PHL big banks’ Q1 loan growth is quickest since the start of pandemic

May 31, 2022 | 12:33 am

THE first quarter saw the country’s largest banks expand their loan portfolio at the fastest pace since the start of the coronavirus disease 2019 (COVID-19) pandemic two years ago.

BusinessWorld’s 1^st Quarter Banking Report showed the combined loans of 45 universal and commercial banks (U/KBs) rose by 6.21% year on year to P9.93 trillion in the January-March period, faster than the 5.93% growth in the previous quarter.

It was the fastest expansion in eight quarters, or since the 9.73% growth recorded in the January to March period in 2020.

On the other hand, the combined assets in the first quarter jumped by 7.37% to P20.27 trillion in the first three months of 2022.

However, this pace was slower than the 8.59% growth logged in the previous quarter, but quicker than the 5.84% seen in the first three months of 2021.

The asset growth was the slowest in three quarters, or since the 2.71% posted in the second quarter of 2021.

In terms of profitability, the median return on equity (RoE) stood at 3.96%, inching up from 3.11% seen in the previous quarter and 3.89% RoE in the January-March period a year ago. The RoE or the ratio of net profit to average capital measures the amount that shareholders make on their investments in a company.

Meanwhile, the nonperforming loans (NPLs) reached P394.63 billion in the first quarter, 6.19% higher from P371.65 billion in the fourth quarter of 2021. Compared with the first quarter of last year, bad debt rose by 9.05%.

This brought the NPL ratio — the share of soured loans to the total loan portfolio — to 4.03% in the first quarter, higher than 3.95% in the preceding quarter but still lower than the 4.12% in the January-March period in 2021.

Financial assets are considered nonperforming when they are considered impaired under existing accounting standards or there is evidence that full repayment of principal and interest is unlikely without foreclosure of collateral, if any.

All other loans are considered nonperforming if any principal and/or interest are left unpaid for more than 90 days from contractual due date, or accrued interests for more than 90 days have been capitalized, refinanced, or delayed by agreement.

Similarly, the U/KBs’ nonperforming asset ratio — the proportion of nonperforming assets to total assets — reached 1.31% in the first quarter, up from 1.27% the previous quarter. However, this was lower than the 1.38% logged in the first three months of 2021.

In relation to the total assets, foreclosed real and other properties stood at 0.26%, inching up from 0.25% in the preceding quarter. It was lower than the 0.28% recorded in the first quarter of 2021.

Total loan loss reserves amounted to P363.56 billion in the first quarter, higher than the P341.23 billion seen in the previous quarter and the P325.26 billion last year.

The UK/Bs’ median capital adequacy ratio — the ability to absorb losses from risk-weighted assets — rose to 21.73% in the first three months of the year, from the preceding quarter’s 21.30% and the 19.78% in the same period last year.

The ratio remains well above the regulatory minimum of 10% set by the BSP as well as the international minimum standard of 8%.

Among banks, BDO Unibank, Inc. had the largest assets with P3.611 trillion as of the first quarter. It was followed by Land Bank of the Philippines (LANDBANK) with P2.808 trillion, and Metropolitan Bank & Trust Co. (Metrobank) with P2.718 trillion.

The merger of the United Coconut Planters Bank and LANDBANK became effective on March 1.

BDO was the top bank with P2.301 trillion worth of loans issued, followed by Bank of the Philippine Islands with P1.456 trillion and Metrobank with P1.192 trillion.

In terms of deposits, BDO ranked first with P2.819 trillion, followed by LANDBANK with P2.461 trillion and Metrobank with P2.043 trillion.

Among banks with assets of at least P100 billion, Standard Chartered Bank recorded the fastest year-on-year growth with 50.74%. It was followed by Rizal Commercial Banking Corp. (19.42%), and LANDBANK (16.57%).

Meanwhile, LANDBANK remained as the most aggressive lender in the first quarter with an annual increase of 24.64%, followed by Bank of Commerce’s 16.62% and The Hongkong & Shanghai Banking Corp. Ltd.’s 14.61%.

BusinessWorld Research has been tracking the financial performance of the country’s biggest banks on a quarterly basis since the late 1980s using banks’ published statements of condition. — M. I. U. Catilogo

DENR imposes moratorium on new applications for seabed quarry permits

May 31, 2022 | 12:32 am

Quarrying-trucks — PHILIPPINE STAR/EDD GUMBAN

THE Department of Environment and Natural Resources (DENR) has imposed a moratorium on the acceptance of new applications for special exploration permits or government seabed quarry permits.

The DENR issued Administrative Order (AO) 171-2022 on May 2 after President Rodrigo R. Duterte’s directive to stop accepting applications for reclamation activities.

“The President directed the DENR and the Philippine Reclamation Authority (PRA) to put on hold the acceptance of all new applications for reclamation projects in the country; and ensure that the pending applications strictly comply with all legal requirements,” the order read.

Under the order, there will be a moratorium on the acceptance of all new applications for special exploration permit/government seabed quarry permits until another presidential directive is issued.

A copy of AO 171-2022 was published in a newspaper on Monday. It will take effect after 15 days.

Seabed quarrying refers to the process of extracting, removing and disposing of quarry resources found in offshore areas. It is usually considered for massive land reclamation projects.

