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Visa says overseas card spending jumped by 38% as more countries eased restrictions

CONSUMERS are slowly getting back to the skies, but it’s not fast enough for Visa, Inc.

While overseas spending on the firm’s cards jumped 38% during the firm’s fiscal fourth quarter, a bigger increase than analysts were anticipating, the firm warned that widespread border closures are still a hindrance. Cross-border travel likely won’t reach pre-pandemic levels until the summer of 2023, said Chief Financial Officer Vasant Prabhu. 

“Cross-border travel is recovering well, but it’s still well below pre-COVID levels, with the pace of recovery depending on border openings,” Mr. Prabhu said Tuesday on a conference call with analysts. “COVID variants are still with us and vaccination rates remain low in large parts of the globe. With these factors as the backdrop, forecasting the trajectory of the return to normalcy remains difficult.”

Cross-border transactions are especially lucrative for Visa because the network can charge higher fees for those purchases. In all, Visa is now assuming revenue in its fiscal year 2022 to climb by a percentage at the “high end of the mid-teens.” Analysts had been expecting a 20% jump.

Visa shares sank as much as 4.1% to $222.22 in extended trading in New York. The stock has climbed 6% this year, compared with the 22% advance of the S&P 500 Information Technology Index.

For its fiscal first quarter, Visa expects revenue to rise by a percentage in the “high teens.” Analysts in a Bloomberg survey forecast a 22% increase.

Governments around the world have begun lifting travel restrictions and vaccines are proliferating in developed markets, allowing consumers to begin traveling again. Excluding the impact of currency swings, overall spending on Visa’s network jumped 17% to $2.78 trillion in the period ended Sept. 30, the company said in a statement. That just missed the $2.79 trillion average of analyst estimates.

Visa said revenue for the quarter ending Sept. 30 rose 29% to $6.6 billion. While that topped estimates, the payments network warned that it will begin spending more on both marketing and technology platforms.

The payments giant set aside a whopping $2.39 billion in incentives and rebates to lure merchants and banks to use the firm’s networks. That was more than the $2.36 billion analysts anticipated.

Net income soared 68% to $3.6 billion in the quarter, or $1.65 a share. Excluding one-time items, Visa said profit was $1.62 a share, which was higher than the $1.54 average of analyst estimates compiled by Bloomberg. — Bloomberg

A look at COVID’s effect on food purchases

A WOMAN shops for vegetables at a grocery store in Cubao. — PHILIPPINE STAR/MICHAEL VARCAS

SOME of the effects of the coronavirus disease 2019 (COVID-19) pandemic on food and beverage sales are an increase in sales in basic products, lower sales in impulse products, and an expansion of e-commerce sales, according to speakers at a recent lecture on the F&B industry.

The French Chamber of Commerce and Industry in the Philippines (CCI-France) laid out government updates and spending patterns of Filipino shoppers in a talk called “Behind the Cuisines: The Changing Phases of the Food and Beverage Industry,” held on Facebook Live on Oct. 22. Celebrity chef Erwan Heussaff had a cooking demonstration the next day.

“We’re now at almost two years into the pandemic, and the disruption in the Philippines remains quite significant,” said Marie-Anne Lezoraine, Managing Director of Kantar Worldpanel Division during the talk. “At the moment, we remain at a lower level of expenditure. We’re very hopeful that recovery is in progress.”

In a series of charts, Ms. Lezoraine explained why spending remains low for Filipino households. “The factors really are, of course, the impact of the current health situation and the necessary lockdowns that have happened.” These have disrupted the shopping behavior of Filipinos, and “to a certain extent, the purchasing power of some parts of the population.”

According to her, prior to the pandemic, Filipinos were among the most frequent shoppers in the world, a trait that applies to shopping for food and beverage (F&B) as well. E-commerce has inflated in the country, as noted by Department of Trade and Industry Secretary Ramon Lopez earlier in the talk. “In 2020, the use of e-commerce in F&B increased by 210% because of the pandemic.”

“There are still huge amounts of opportunity for e-commerce growth. This channel can probably play in the future a greater role in offsetting some of the brick-and-mortar stores’ losses,” said Ms. Lezoraine.

