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‘More stable’ global economy under Biden presidency to benefit Philippines

THE PHILIPPINES is likely to benefit from a more stable world economy and subdued geopolitical tensions after United States President Joseph R. Biden, Jr. took office on Wednesday.

In his inauguration speech, Mr. Biden offered a message of reconciliation, as the United States looks to restore alliances around the world (Related story on S2/8 ).

“America has been tested, and we’ve come out stronger for it. We will repair our alliances and engage with the world once again. Not to meet yesterday’s challenges, but today’s and tomorrow’s challenges. And we’ll lead, not merely by the example of our power, but by the power of our example,” Mr. Biden said.

In a Viber message to reporters, Finance Secretary Carlos G. Dominguez III highlighted this passage from the US president’s speech, saying this “bodes well for a return openness to international trade and investment and  will undoubtedly redound to our mutual benefit.”

Former President Donald J. Trump had pushed his “America First” policy, and provoked a trade war with China. Under his administration, the United States withdrew from the Paris Agreement, a global commitment to fight climate change, and the  World Health Organization (WHO).

“Adherence to multilateral agreements like the WTO (World Trade Organization), climate agreement and WHO, to mention a few, will make the world economy less risky, less volatile and more stable plus additional stimulus spending by the Biden administration will help boost global recovery. The Philippines will benefit from all these,” Finance Undersecretary and Chief Economist Gil S. Betran told BusinessWorld in a text message on Tuesday.

Reuters reported Mr. Biden issued an executive order on Wednesday to bring the United States back into the Paris accord.

Cheuk Wan Fan, the head of investment strategy and advisory for Asia at the private banking arm of Hongkong and Shanghai Banking Corp. Ltd. (HSBC), said the leadership change in the United States may ease US-China trade tensions.

“We don’t expect that a change in US leadership will bring a quick U-turn in US-China relations. However, with the expected shift of the Biden administration to a more multilateral policy approach in dealing with trade and international policies, this will reduce the risk of a sharp escalation of US-China tensions,” she said in an online briefing on Wednesday.

The HSBC executive noted the Biden administration will likely bring more predictable and market-friendly trade policies, but trade tensions between the two countries will “not be totally over.”

The United States and China are the biggest trade partners of the Philippines, with the US being the top export destination followed by China in November last year. Meanwhile, China is the country’s biggest source of imported goods, followed by Japan and the US.

Meanwhile, the Biden administration is pushing for a $1.9-trillion stimulus package to drive economic recovery.

The planned big spending by the US government will help the global economy recover faster, which will benefit the Philippines through trade and other channels, said Michael L. Ricafort, the chief economist at the Rizal Commercial Banking Corp. (RCBC) in a note on Thursday.

“However, these could be offset by divided US Senate (evenly split between the Democrats and Republicans; though any tie-breaking vote may come from US Vice President Kamala Harris) could potentially slow down the enactment of larger US stimulus, higher taxes especially on the wealthiest, and tighter regulation of some industries,” he added. — Beatrice M. Laforga

Warning signs flash as emerging markets rally to new record highs

THE MSCI Emerging Markets Index has now gained more than 9% this year — REUTERS

EMERGING-MARKET STOCKS have set a new swath of record highs this week, driven by optimism over additional US stimulus and a dovish Federal Reserve. The rally’s gaining momentum even as some technical indicators are showing a pullback is overdue.

The MSCI Emerging Markets Index has now gained more than 9% this year, extending a rebound from its low during the coronavirus sell-off in March to a heady 88%. Goldman Sachs Group, Inc., UBS Global Wealth Management and Wells Fargo Investment Institute all added to the positive chorus this week, releasing bullish calls on developing-nation equities.

“With vaccine rollouts combined with fiscal stimulus and loose monetary policy, global growth should improve and benefit emerging-market economies relatively better,” said Joshua Crabb, a senior money manager in Hong Kong at Robeco, which oversees $186 billion. “Cheaper valuations combined with better growth, a dovish Fed and a weaker dollar bode well for emerging markets over the course of 2021.”

Exchange-traded funds covering developing-nation assets drew the highest inflows in more than a year last week, with traders increasing their holdings by a combined $3.56 billion, according to data compiled by Bloomberg. That was an 11th straight week of inflows, increasing total assets to $332.1 billion, with the highest proportion of new money going to China, Taiwan and South Korea.

Emerging-market equities may reach new “historical highs” driven by better corporate profits, Goldman Sachs strategists including Kamakshya Trivedi in London and Caesar Maasry in New York wrote in a report this week. The investment bank raised its 12-month target for the MSCI equity gauge to 1,450 from 1,375. The index was at 1,413.82 on Thursday.