The PRA approves bids and awards for contracts for government reclamation projects.

The DENR issues the final permit for any company planning to undertake seabed quarrying and mining.

In 2021, the Mines and Geosciences Bureau (MGB) received six government seabed quarry permit (GSQP) applications, according to MGB Director Wilfredo G. Moncano.

“We have a total of 10 officially accepted GSQP applications. We are waiting for their compliance with the Area Status and Clearance before we proceed to the next stage of evaluation. If they failed to comply with the Area Status and Clearance within the prescribed period, we will be denying their applications,” he said in a text message.

Mr. Moncano said that there were another four GSQP applications filed before the moratorium that were still not officially accepted.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the DENR’s order was a step towards ensuring that the local mining and quarrying industry remain environmentally sustainable.

“There is a need to align the global best practices on mining activities, in terms of sustainability and minimize adverse impact on the environment. Increased international compliance with [environmental] standards by both international and local regulators in recent years would place more stringent environment standards, by carefully weighing the environmental damage or impact of those activities over the long-term compared to economic gains derived,” he said in a text message.

“This is also consistent with the increased need to sustain the country’s marine resources amid the country’s importation of fish in recent months,” he added.

In December 2021, the government lifted the four-year ban on open-pit mining.

In April, President Rodrigo R. Duterte had also lifted the nine-year moratorium on granting mining permits. — Luisa Maria Jacinta C. Jocson

ADB greenlights $400-M loan for PHL capital development

May 31, 2022 | 12:31 am

One Triangle tower — Ayala Land Inc’s Tower One office building is seen at the heart of the Makati business district, March 11, 2016. — REUTERS/ROMEO RANOCO

THE Asian Development Bank (ADB) on Monday said it has given the greenlight for a $400-million policy-based loan to help the Philippines further develop the domestic capital market and increase financing for infrastructure projects.

In a statement, the multilateral lender said the loan will assist the Philippines’ efforts to create an efficient domestic debt market, and boost institutional participation in the market, specifically insurance firms and pension funds.

The ADB said the additional supply of long-term finance will help the country address an infrastructure financing gap estimated at around P2 trillion a year up to 2030.

“As the Philippines steers its economy towards sustainable and resilient growth after the devastating COVID-19 pandemic, it will require various sources of long-term financing to support the recovery of its industries and micro-, small-, and medium-sized enterprises; provide social protection; and fund its infrastructure development priorities,” ADB Principal Financial Sector Specialist for Southeast Asia Stephen Schuster was quoted as saying.

Mr. Schuster said a more diversified investor base will ease fiscal constraints in the country.

The further development and growth of the insurance and pension sectors can fuel economic growth and reduce poverty, the ADB said.

The policy loan will help build an enabling environment for more investment products aimed at long-term investors.

Compared to its peers in the region, the Philippines’ pension funds and the insurance sector accounts for a combined 12% of the country’s gross domestic product, versus Thailand’s 30% and Malaysia’s 80%.

“There is huge potential in tapping this sector for long-term funds since they have long investment horizons and low leverage. These investors can offer better debt pricing and longer maturities in local currency and are less likely to sell or retreat during short-term market corrections,” ADB said.

The ADB is one of the Philippines’ biggest sources of official development assistance, with average annual lending of $1.9 billion in the last five years.

In 2021, the ADB lent around $2.2 billion to the Philippines, the bulk or 92% of which went to pandemic response programs. — TJT

Tax breaks give Converge more room for expansion

May 31, 2022 | 12:07 am

LISTED fiber internet service provider Converge ICT Solutions, Inc. said the approval of its tax incentives will allow more room for the company to further expand its fiber network to reach its goal of covering 55% of households in the Philippines.

“Securing tax breaks from FIRB (Fiscal Incentives Review Board) will allow Converge more room for expansion of FTTH (fiber-to-the-home) ports towards our 2023 goal of deploying 7.5 million to 8 million ports to cover 55% of Philippine households,” said Maria Grace Y. Uy, co-founder and president of Converge, during the company’s annual stockholders’ meeting on May 27.

The FIRB recently approved the application for tax incentives of Converge and three other telecommunications companies.

The tax incentives granted to Converge include a four-year income tax holiday, five years of enhanced deductions, and 11 years of duty exemption on equipment and raw materials. These were granted to Converge for its fiber optic network for high-speed internet broadband, with a total project cost of P150.6 billion.

Finance Secretary and FIRB Chairman Carlos G. Dominguez III said in a statement that the government expects Converge to deliver on its performance commitment of “faster and cheaper internet access” in remote areas, as “this will not only address our pain points with regard to connectivity but also provide more employment opportunities to our people in rural areas.”

SkyTowers Infra, Inc., Frontier Tower Associates Philippines, Inc., and Transcend Towers Infrastructure Philippines, Inc. were also granted tax incentives.

Converge said it believes the FIRB approval was a recognition of the “missionary nature” of its project, which is expected to “bring connectivity to marginalized areas of the Philippines.”

“Broadband connectivity is one of the priority sectors that have a direct impact on AmBisyon Natin 2040, the government’s long-term vision for the nation,” it said in a statement.