She also noted the increase of spending in some goods, particularly in essentials such as flour, margarine, butter, instant noodles, canned fish, cooking oil, and seasonings. However, “It has been a little bit tougher for these categories which are more impulse categories,” she noted, resulting in lower sales in chocolate and ice cream, for example. “Any progress in the front of mobility will surely help those categories recover.”

She noted some trends that will still be relevant in 2022: the prioritization of food, an economic recovery driven by middle- to lower socio-economic classes, the value of proximity in shopping, and the importance of sustainability (particularly with regards decreasing plastic waste).

Still, she said: “We’ve really seen some brands performing quite well, and as a result, I’m very confident to say that across all categories, there are really pockets of growth and successes that can be found.” —  JLG

SEC clears Cirtek’s P3.5-B shares offer

THE Securities and Exchange Commission (SEC) has given Cirtek Holdings Philippines Corp. the go signal to offer as much as P3.5 billion of preferred shares to the public.

“In its meeting on October 26, the Commission En Banc resolved to render effective the registration statement of Cirtek covering 50 million preferred B-2 Subseries C and D shares at an offer price of P50 per preferred share, with an oversubscription option of up to 20 million preferred shares,” the commission said in an e-mailed statement on Wednesday.

According to the latest timetable submitted to the SEC, Cirtek Holdings’ offer period is slated for Nov. 25 to Dec. 3.

Shares will be listed and traded on the main board of the Philippine Stock Exchange, with the listing of the preferred shares scheduled for Dec. 10.

Cirtek Holdings may net up to P3.44 billion from the preferred shares offer, should the oversubscription option be fully exercised.

Proceeds from the offer will be used to refinance the company’s existing debt, for partial repayment of maturing debt, for capital expenditures, and to fund the working capital of its subsidiaries.

Cirtek Holdings assigned PNB Capital and Investment Corp. as the sole issue manager, lead underwriter, and sole bookrunner for the offer. — Keren Concepcion G. Valmonte

Swap rates in India surge as traders see central bank turning hawkish

COMMONS.WIKIMEDIA.ORG
THE MARKET expects the Reserve Bank of India to roll back its stimulus soon. — COMMONS.WIKIMEDIA.ORG

SWAP RATES are rising in India in a sign that traders expect the central bank to roll back monetary stimulus quicker than expected despite its reassurances.

The five-year onshore overnight indexed swap, a tool to trade rate expectations, has advanced 31 basis points (bps) in October to 5.64%. It’s poised for the biggest monthly gain since February when the government said the economy had exited a recession before a Delta variant outbreak.

Traders globally are betting that central banks will have to hike rates faster than projected as pandemic-era inflation become entrenched. While price pressures in India eased in the past few months, economists expect it to rise again largely due to the surge in global energy prices, which could influence the Reserve Bank of India’s (RBI) policy decision.

“The swap market is telling us that the RBI may be falling behind the curve,” said Vijay Kumar Sharma, senior executive vice-president at PNB Gilts Ltd. “The view is inflation will be higher and there will be steep rate hikes.”

Inflation has climbed quicker than expected in other countries, with Australia on Wednesday reporting gains that led to a selloff in bonds. Last week, price pressures in New Zealand had also driven a similar reaction.

In India, while the CPI is seen moderating in October to November, it will head back toward 6% in the next quarter, according to a note from DBS Bank Ltd. That will help fuel trades on policy normalization just as pricier imports weigh on the currency, it said.

As a result of the jump in India’s swap rates, the spread with five-year bond yields is approaching zero from almost 80 bps earlier in the year. One-year onshore overnight indexed swap rates have also gained by 29 bps this month.

TAPER SURPRISE
India imports about 85% of its oil requirements, and higher energy costs may add as much as 100 bps to its headline inflation over the next six months, according to estimates by Nomura Holdings, Inc.

At the October policy review meeting, RBI Governor Shaktikanta Das said he would stop a program of buying government debt, surprising traders. Mr. Das though was careful to steer clear of any talk of rate hikes and emphasized continued accommodative policy.

Swaps are indicating that the overnight rate could jump by about 150 bps over the next year due to changes in liquidity conditions and policy rates, said Nagaraj Kulkarni, senior Asia rates strategist at Standard Chartered Plc. The lender sees it rising by 100 bps. 