Corporate earnings in developing nations may rise 28% this year as companies in the developing world outperform during the global recovery, UBS Global Wealth Management’s Solita Marcelli in New York wrote in a research note this week.

For all the enthusiasm, there are some warning signs. The 14-day relative strength index for the MSCI EM equity gauge increased to 83 on Thursday, its 17th straight day above the threshold of 70 that signals to some traders gains have been excessive.

At the same time, Bloomberg’s Fear/Greed indicator, which measures selling strength versus buying strength, for the MSCI measure, has climbed to the highest level since October 2011.

While acknowledging there are warning signs, Mr. Crabb at Robeco remains confident in the long-term outlook.

“Although emerging markets have spiked recently and may see a short-term consolidation, the valuation discount to developed markets still makes EM attractive,” he said. — Bloomberg

Filinvest Land to transform unit into REIT

FILINVEST Land, Inc. is set to transform its subsidiary Cyberzone Properties, Inc. into a real estate investment trust (REIT) company to fully realize the value of its leasing business.

In a statement on Thursday, Filinvest said its board of directors approved the transition of Cyberzone into a REIT company that will be listed on the Philippine Stock Exchange in compliance with the guidelines and requirements governing the asset class.

According to Filinvest, it currently has 43 operating and under construction office buildings that span 824,000 square meters of gross leasable area. A REIT owns and operates income-generating properties, which could offer investors attractive returns.

Josephine Gotianun-Yap, its president and chief executive officer, said a REIT listing would fast-track the growth of its business line and could unlock the value of the company’s office leasing business.

“Filinvest has a growing portfolio of recurring income projects and significant prime office properties in Alabang, Cebu, and Clark to continue to grow this business,” Ms. Gotianun-Yap was quoted as saying.

Filinvest said the property portfolio for the REIT company will include a number of operating office buildings and those leased out to traditional and multinational business processing outsourcing (BPO) firms.

The said office buildings are located in Northgate Cyberzone in Filinvest City, Alabang, and Filinvest Cyberzone Cebu in Cebu City.

“Northgate Cyberzone in Filinvest City is an 18.7 hectare Philippine Economic Zone Authority (PEZA) registered business park designed to cater primarily to BPO companies,” the company said.

“It is home to the Philippines’ largest district cooling system to date that helps reduce energy consumption, provides greater efficiency, lowers the initial capital investment, reduces carbon dioxide emissions and enhances real estate value by freeing up building space for other uses,” it added.

Filinvest said Cyberzone’s office rental revenues as of September last year had improved 16% year on year to P2.46 billion, adding that its BPO buildings have remained fully operational despite the coronavirus disease 2019 (COVID-19) pandemic.

For the January-September period, Filinvest Land posted a 40% drop in its attributable net income to P2.73 billion due to lower gross revenues.

The company’s gross revenues during the period fell 32% to P12.54 billion as the pandemic impacted its home sales.

On Thursday, its shares at the stock exchange improved 2.68% or three centavos to close at P1.15 apiece. — Revin Mikhael D. Ochave

Discovery World increases stake in four subsidiaries

DISCOVERY WORLD Corp. has increased its subscription in four subsidiaries in a move to create opportunities for the company’s resort business.

In four separate disclosures on Thursday, Discovery World announced the decision of its executive committee to increase the company’s subscription in its subsidiaries, namely: Palawan Cove Corp., Lucky Cloud 9 Resort, Inc., Balay Holdings, Inc., and Cay Islands Corp.

Discovery World said it increased its subscription in Palawan Cove by 10 million shares with a par value of P1 per share, amounting to P10 million, which will be used as working capital.

With the new subscription, the company said the resulting outstanding capital stock of Palawan Cove will be 90 million shares, from the previous 80 million shares.

Palawan Cove is the owner of Boayan Island, a predevelopment site for a diving and snorkeling destination.

Discovery World also increased its subscription in Lucky Cloud 9 Resort by 40 million shares with a par value of P1 per share, equivalent to P40 million.

“Lucky Cloud 9 Resort, Inc. owns real property in General Luna, Siargao, Surigao Del Norte, and this property will be used as a site for hotel and hostel developments,” the disclosure said.

Discovery World said the subscription amount will be paid in tranches. The initial payment will be 25% of the subscription price, at P10 million.

“Lucky Cloud 9 Resort, Inc., should file an application for increase in authorized capital stock from P140 million to P200 million, and duly approved by the Securities and Exchange Commission (SEC),” the disclosure said.