Converge, which saw its attributable net income increase by 27% to P1.97 billion in the first three months of the year, targets to roll out fiber-to-the-home infrastructure to cover more than 1,200 unserved and underserved towns nationwide.

Converge ICT shares closed 1.70% lower at P26.05 apiece on Monday. — Arjay L. Balinbin

Anne Curtis ends hiatus with comeback concert

May 31, 2022 | 12:07 am

ANNE Curtis makes her comeback to the concert stage in Luv-Anne: The Comeback at Resorts World Manila’s (RWM) Newport Performing Arts Theater on June 11.

Four years since her last concert and three years since welcoming her first child, taking a break in Australia and spending time with her family during lockdown, Ms. Curtis said that she is ready to start working again.

“Luv-Anne was originally… supposed to be a digital concert,” Ms. Curtis said during an online press conference on May 25. “It made sense to do an online concert back then because everyone was at home. And then more so because another lockdown happened.”

Ms. Curtis added that the production team waited for a period of normalcy to push through with a live concert.

“I had visited Resorts World, I sat on the stage to have a feel of it, kung kaya ko siya (If I could manage it),” Ms. Curtis said. “It felt it was the right amount of people I could be comfortable performing live with. I feel like it is a great way to reintroduce this world to me.”

According to a press release, Ms. Curtis’ concert includes “birit* songs numbers” and “palaban** fashion” renditions of popular international and OPM hits, and special guest performances.

“I’ve been doing dance rehearsal twice to thrice a week just to get movement in my body again. I’ve been doing band rehearsals and voice lessons,” Ms. Curtis said of preparations.

The concert is directed by Paolo Valenciano, with creative direction by Georcelle Dapat-Sy, and musical direction by Louie Ocampo.

For the upcoming show, Ms. Curtis has been training with Singer, voice professor, and singing voice therapist Katherine Frances Valdellon Molina (better known as Kitchy Molina).

“Nakapahinga talaga yung voice ko, gumanda… (My voice was well rested, it improved…),” she said. “I won’t say sobrang ganda pero may improvement. (I won’t say it’s super nice but there is improvement).

Luv-Anne: The Comeback is produced by Frontrow Theatre Management in cooperation with Resorts World Manila and Viva Artists Agency. Tickets are now available at all TicketWorld and SM Tickets outlets and range in price from P2,500 to P10,000. For inquiries, call Viva (0908-814-4601), Ticketworld (8891-9999), or SM Tickets (8470-2222). For more information about Luv-Anne: The Comeback and RWM’s entertainment schedule, visit www.rwmanila.com. — Michelle Anne P. Soliman

* Sustained high notes while singing.

** Combative

ABS-CBN sees improved Q1 performance, cuts losses

May 31, 2022 | 12:06 am

ABS-CBN Corp. has seen its attributable net loss for the first quarter of the year narrow to P1.38 billion from a loss of P1.95 billion the previous year.

The company’s total revenues for the quarter climbed 18.6% to P4.65 billion from P3.92 billion in the same period in 2021, its first-quarter report showed. Its total expenses remained at P5.77 billion.

ABS-CBN’s advertising revenues increased 59.8% to P1.49 billion from P929 million previously, while consumer sales grew 5.8% to P3.17 billion from P2.99 billion.

The company said the increase in advertising revenues is attributable to both political placements and growth in regular advertising as it continues to expand its coverage through partnerships.

“Consumer sales increased by P174 million mainly resulting from the licensing and syndication of the company’s films and programs library,” it noted.

As of March 31 this year, ABS-CBN’s total consolidated assets stood at P53.4 billion, 1.5% higher than total assets of P52.6 billion as of Dec. 31, 2021.

The company said its net debt-to-equity ratio was at 1.45x and 1.46x as of March 31 this year and Dec. 31, 2021, respectively.

Under President Rodrigo R. Duterte’s government, lawmakers who supported him rejected the franchise application of ABS-CBN, the former rival of GMA Network, Inc. in the broadcasting space.

The House of Representatives committee on legislative franchises deemed the broadcast network critical of Mr. Duterte and “undeserving” of the privilege.

“Despite the non-renewal of the company’s franchise, ABS-CBN remained committed in producing meaningful and quality content to continue to be of service to the Filipino worldwide,” the company said.

It launched in 2020 its Kapamilya Channel on cable TV, and subsequently, its digital streaming channel Kapamilya Online Live.

“On Oct. 6, 2020, a new milestone was again reached by ABS-CBN where it was able to secure a partnership with Zoe Broadcasting to blocktime ABS-CBN’s programs under the Channel 11 A2Z. These initiatives allowed ABS-CBN to be welcomed back to Filipino households. Launching these platforms allowed the company to generate P1.5 billion in advertising revenues in the first quarter of 2022,” the company said.

ABS-CBN shares closed 3.03% higher at P10.20 apiece on Monday. — Arjay L. Balinbin

ABS-CBN partners with Viu to stream PHL Flower of Evil adaptation internationally

May 31, 2022 | 12:06 am

ABS-CBN and PCCW’s pan-regional OTT video streaming service Viu will stream the Philippine adaptation of the Korean thriller Flower of Evil (2020) in 16 markets across Asia, the Middle East, and South Africa.

The series is the first Viu Original Adaptation from the Philippines, and it stars Lovi Poe and Piolo Pascual.