The overnight fixing rate was at 3.48% on Tuesday. Citigroup, Inc. has also unwound its offshore OIS curve steepener trade amid concerns of inflation remaining elevated for longer.

“Higher energy prices and global repricing of policy normalization expectations have swept past India swap curve as well,” Citigroup analyst Gaurav Garg wrote in a note to clients. “Even as RBI MPC’s growth focus remains evident, ongoing concerns over inflation globally and some central banks reluctantly giving in to price pressures is causing the market participants to indiscriminately unwind receivers in short tenors.” — Bloomberg

Dune: Part Two movie gets go-ahead from Warner Bros.

Dune

LOS ANGELES —  Movie studio Warner Bros. said on Tuesday it will release a second Dune movie in Oct. 2023.

The first part of the sci-fi epic, directed by Denis Villeneuve and one of the most eagerly anticipated films of 2021, opened in movie theaters in North America last week and earned a healthy $41 million on its opening weekend. The movie, which cost an estimated $165 million to produce, also did well overseas and has taken in almost $225 globally at the box office.

Mr. Villeneuve has always said that he envisaged a second movie but Warner Bros. had not committed to the project before Tuesday.

Warner Bros. said that Dune: Part Two will be released exclusively in movie theaters. The first movie was released simultaneously in theaters and on streaming service HBO Max.

Mr. Villeneuve has been adamant that the two-and-a-half-hour movie, which has been praised for its stunning visuals, should be seen on the big screen rather than at home. Dune featured a star-studded cast including Timothee Chalamet, Rebecca Ferguson, Zendaya and Jason Momoa. Casting for the second part has not been announced.

The film was the latest attempt to turn Frank Herbert’s 1955 400-page science fiction novel of the same name into a hit on the silver screen. Mr. Villeneuve’s Dune follows Alejandro Jodorowsky’s unsuccessful attempt in the mid-1970s and David Lynch’s critically panned 1984 version. — Reuters

Globe prices $600-M perpetual capital securities

GLOBE Telecom, Inc. is raising $600 million through the issuance of Reg S only non-call five-year US dollar-denominated senior perpetual capital securities.

In a disclosure to the stock exchange on Wednesday, Globe said it had successfully priced the securities offering with an initial distribution rate of 4.20%, payable semi-annually.

The net proceeds will be used to finance its capital expenditures and maturing and/or existing obligations.

“This offering represents Globe’s return to the international capital markets following its dual-tranche US dollar-denominated senior notes issuance in 2020,” it noted.

“The final order book was oversubscribed by more than three times, allowing Globe to upsize the transaction to US$600 million and tighten final pricing by 30 basis points to 4.20% from the initial price guidance of 4.50%,” the company added.

Globe described the transaction as “the tightest pricing” for an equity-accounted senior step-up perpetual from the Philippines during the pandemic.

Globe President and Chief Executive Officer Ernest L. Cu said: “The issuance reaffirms the international investment community’s confidence in the company’s strong business fundamentals and mobile market leadership.”

“The success of the offering supports our efforts to expand and enhance our core business and enable our efforts in building a robust digital ecosystem in the country,” he added.

Globe Telecom shares closed 4% lower at P3,022 apiece on Wednesday. — Arjay L. Balinbin

AIG replaces CFO as it prepares for life unit’s initial public offering

AMERICAN International Group, Inc. (AIG) named Shane Fitzsimons chief financial officer (CFO), replacing Mark Lyons, as Chief Executive Officer Peter Zaffino overhauls the sprawling insurer.

The change is effective Jan. 1, when Lyons will move to the newly created role of executive vice-president, global chief actuary and head of portfolio management, the New York-based insurer said in a statement Monday. Both Messrs. Lyons and Fitzsimons, currently chief administrative officer, will continue reporting to Mr. Zaffino and remain members of AIG’s executive leadership team. Mr. Lyons will have a more direct role in improving the company’s underwriting.

“Mark is one of the most accomplished and respected actuaries and business executives in our industry,” Mr. Zaffino said in a statement. “Serving in this new role will further strengthen our focus on high-quality underwriting excellence and portfolio positioning, which underpins AIG’s overall growth strategy.”