According to the company, the total outstanding capital stock of Lucky Cloud 9 Resort will increase to 180 million shares from the previous 140 million shares.

Discovery World also disclosed the increase in its subscription in Balay Holdings by 10 million shares with a par value of P1 per share, amounting to P10 million.

“Balay Holdings, Inc. is seen to own real properties in Boracay to be used as the staff house of the employees of the company,” the disclosure said.

The additional shares will increase Discovery World’s subscription to 100 million shares from 90 million shares.

“Balay Holdings, Inc.’s initial application for an increase in authorized capital stock to P50 million has been revised to P100 million,” the company said.

“Currently, Discovery World owns 800,000 shares of Balay Holdings, Inc. and the percentage to the total outstanding shares reflected is subject to the SEC approval of the application for increase of BHI’s authorized capital stock,” it added.

The company also announced an increase in its subscription in Cay Islands by 40 million shares with a par value of P40 million, amounting to P40 million.

“Cay Islands owns real property in El Nido, Palawan used as a site for its retail development ‘Shoppes at Vanilla Beach’ and other planned hotel and hostel developments,” the disclosure said.

Discovery World said the subscription will be paid in tranches, with the initial payment amounting to P10 million.

Shares in Discovery World at the stock exchange rose 26.67% or 80 centavos to end at P3.80 apiece on Thursday. — Revin Mikhael D. Ochave

Netflix ends year with record 200M subscribers, spurred on by new rivals

GLOBAL streaming service Netflix closed 2020 with an additional 37 million paying subscribers above company and analysts forecasts, with its executives reporting in the earnings report that the service is “very close to being sustainably free cash flow positive.”

After slowing down in the third quarter of 2020 by adding 2.2 million subscribers, lower than the company forecast of 2.7 million and significantly less than the 28 million subscribers that jumped aboard in the first half of 2020, Netflix bounced back in the fourth quarter by adding 8.5 million subscribers, successfully breaching the 200 million subscriber mark. Netflix subscribers currently sit at 203.66 million.

The rise in subscriber numbers bodes well for the service’s balance sheet as Netflix reported $25 billion in annual revenue (an increase of 24% year on year) and grew operating profit by 76% to $4.6 billion.

This means that Netflix may soon be cash flow positive and would no longer need to raise external funding for daily operations.

The Asia Pacific (APAC) region saw the second largest subscriber jump at 9.3 million (up 65% year on year) for the entire 2020, following the Europe, Middle East, and Africa (EMEA) region which saw 14.9 million new subscribers. South Korea and Japan in particular were mentioned in the earnings report as the two countries which reported significant subscriber growth.

In the earnings interview published on YouTube on Jan. 19, Netflix mentioned rival Disney+ and how its hugely successful year — onloading 87 million paying subscribers in its first year — gets them “fired up about increasing [their] membership [and] increasing [their] content budget,” in the words of Netflix co-CEO Reed Hastings.

“It’s super impressive what Disney has done. It’s an incredible execution for an incumbent to pivot and taking on an insurgent… and it shows that members are interested and willing to pay more for more content,” Mr. Hastings said.

The earnings report also mentioned other competitors, including the soon-to-launch Paramount+ in 2021 (from ViacomCBS) and existing streaming services AppleTV+, WarnerMedia’s HBO Max, and NBCUniversal’s Peacock.

“Our strategy is simple: if we can continue to improve Netflix every day to better delight our members, we can be their first choice for streaming entertainment. This past year is a testament to this approach,” the company said in the earnings report.

For 2021, Netflix expects the first quarter to see 6 million new subscribers, significantly lower than 2020’s first quarter which recorded 15.8 million new subscribers. The company said that the Q1 (first quater) 2020 numbers “included the impact of the initial COVID-19 lockdowns.”

WHAT PEOPLE WATCHED
In the fourth quarter of 2020, two live action series from Asia — Alice in Borderland from Japan and Sweet Home from Korea — collectively saw 30 million households watching and both titles appeared in Top 10 lists across Asia and countries outside the region including Germany and France.

This is said to be “a true testament to the fact that great stories made in Asia with Asian filmmakers and talent can cross borders and be watched and loved by the world,” according to a separate Netflix press release.

Meanwhile, the fourth season of the British royal family drama The Crown became the series’ biggest season so far, with the number of households watching the series reaching over 100 million since its launch in 2016.

With show production back up and running in most regions, Netflix reported that “over 500 titles” are currently in post-production or preparing to launch and that they plan to release “at least one new original film every week in 2021.”