The series is Ms. Poe’s first drama series with the network since joining ABS-CBN in September 2021, and Mr. Pascual’s first drama series in four years.

“The way we adapted it is very Pinoy,” Mr. Pascual said of the series during an online press launch on May 23. “At the end of the day, it’s not about copying but coming up with something new.

“Projects, when they come, you just take it as they are, so I never wanted to compare any of my work to anything else…,” Mr. Pascual added. “It’s a matter of accepting the whole story and portraying something na hindi mo pa nagawa (which you have not done before).”

“I’m really grateful,” Ms. Poe said of the opportunity to work with Mr. Pascual. “This is my first [Kapamilya] show and I’m paired up with someone who is really amazing, and really genuine and nice.”

INVESTIGATING A SERIAL KILLER
Flower of Evil follows a couple and their daughter. However, the wife and daughter are unaware that the man has successfully changed his identity to hide a scandalous past. His wife, who is a police detective, is then tasked with investigating an unsolved serial murder case that leads her to the man she married.

“You give them the benefit of the doubt first and then that’s when you’re being a detective comes to figure things out,” Ms. Poe said of her role.

“This latest offering puts Filipino talent front and center in the way we do storytelling, supported by a powerhouse cast and a world-class production team,” Viu Philippines’ Country Manager Arianne Kader-Cu said in a statement.

“Our partnership with Viu on the local adaptation of Flower of Evil is a major milestone for ABS-CBN Entertainment. This is an opportunity for us to showcase excellent Filipino content and talent to the global audience in the 16 markets of Viu,” ABS-CBN Entertainment’s Chief Operating Officer for Broadcast Cory Vidanes said in a statement.

“Our local adaptation of the Korean hit love story Flower of Evil, a compelling and powerful narrative on love for family, search for truth and justice, is the unanimous choice to open our regional partnership with Viu,” Ms. Vidanes added.

Also in the cast are Agot Isidro, Edu Manzano, Denise Laurel, Joross Gamboa, Joem Bascon, Epy Quizon, Rita Avila, Jett Pangan, Pinky Amador, Joko Diaz, and JC de Vera.

ABS-CBN and Viu’s collaboration aims to bring premium Asian entertainment to more viewers worldwide. The partnership began in March with the streaming of ABS-CBN’s adaptation of the BBC One drama series The Broken Marriage Vow.

Flower of Evil is currently in production and is scheduled to premiere in June. It will stream on Viu 48 hours before its domestic television broadcast. — Michelle Anne P. Soliman

New capital rules could spell doom for rural banks

May 31, 2022 | 12:05 am

business-people-connecting-puzzle-pieces-[rawpixel.dom] — RAWPIXEL.COM-FREEPIK

AS THE PHILIPPINES starts to recover from the pandemic-caused recession, the Bangko Sentral ng Pilipinas (BSP) plans to hike the minimum capital requirement of rural banks in a bid to strengthen and enhance the capacity of these small lenders which could spell the doom for some of them.

In a draft circular, the central bank sought to raise the minimum capital requirements for rural banks to P60 million (head offices and banks with less than five branches) up to P200 million (more than five branches). This excludes the lenders’ branch-lite units.

Under the current regulations, rural banks and cooperatives must have a minimum capitalization of P10 million to P200 million depending on the location and number of branches.

The planned adjustment of required capital for smaller banks forms part of the initiatives under the Rural Bank Strengthening Program (RBSP), which was approved by the Monetary Board last March 3.

The RBSP was developed to enhance the operations, capacity, and competitiveness of rural banks. It is composed of four key elements: strengthened capital base; holistic menu of five time-bound tracks, all aimed at ensuring that rural banks that continue to operate have adequate capital to support their operations and effectively comply with regulatory expectations; incentives and capacity building interventions to promote successful undertakings; and review and enhancements of existing regulations to ensure consistency in policy approach and direction.

Under the strengthened capital base, the central bank created five tracks under the program that would encourage the promotion of a strong capital base for banks. These five tracks were merger/consolidation; acquisition/third-party investment; voluntary exit/upgrade of license; capital-build up program; and supervisory intervention.

Furthermore, this program aims to aid the challenges that rural banks’ face in terms of enhancing their risk management systems; upgrading resources and managing operational costs; meeting prudent standards; and accelerating digital transformation, among others.

INCLUSION INTERRUPTED?
With its primary objective of meeting credit needs and providing affordable financial services to the rural population of farmers, fishermen, and merchants, the new minimum capital requirement would push the rural banks to close their doors.

This move of the regulators will stunt the financial inclusion initiatives in the rural areas, Rural Bankers Association of the Philippines President Albert T. Concha, Jr. said.

“We find the proposed amounts too high given the BSP concerns that the increase in capital seeks to address… The increase should be aligned to the needs and realities of each rural bank,” Mr. Concha said in an e-mail interview.

Mr. Concha said the rural banks’ hiking of minimum capitalization should not be across the board, but should consider each lender’s market availability, local economy, and operational requirements.

“A look at the annual 2019 to 2021 per capita local GDP (gross domestic product) shows that an increase of the requirement to P60 million and P200 million is unwarranted as the local economic activity cannot support said capital and the market to lend to simply does not exist,” he said.