The shift is the latest move by the insurer to sharpen its focus on its core operations and make necessary preparations to split off its life and retirement business through an initial public offering. In recent months, Mr. Zaffino has touted the progress of the turnaround effort, saying the company is no longer focused on “remediation” and instead is concentrating on growth.

The company made additional leadership changes Monday.

Elias Habayeb, currently CFO for general insurance and deputy CFO for all of AIG, will replace Tom Diemer as CFO of the company’s life and retirement unit. Mr. Diemer is leaving the company to pursue other opportunities, according to the statement. Mr. Habayeb “will be an exceptional public company CFO and provide the life and retirement executive leadership team with significant expertise, insight and financial acumen as they move toward an initial public offering,” Mr. Zaffino said.

Elaine Rocha, currently global chief operating officer for Reinsurance, will become global chief investment officer, reporting to Lyons initially and then to Mr. Fitzsimons starting in January. Mr. Rocha will lead the investments unit that will remain with AIG, according to the statement.

Ted Devine has joined the company to take over the AIG 200 effort, a series of initiatives meant to improve the insurer’s operations and efficiency. Mr. Devine, who will report to Mr. Zaffino, has been advising the company on AIG 200 since 2019, focusing on technology delivery and user experience. — Bloomberg

Typewise aims to expand user base in Philippines

By Arjay L. Balinbin, Senior Reporter

TYPEWISE, a Zurich-based deep-technology startup, said it aims to grow the user base of its privacy-focused smartphone keyboard application in the Philippines.

“We started from a small base of just under 500 downloads in January 2021. As of September, we had just under 6,000. Whilst this number is not huge in comparison to the overall population of the Philippines, we have achieved this entirely via word of mouth as we have done zero promotional activity in the Philippines,” Typewise Chief Executive Officer David Eberle told BusinessWorld in an e-mail interview on Oct. 22.

“We’re growing at about 55% month on month, which is very encouraging,” he added.

The smartphone application has three main features: hexagonal keyboard design, privacy offering, and superior autocorrect AI.

It is free to download for both iPhone and Android, while a PRO or paid version offers more features.

“The vast majority of our users in the Philippines are using Typewise custom keyboard (which is our free version), with around 1.5% of people using the PRO version,” Mr. Eberle said.

“We hope the organic growth will continue, but we’ll also be adding new features to the keyboard to convert more free users to the PRO version.”

“We would also like to spread the word of Typewise more in the Philippines so will investigate options for doing that, such as Philippine-targeted social media campaigns or news stories focused on the Philippines,” Mr. Eberle also noted.

As for Typewise’s vision for the app, he said: “At the moment, people waste a lot of time inputting text into our devices, so we build powerful autocorrect and text prediction AI that enables people to type faster, type more accurately and type with 100% privacy.”

Typewise also intends to offer a desktop app or a browser extension.

The goal is to “help people save time when interfacing with their computers, phones or tablets, at work and in everyday life,” Mr. Eberle said.

Criminal charges not ruled out in shooting on Alec Baldwin film

CRIMINAL charges have not been ruled out in a fatal accidental shooting by actor Alec Baldwin on the set of a western film, the local district attorney said on Tuesday.

Santa Fe County District Attorney Mary Carmack-Altwies, in an interview with the New York Times also said it was incorrect to refer to the firearm used in the incident as a “prop gun,” as has been done in media reports.

“It was a legit gun,” Ms. Carmack-Altwies told the paper. “It was an antique-era appropriate gun.”

The prosecutor said an “enormous amount of bullets” had been found on the set and an investigation was needed into the nature of that ammunition. — Reuters

Pryce income up 19% as LPG sales rise

PRYCE Corp. recorded a 19% rise in its consolidated net income to P1.45 billion in the nine months to September due to higher sales of liquefied petroleum gas (LPG) and other gas products.

Gross revenues during the period rose by 24% to P11.18 billion. The company has yet to report figures for the third quarter alone.

“Sales of LPG and its related products (LPG revenues) accounted for 92% of gross revenue, while sales of industrial gas products contributed 7%,” the company said in a disclosure on Wednesday, adding that the remaining 1% was covered by real estate and pharmaceutical sales.

