cycle is favorable for Philippine banks but is not expected to result in a significant decline in credit growth and asset quality.

“Profits and loans of Philippine banks will likely continue to grow as the economy recovers from the coronavirus pandemic. The banking sector is also seen to remain resilient amid shocks on the back of their strong capital positions,” said Mr. Arce.

“Banks’ NPL ratios are expected to have peaked and will continue to gradually decline by end-2022. Over the next year, higher inflation and rising rates could dampen demand for loans and increase defaults among consumers and small businesses, but these risks are seen to be manageable,” he added.

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