The current RBSP is “better” compared to the previous strengthening programs in the past, except for the proposed hike in minimum capitalization requirement, Mr. Concha said.

Further, he expressed concerns on the deadline that was given to them for the compliance of amended minimum requirement, noting that “rural banks are still recovering from the losses of the pandemic and the timeframe proposed of three years is too short a time to work on capital buildup of that amount.”

For her part, Guagua Rural Bank, Inc. Chief Operations Officer Elizabeth C. Timbol said it would be wise for the BSP to extend the compliance period to 10 years to give rural banks ample time to raise a large amount to meet the new minimum capital.

“For if the smaller banks become big, they will surely cater to larger markets and the unbanked market will no longer be reached and will then remain unbanked,” Ms. Timbol said in an e-mail.

Rural banks shall be given three years from the draft circular’s effectivity to meet the revised minimum capital requirements.

There were 15.90 million rural bank depositors as of end-March with a total of 16.23 million accounts, central bank data showed. The bulk of them — around 13.91 million — have account values amounting to P5,000 and below.

“With account values falling below P5,000 per depositor and the limited number of depositors available per community, we highly doubt that commercial or thrift banks would be interested to open and operate branches where single-unit rural banks have decided to close shop,” Mr. Concha said.

“This will stunt the financial inclusion initiatives in the countryside,” he said.

Early this year, the BSP has launched a six-year financial inclusion plan that aims to onboard unbanked adult Filipinos who belong to small businesses and agriculture sectors. The National Strategy for Financial Inclusion 2022-2028 is an update to a similar plan in 2015. The central bank eyes to onboard 70% unbanked Filipinos by 2023.

Notably, Ms. Timbol commended the program which sought to boost the resilience of rural banks in the countryside.

“The rural banking industry has always been resilient especially during challenging times, and we remain relevant in the respective communities we serve. With the BSP’s RBSP, it aims to provide strategic and policy direction in developing a sustainable capacity-building program for the RB (rural bank) industry. Our mandate to help develop the countryside and literacy for all Filipinos is close to our hearts,” Ms. Timbol said.

In terms of developments in digitization efforts of rural banks, according to Mr. Concha, some of rural banks has embraced online mobile banking and the National Retail Payment System — a policy and regulatory framework that aims to provide direction in carrying out retail payment activities through BSP-supervised financial institutions (BSFIs).

Meanwhile, a large number of rural banks have adapted technology in its back office, altering its core banking systems, digitization of records, and accelerating its internet connectivity.

“We continue to support the micro, small, and medium enterprise (MSME’s), farmers and fisherfolk, and with rural banks going digital, we enjoin the local government units in the disbursement and collection of payments through our digital platforms. We continue to be strong partners with the government in promoting financial inclusion even in far flung areas in the countryside,” Ms. Timbol said.

IMMINENT CLOSURES
However, Mr. Concha expressed a gloomy outlook with the amendment of capital requirement, citing possible closures of multiple rural banks in the countryside.

“With RBSP and the increased capital stock requirement, if implemented in its current form of P60 million, we foresee many single unit RBs to voluntarily surrender their licenses and severely crippling access to banking and credit in the countryside,” he said.

Since the start of the pandemic, the BSP has closed a total of 21 rural banks while two rural banks voluntarily surrendered their banking licenses. Meanwhile, the regulator has processed 18 transactions for mergers, consolidations, and acquisitions — nine of these were rural banks.

In addition, a total of 30 rural banks have undergone mergers and consolidations under its previous program, the Consolidation Program for Rural Banks (CPRB). Of the 30 rural banks, 16 have been absorbed by thrift banks while the rest were merged with other rural banks.

Amid the challenges that the rural banks are facing, Ms. Timbol expects the rural banking industry to be more secure and strong. However, she believes that the new minimum capitalization requirement should not be the priority in these times when the local economy is still in the recovery period from the impact driven by the global pandemic.

“The rural banking industry will definitely be more stable and will continue to be a strong partner of the government in promoting growth and development in the countryside. With the assistance of the BSP, rural banks are poised for greater heights in bringing credit to the underbanked and developing entrepreneurial activities in the countryside,” she said.

“However, this is not the best time to impose increase in capitalization while everyone is recovering from the pandemic because many RBs, especially from the remote areas, need to focus in helping in the countryside development,” Ms. Timbol said. — Mariedel Irish U. Catilogo

Alsons sets focus on two hydro facilities in 2022

May 31, 2022 | 12:05 am

ALSONS Consolidated Resources, Inc. (ACR), said in a disclosure on Monday that it will be focusing on advancing the development of two hydroelectric power projects in the Zamboanga Peninsula and Negros Occidental this year.

These are the 21-megawatt (MW) hydro power plant in Zamboanga del Norte, which is being developed by ACR’s Sindangan Zambo-River Power Corp.; and the 42-MW Bago river hydroelectric power plant in Negros Occidental, the company’s first power project outside of Mindanao.

“The Siguil, Sindangan, and Bago river hydro power plants will be the first three of at least eight run-of-river hydroelectric power plants that ACR plans to develop in the years to come,” ACR Executive Vice-President Tirso G. Santillan, Jr. said.