Among the new shows that have already premiered and will soon premiere in the first quarter of 2021 are the third season of Cobra Kai, French series Lupin, To All the Boys I’ve Loved Before 3, Fate: The Winx Saga, Yes Day, Sky Rojo (from the creators of La Casa de Papel), and Space Sweepers. — Zsarlene B. Chua

Smaller banks may face threat from new fintech mart entrants

FINANCIAL PLAYERS backed by large firms or with an established presence looking to enter the Philippine market are expected to thrive and could pose a threat to more traditional smaller lenders here, a debt watcher said.

“We believe that aspiring entrants that already have extensive customer base or are backed by corporates with strong firepower would pose for a more formidable threat to the incumbents over time, with the smaller banks with sub-par digital offerings more at risk of losing out from the competition,” Tamma Febrian, associate director of the Financial Institutions Group of Fitch Ratings, said in an e-mail to BusinessWorld.

Mr. Febrian said the trend seen in the recent years showed financial technology (fintech) firms in the country have posted growth through bank partnerships rather than via acquisitions.

Meanwhile, in other ASEAN markets such as Indonesia, fintechs have been acquiring smaller banks.

“The foreign ownership restrictions for non-bank corporations in owning banks in the Philippines may also be another deterrent, especially for those who are seeking to have full control,” Mr. Febrian said.

He noted that fintech acquisitions are unlikely to pose a material challenge for big, incumbent banks that are more focused on underserved segments of the market.

“We believe that any near-term impact should be manageable, and many banks have accelerated their digitalization as a result of the pandemic, potentially closing of openings for some of the new entrants,” he said.

The central bank in November approved a regulatory framework for digital banks, which will be distinct from traditional brick-and-mortar lenders. The BSP has said it sees all-online banks helping in the expansion of the range of financial services available to Filipinos.

BSP Deputy Governor Chuchi G. Fonacier said earlier this month that they already received an application for a digital banking license from a partnership between local and foreign players. Four more parties have expressed interest in applying.

The BSP aims to bring the banked population to 70% of Filipino adults by 2023.

Only 25% of Filipino adults were part of the banked population as of 2019, leaving some 51.2 million of about 72 million with no formal accounts in the financial system. — L.W.T. Noble

PCCI sets up venue for teaching robotics, entrepreneurship

THE Philippine Chamber of Commerce and Industry (PCCI) on Thursday launched a center for technology education and entrepreneurship.

The business chamber partnered with Huawei Technologies Co. Ltd. for the innovation center, which will be the venue for teaching artificial intelligence, robotics, coding, big data analysis, Internet of Things, satellite internet connectivity, and blockchain.

The center is also a start-up incubator that connects local entrepreneurs to investors, along with giving them access to training and mentorship.

“Our center will facilitate knowledge-exchange among start-ups, established businesses, and local government units,” PCCI President Benedicto V. Yujuico said in his speech at the launch.

He said the potential partnerships could develop digital transformation and software solutions in smart cities, medical technology, security systems, and digital banking. The center will also launch its website innovate.com.ph.

The implementing rules and regulations (IRR) Innovative Startup Act or Republic Act No. 11337, which provides incentives for startups and enablers, was signed in 2019. — Jenina P. Ibañez

TV5 to air ABS-CBN show ASAP Natin ‘To, FPJ movie block

AFTER partnering with Zoe Broadcasting Network to create the A2Z channel to broadcast several of its shows, ABS-CBN is once again branching out and will start showing musical variety show ASAP Natin ‘To and the FPJ: Da King movie block on TV5 starting Jan. 24.

The announcement was made on Jan. 21 after months of speculation as TV5 executives including Manuel V. Pangilinan, chairman of the TV5 Network, Inc., confirmed that there were ongoing conversations with ABS-CBN talents while programming head Percival “Perci” M. Intalan said in August that there were “talks on several levels happening” when it came to ABS-CBN.

(Read more: TV5 to buy entertainment content, enter into block timing | BusinessWorld (bworldonline.com)

Cignal TV has also been carrying ABS-CBN channels (Kapamilya Channel, Jeepney, Cinemo, and Knowledge Channel) via its pay TV service.

“This collaboration between Cignal, TV5, Brightlight Productions, and ABS-CBN marks the start of greater cooperation among our various industry players and begins a new era of partnership,” Robert P. Galang, president and CEO of Cignal and TV, said in a statement, before adding that they are pleased to have both ASAP and the Fernando Poe, Jr. movies on TV5.