The 7% contribution of industrial gas products to the company’s revenues was higher than the usual 4%, it added. Demand for medical oxygen accounted for the increase because of the coronavirus pandemic, it said.

The listed company, which has Pryce Gases, Inc. as its major subsidiary, said the sales of its LPG products grew by 20% as of September to P10.26 billion. These products include cooking gas, cylinders, gensets, stoves, and accessories.

“This revenue growth was driven by a combination of the rise in international LPG contract price and the increase in sales volume of LPG cooking gas,” it added.

The average LPG contract price, according to the company, rose 65% to $579.89 (P29,470) per metric ton (MT) in 2021, while the sales volume of cooking gas increased by 16% to 206,618 MT.

Meanwhile, the company’s operating expenses also went up by 39% to P1.32 billion as it continues to expand its LPG refilling plants and sales centers to widen the availability of its LPG brand and “to penetrate the LPG retail market more deeply.”

Pryce Corp. has two ongoing constructions of LPG marine terminals — one in Lugait, Misamis Oriental to be completed in December this year, and another in Lila, Bohol which is expected to be completed in December next year.

Shares of Pryce Corp. at the local bourse went up by 1.48% or eight centavos on Wednesday to finish at P5.48 apiece. — Bianca Angelica D. Añago

Etiqa Philippines streamlines product offerings

ETIQA LIFE and General Assurance Philippines, Inc. (Etiqa Philippines) is offering various insurance products through a “unified approach” to simplify the selection process for its clients.

“In the country, Etiqa Philippines is only one of the very few insurance providers with a composite license. Because of this, we can offer the widest variety of insurance products in the market under one brand, one company, and one roof. This is what we mean by going unified,” Etiqa Philippines President and Chief Executive Officer Rico Bautista said in a statement.

“Many insurance providers oftentimes offer only selected plans — a missed opportunity for customers to avail themselves of potentially wider protection when a more comprehensive range of plans are presented for their selection,” Mr. Bautista said.

This “unified approach,” Etiqa Philippines said, allows them to give their clients a comprehensive insurance portfolio to choose products from.

Etiqa Philippines offers retail life and nonlife insurance products, as well as teacher loans, which may be paid by salary deduction, based on its website.

The insurer also services group needs through corporate life products.

On the nonlife insurance side, its protection services are for all-risk insurance, commercial fire, and vehicle fleet management.

The insurer’s clients include telco and media brands, utility service providers, business process outsourcing firms, and e-commerce marketplaces, among others.

These clients have access to about 30,000 doctors and 1,600 accredited hospitals and clinics across the country.

Etiqa is part of the Maybank Group.

YouTube, TikTok, Snap resist comparison to Facebook on privacy protection for kids, teens

SOCIAL media companies YouTube, TikTok and Snap sought to distance themselves from rival Facebook, Inc. on Tuesday as lawmakers pressed for legislation to codify privacy protections for kids and teens on their platforms.

The executives appeared at a Senate committee hearing a day after a consortium of 17 news outlets, including Bloomberg, published dozens of articles based on troves of leaked Facebook data that detailed how the company prioritized profits over the safety of users — particularly teenagers — on its products.

The Senate Commerce Committee’s consumer protection panel, led by Connecticut Democrat Richard Blumenthal and Tennessee Republican Marsha Blackburn, examined efforts by Alphabet, Inc.’s YouTube, ByteDance Ltd’s TikTok and Snap, Inc. to protect the privacy of children and teenagers online.

Mr. Blumenthal said that there’s bipartisan urgency to move forward with legislation on regulating these companies.

“Whether it’s Facebook or your companies, in various ways I think you have shown that we can’t trust big tech to police itself,” he said.

Mr. Blumenthal dismissed the current company policies that the executives said protect young people and teens, saying “there’s no way to hold you accountable under current law.”

He said tech companies should not be relying on parents to protect their children’s privacy on their platforms, the features need to be built in.

“Being different from Facebook is not a defense. What we want is not a race to the bottom, but really a race to the top,” Mr. Blumenthal said.