The company’s initial hydro power project, the 14.5-MW Siguil hydro plant in Sarangani province, will be starting commercial operations in the second quarter of 2023.

“This is all in keeping with the Department of Energy’s mandate to ensure that all key areas have access to readily available sources of renewable energy,” Mr. Santillan said.

In 2021, the company’s attributable net income rose 24.4% to P404.56 million from P325.11 million while consolidated revenues increased by 6.2% to P10.05 billion from P9.46 billion.

“Despite a challenging business environment and the impact of the COVID-19 (coronavirus disease 2019) pandemic, we managed to achieve higher revenues and net income attributable to parent due to operating efficiencies and cost cutting measures,” ACR Chief Finance Officer Alexander Benhur M. Simon said.

The company said that its 210-MW Sarangani Energy Corp. baseload power plant was a key revenue and income driver, delivering a combined output of 974 gigawatt-hours last year from 952 gigawatt-hours in 2020.

Sarangani Energy currently provides power to key areas in Mindanao, including Sarangani province, General Santos, Cagayan de Oro, and Iligan.

In the first quarter of 2022, ACR recorded a 2.9% decline in attributable income to P90.16 million from P92.88 billion a year ago despite a 23.6% rise in revenues to P2.67 billion from P2.16 billion previously.

For the rest of the year, Mr. Simon said, “We expect higher revenues and profit margins as we continue to realize incremental revenues from ancillary services and additional utilization of the available capacity of [Sarangani Energy].”

ACR said that its 100-MW Western Mindanao Power Corp. diesel plant in Zamboanga City was another growth driver for the company.

The plant is the only major power generation facility in the Zamboanga Peninsula. The plant provides power to Zamboanga City and supplies vital ancillary services to stabilize the power grid in Western Mindanao.

ACR has a portfolio of four power facilities with an aggregate capacity of 468 MW serving over eight million people in 14 cities and 11 provinces.

At the stock exchange, ACR shares remained unchanged at P1.01 apiece on Monday. — Luisa Maria Jacinta C. Jocson

Top Gun: Maverick debuts to stratospheric $124 million

May 31, 2022 | 12:05 am

LOS ANGELES — Tom Cruise may have pulled off one of the most daring stunts of his career — getting audiences to go to the movies for something that doesn’t involve superheroes.

Top Gun: Maverick pulled in blockbuster ticket sales in its opening weekend, collecting $134 million from a record 4,732 North American cinemas. Paramount and Skydance’s all-American action adventure is expected to collect $151 million through Monday, defying expectations while also setting a new high-water mark for Memorial Day opening weekends. That’s thanks to dazzling reviews, heaping doses of nostalgia and getting Mr. Cruise back in the cockpit to perform real aerial stunts as pilot Pete “Maverick” Mitchell.

Top Gun: Maverick is the highest-grossing debut in Mr. Cruise’s 40-year career, and his first to surpass $100 million on opening weekend. War of the Worlds, which opened to $64 million in 2005, previously stood as Cruise’s biggest opening weekend.

Audiences over 40 years old, the people who were top of mind when Paramount greenlit a sequel to 1986’s Top Gun, turned out in force, which is impressive because that demographic has been the most reluctant to return to theaters. The film’s positive word of mouth should be helpful in reaching younger audiences, who were not alive when Top Gun opened 36 years ago.

David A. Gross, who runs the movie consulting firm Franchise Entertainment Research, called the film’s three-day figure “outstanding.”

“The source material remains strong, the execution is excellent, and Tom Cruise makes it work impeccably well,” he says.

Top Gun: Maverick continues a stellar box office streak for Paramount, marking the studio’s fifth movie this year to open in first place. Without the assistance of comic books or raging dinosaurs, the studio’s 2022 slate — also consisting of Sonic the Hedgehog ($182 million in North America), The Lost City ($100 million in North America), Scream ($81 million in North America), and Jackass Forever ($57 million in North America) — has resonated in theaters in a big way. It’s an impressive rebound since Paramount hardly released any movies during the pandemic, instead sending big titles like Chris Pratt’s The Tomorrow War, director Aaron Sorkin’s The Trial of the Chicago 7, and Eddie Murphy’s Coming 2 America to streaming services.

Despite countless delays (the Top Gun sequel was scheduled to open in the summer of 2020 until COVID-19 scrambled those plans), Mr. Cruise was adamant that “Maverick” not follow in the footsteps of those films. The two-year wait has already started to pay off since the film has been rapturously reviewed. It has a 97% on Rotten Tomatoes and an A+ CinemaScore.

Joseph Kosinski directed the PG-13 Top Gun: Maverick, which picks up decades after the original and sees Maverick train a new group of cocky aviators for a crucial assignment. The cast includes Miles Teller, Glen Powell, Jon Hamm, Jennifer Connelly, and Val Kilmer, who played Iceman in the first Top Gun.

Top Gun: Maverick also needs theaters to justify its hefty $170 million production budget, which does not include the tens of millions spent on promoting the movie to audiences worldwide. Those efforts included a splashy premiere at the Cannes Film Festival, which culminated with eight fighter jets flying over the Croisette (the French government paid for those). Skydance Media co-produced and co-financed the film. — Reuters

BTr rejects all bids for one-year T-bills as rates rise on hike bets

May 31, 2022 | 12:05 am

THE GOVERNMENT made a partial award of the Treasury bills it offered on Monday. — BW FILE PHOTO

THE GOVERNMENT partially awarded the Treasury bills (T-bills) it offered on Monday at lower rates as investors flocked to shorter tenors on expectations of more hikes from the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve.

The Bureau of the Treasury (BTr) awarded just P10 billion in T-bills at its auction on Monday even as total tenders reached P42.88 billion, nearly thrice as much as the P15 billion on offer.

The Treasury made full awards of the shorter 91- and 182-day tenors and rejected all bids for the one-year T-bill as investors wanted higher returns in exchange for keeping their money locked up for a longer duration.

Broken down, the government fully awarded the 91-day T-bills, raising P5 billion as programmed as tenders for the tenor reached P22.34 billion. The average yield of the three-month debt papers was at 1.46%, 21.5 basis points (bps) lower than the 1.675% seen at last week’s auction.

The BTr also raised P5 billion as programmed from the 182-day securities as bids for the tenor reached P14.96 billion. The average rate on the six-month T-bill was at 1.812%, down by 8 bps from the 1.892% fetched at the previous auction, where the government made a partial award of the tenor.

The 91- and 182-day tenors fetched yields of 1.4533% and 1.7681% at the secondary market before Monday’s auction.

Lastly, the Treasury rejected all bids for its P5-billion offer of one-year T-bills even as bids reached P5.58 billion. Had the government made a full award, the average rate of the one-year tenor would have been at 2.716%, 67.59 bps higher than the 2.0401% fetched at the secondary market prior to the auction, based on the PHP Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

National Treasurer Rosalia V. de Leon said in a Viber message to reporters that the BTr made a full award of the 91- and 182-day tenors as they were over twice oversubscribed and fetched lower rates.

Ms. De Leon said they rejected all bids for the 364-day securities due to “tepid demand and unacceptable rates” as the market priced in expectations of hikes by the BSP and the Fed in their bids for the longest T-bill tenor on offer.

The first trader likewise said demand for the one-year T-bill was weak amid rate hike fears.

“Despite the prospects of higher policy rates in June, yields for the 91- and 181-day [T-bills] eased. I think most investors continued to be on wait-and-see and just prefer to park cash in short-term investments while waiting for firm leads,” the second trader said.

The BSP is likely to raise key interest rates by another 25 bps at its next policy review on June 23, its chief said last week.

“We are probably inclined to have another 25-basis-point adjustment on our next Monetary Board meeting which is on June 23,” BSP Governor Benjamin E. Diokno said.

The BSP raised benchmark interest rates by 25 bps on May 19, marking its first hike since November 2018, as it tries to temper rising inflationary pressures.

The Monetary Board increased the key policy rate by 25 bps to 2.25%. Interest rates on the overnight deposit and lending facilities were also hiked by 25 bps to 1.75% and 2.75%, respectively.

At that meeting, the central bank upwardly revised its average inflation forecast for 2022 to 4.6% from the previous forecast of 4.3%, exceeding the 2-4% target band. For 2023, the BSP’s inflation forecast was hiked to 3.9% from 3.6% previously.

Inflation climbed to 4.9% in April, the highest in more than three years.

Meanwhile, all participants of the Fed’s May 3-4 policy meeting backed a half-percentage-point rate increase to combat inflation that they agreed had become a key threat to the economy’s performance and was at risk of racing higher without action by the central bank, Reuters reported.

This month’s 50-basis-point hike in the Fed’s benchmark overnight interest rate was the first of that size in more than 20 years and “most participants” judged that further hikes of that magnitude would “likely be appropriate” at the Fed’s policy meetings in June and July, according to the minutes released last week.

The BTr wants to raise P250 billion from the domestic market in June, or P75 billion through T-bills and P175 billion from Treasury bonds.

The government borrows from local and external sources to help plug a budget deficit capped at 7.7% of gross domestic product this year. — T.J. Tomas with Reuters

PHL banks urged to be green, sustainable

May 31, 2022 | 12:04 am

In recognizing the part of the banking industry to pursue sustainable financing or green financing in the country, the Bangko Sentral ng Pilipinas (BSP) has released the Philippine Sustainable Finance Roadmap and Sustainable Finance Guiding Principles to serve as the foundation in promoting successful strategies in implementing sustainable finance in the country.

Banks were all encouraged to study and apply all the guidelines written in the roadmap to improve the banks’ process in adopting sustainable finance in their investment activities that will not only give sustainability-positive outcomes and investible returns but also environmental safety and considerations.

The roadmap, launched in October last year, formed a comprehensive approach that will serve as the foundation for effective strategies to facilitate the mainstreaming of sustainable finance in the country. Meanwhile the guiding principles establishes a common understanding among various stakeholders of the economic activities considered “sustainable.”

BANKS ROLE ON SUSTAINABLE FINANCING
According to the International Capital Market Association, sustainable finance “incorporates climate, green, and social finance while also adding wider considerations concerning the longer-term economic sustainability of the organizations that are funded, as well as the role and stability of the overall financial system in which they operate.”

Sustainable finance has been implemented across the financial system due to its economic benefits with the environment. Some banks have already invested even before the roadmap was released several years ahead.