The witnesses included Michael Beckerman, TikTok’s vice-president and head of public policy for the Americas, Jennifer Stout, Snap’s president of global public policy, and Leslie Miller, YouTube’s vice-president of government affairs and public policy.

EMPHASIS ON SAFETY
Mr. Blumenthal and Ms. Blackburn’s subcommittee previously heard from Facebook whistle-blower Frances Haugen, the former product manager who leaked documents to the committee and the US Securities and Exchange Commission. Ms. Haugen highlighted how Facebook’s engagement-based algorithms lead harmful content to become viral on the platform. She said these algorithms particularly affect teenage girls who already have negative views of their bodies.

The three social media companies attempted to set themselves apart from Facebook in their approach to online safety. The hearing marked TikTok and Snap’s first appearance before Congress.

Last week, Mr. Blumenthal separately invited Facebook CEO Mark Zuckerberg to testify before the subcommittee in a future hearing.

Snap emphasized that one of its strongest privacy protections is that it only allows users ages 13 and up, and has no plans to market to kids under 13. The registration process fails for individuals under the age of 13 that attempt to sign up.

“We make no effort — and have no plans — to market to children,” Ms. Stout told the committee. “We want Snapchatters to be connected to the people they’re connected to in real life” she added, differentiating the platform from Facebook.

Ms. Stout said that regulation alone won’t solve the challenges surrounding privacy online. “Technology companies must take responsibility and actively protect the communities they serve,” she said.

TikTok highlighted specific actions it’s taken to protect children’s safety in recent years, including disabling the direct messaging feature for users under age 16. The company also disabled all users from sending certain videos, photos and website links, and only videos that have been approved through content moderation are allowed.

According to Mr. Beckerman’s testimony, TikTok has removed 11 million suspected underage accounts from April to June 2021. But the company acknowledged the challenges it faces.

“We do know trust must be earned, and we’re seeking to earn trust through a higher level of action, transparency and accountability, as well as the humility to learn and improve” Mr. Beckerman said.

Ms. Blackburn raised concerns about data collected by TikTok and whether it’s shared with the Chinese government, where parent company ByteDance is based. She said that despite vague assurances, TikTok “has not alleviated my concerns in the slightest.” 

TikTok said it stores its data outside of China, including in Singapore and the US. “We do not share information with the Chinese government,” Mr. Beckerman said at the hearing.

YouTube’s Ms. Miller told the panel that YouTube Kids, created in 2015, provides parents with tools to control and customize the app for children. Ms. Miller said that kids under 13 who aren’t in a parental “supervised experience” are not allowed on YouTube. They don’t allow personalized advertisements on YouTube Kids or the “supervised experience.” 

Ms. Miller said the company has removed nearly 1.8 million videos from April to June 2021 for violations of the company’s child safety policies.  

EFFORTS TO LEGISLATE
Mr. Blumenthal asked if the three social media platforms would support his legislation — known as the EARN IT Act — which would make tech companies liable for child sexual abuse material on their platforms. The Senate Judiciary Committee unanimously advanced the measure last Congress, and Mr. Blumenthal said he plans to reintroduce it in the coming weeks.

All three platforms said they supported the intentions and goals of the proposed legislation, but didn’t go as far as saying they support the measure.

“This is the talk that we’ve seen again, and again and again, that you support the goal. That’s meaningless unless you support the legislation,” Mr. Blumenthal said. “I ask that each and every one of you support the EARN IT Act.”

Mr. Blumenthal and Massachusetts Democrat Ed Markey asked the companies if they supported updating the Children’s Online Privacy Protection Act, which was enacted in 1998, years before the launch of the social media companies. The law currently restricts collection of personal information of children under age 13. The legislation would expand the protections to age 16. The bill has bipartisan support from Republican Senators Bill Cassidy of Louisiana and Cynthia Lummis of Wyoming.

TikTok’s Mr. Beckerman said he supports reforming COPPA, but said Congress should go further in setting uniform age verification standards for all platforms to follow.

Mr. Markey also discussed his legislation to prohibit certain manipulative marketing practices geared toward online users under the age of 16, including banning auto-play features and algorithms that amplify violent and dangerous content. That bill has no Republican cosponsors to date. — Bloomberg

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