Rizal Commercial Banking Corp. (RCBC) believes that good sustainable practices are a key pillar of responsible lending which impacts on the environment and communities. RCBC’s Sustainability Report is in response to the BSP’s call for financial institutions to be enablers of environmentally and socially responsible business decisions.

“RCBC is a pioneer in sustainable financing. Its environmental and social management system (ESMS) and its own Sustainable Finance Framework are aligned with the strategic pillars of the sustainable financing Roadmap and Guiding Principles,” the bank said in an e-mail.

The lender said it has implemented its ESMS since 2011, several years ahead of the central bank’s issuance for the banks to incorporate sustainability principles into their operations. It developed its own sustainable finance framework in 2019.

RCBC issued the first Peso Green and Sustainability bonds under the Association of Southeast Asian Nations (ASEAN) Sustainability Framework and the first US Dollar Sustainability bond by a Philippines corporate or bank issuer. This year, RCBC was the first bank in the Philippines to offer a Peso Green Time Deposit. All of these products offer market rates of interest. Proceeds are allocated to refinancing of the Bank’s green and social asset portfolio, thus guaranteeing investors of environmentally and socially positive outcomes.

“Since the implementation of RCBC’s Sustainable Finance Framework in 2019, RCBC has issued $1.4 billion in sustainable financing instruments, which attracted strong demand from investors all over the world. The P17.87 billion issuance in March 2021 was the only peso-denominated sustainability bond to be issued in the country in 2021 and the largest bond issuance in RCBC’s 61-year banking history,” added RCBC.

According to RCBC, these sustainable investments are offered to companies or individuals who are looking to place their funds into assets that help protect the environment with socially positive outcomes, and the economic impact or pricing was never the motivation for the issuance of these sustainable financing instruments.

“Although, it has been recently observed that there is a small pricing benefit particularly in offshore markets — this is the result of investors wanting to increase the share of these assets in their portfolios and funds dedicated solely to sustainable assets,” RCBC said.

Meanwhile, Maybank Philippines, Inc. (MPI) is poised and has adopted sustainable financing, being part of the Bank’s environmental social and governance (ESG) framework in their business agenda.

“MPI is leveraging on the roadmap and activities of our parent bank and its sustainability office, being the forerunner in sustainable finance/ESG in the region.

It has made the following sustainability commitments:

a.) Mobilization of 50 billion Malaysian ringgit (MYR or about $1.14 billion) in sustainable finance by 2025;

b.) Improving and the lives of one million households across ASEAN by 2025;

c.) Achieving a carbon neutral position for scope 1 and 2 emissions by 2030 and net zero carbon equivalent position by 2050; and

d.) Achieve one million hours per annum on sustainability & delivering one thousand significant sustainable development goals (SDG)-related outcomes by 2025.

“Maybank Group’s focus is to integrate ESG principles into the prevailing risk management strategies as well as to bring impact to all stakeholders, internal and external,” MPI Chief Risk Officer Rajagopal Ramasamy said in an e-mail.

Mr. Ramasamy said that there seems to be lack of awareness on the benefits of sustainable products, though this is viewed as not of higher risk compared to other financial instruments.

“This misperception may result in negative outcome amongst investors on green financing. Educating stakeholders on benefits of ESG/sustainable financing is crucial, thus MPI has outlined, conducted and committed to various learning and client engagement initiatives to support our sustainability agenda,” Mr. Ramasamy said.

Mr. Ramasamy said that sustainability shall be embedded in business process for positive economic impact. He added that there are larger market opportunity for sustainable financing, and various elements could be incorporated to offer attractive sustainable financing solutions. Markets that are already into sustainable businesses with embodied ESG principles and players in transition towards sustainable businesses can be the target.

“Rate of return remains to be a primary objective of any investors. Hence, it is important for lenders to demonstrate to the investors the advantage in such instruments towards environment, ecosystem, and community without diminishing monetary returns,” Mr. Ramasamy said.

FURTHER DEVELOPMENT
Banks plan to develop or further its involvement in green financing and develop specific strategies of action for this segment this year or in the future.

RCBC intends to provide further support for renewable energy (RE) by tapping 12 RE projects, with a combined capacity of 1.6 gigawatts (GW) in the next two years. This goal supports its public commitment to cease funding for the construction of new coal power plants (since December 2020) and gradually taper off its P42 billion coal exposure until full maturity in 2031. Since 2012, the Bank has supported around 3 GW of RE projects.

MPI will provide funding to RE-related activities and projects while reducing exposures to non-renewable energy investments such as coal-fired power plants.

MPI will also finance related businesses in the value chain financing promoting ESG. Help counter rapid global warming by supporting activities leading to net-zero carbon emissions.

According to MPI, the Maybank Group has achieved 13.6 billion Malaysia ringgit in sustainable financing to date, with 6.1 billion Malaysia ringgit worth of green buildings accounting for the largest segment. It has played a role in the world’s first Islamic Green Financing in Singapore and in the first Malaysian Sustainability Sukuk.

“Maybank Philippines plans to play similar role in the Philippines for in the area of green financing, both at corporate and retail markets,” Mr. Ramasamy said. — Lourdes O. Pilar

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