“The future of entertainment media is rapidly converging around a dynamic mix of traditional and digital platforms… we are committed to continuously explore more initiatives to provide the best of both worlds to all our stakeholders,” Mr. Galang explained.

Aside from various free TV partnerships, ABS-CBN has also expanded its digital content footprint by offering its shows on live streaming app Kumu, various social media networks including Facebook, YouTube, and its own streaming service iWantTFC.

ASAP Natin ‘To is considered the country’s longest running musical variety show, having been launched in 1995. It features some of the country’s biggest performers including Martin Nievera, Zsa Zsa Padilla, Gary Valenciano, Sarah Geronimo, Erik Santos, Ogie Alcasid, and Regine Velsaquez-Alcasid. The FPJ: Da King movie block features the movies of the popular late action star and a National Artist of the Philippines for Film Fernando Poe, Jr. He started acting in 1955 and his films included such classics of the action genre as Lo’ Waist Gang, Asedillo, and Aguila, and the fantasy action series Ang Panday.

ASAP Natin ‘To will air on TV5 every Sunday starting Jan. 24, 12 p.m., while the FPJ: Da King movie block will air every Sunday, also starting Jan. 24, at 2 p.m.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., that owns and operates TV5 and CignalTV has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Zsarlene B. Chua

UK stars from Ed Sheeran to Elton John raise alarm over post-Brexit music tours

LONDON — More than 100 British musicians, from Ed Sheeran, Sting, and Pink Floyd’s Roger Waters to classical stars like conductor Simon Rattle, have said tours of Europe by British artists are in danger because of Brexit.

In a letter to The Times newspaper published on Wednesday, the musicians said the government had “shamefully” broken a promise to negotiate a deal allowing musicians to perform in the European Union (EU) without the need for visas or work permits.

They called for a reciprocal deal allowing paperwork-free travel for both British and European touring artists. “The deal done with the EU has a gaping hole where the promised free movement for musicians should be: everyone on a European music tour will now need costly work permits and a mountain of paperwork for their equipment,” they wrote.

One of the consequences of Brexit, which fully took effect on Dec. 31, is that British and EU citizens can no longer freely travel, work and live in each other’s territories.

The letter’s signatories ranged from The Sex Pistols and Iron Maiden to Joss Stone, Radiohead, Elton John, Bob Geldof, and Queen’s Brian May and Roger Taylor.

Roger Daltrey, lead singer of The Who and an outspoken Brexiteer who previously dismissed concerns about tours after Brexit, was also on the list.

On the classical side, cellist Sheku Kanneh-Mason, who performed at the wedding of Prince Harry and Meghan Markle, was joined by violinist Nicola Benedetti and composer Judith Weir, holder of the post of Master of the Queen’s Music.

“The extra costs will make many tours unviable, especially for young emerging musicians who are already struggling to keep their heads above water owing to the COVID ban on live music,” the musicians wrote.

Under the deal agreed by London and Brussels in December, British musicians will be able to tour in EU countries without a visa for up to 90 days in any 180-day period, but will need work permits to perform in some countries like Germany and Spain.

New rules on road haulage mean British trucks have to return to Britain after two laden journeys in the EU, making the standard touring model for British bands and ensembles impossible, according to the Association of British Orchestras.

The British and European executives blamed each other for the industry’s predicament, each saying their proposals during the Brexit talks had been rejected by the other side.

“If the EU reconsiders its stance our door remains open,” the culture ministry in London said.

In Brussels, the European Commission said Britain had chosen to end the free movement of EU citizens to the United Kingdom, which inevitably meant that travel, including for business purposes, would no longer be as easy as it was before Brexit. — Reuters

2GO launches supply chain solution

2GO GROUP, Inc. has launched a new supply chain solution called 2GO Connect that aims to remove supply chain inefficiencies amid the coronavirus disease 2019 (COVID-19) pandemic.

In a statement on Thursday, the logistics and transportation provider said 2GO Connect offers fast and direct service to modern trade points of sales across the country.

The company said the new service solution lets businesses deliver their inventories straight to malls and modern trade, avoiding several handling points and transportation costs.

2GO Chief Operating Officer Waldo C. Basilla said 2GO Connect leverages off its ROPAX (roll-on/roll-off passenger) service and its landside network to cater to malls in Cebu, Iloilo, Cagayan de Oro, and Bacolod four times a week.

Mr. Basilla said the cargoes are gathered at the origin and those heading to the same destination will be placed in a container and have a “train-like” schedule for regular deliveries straight to the malls.

“We integrate our broad multimodal transportation services to enable fast, reliable, and direct service to replenish goods at the malls, as the economy gradually reopens in 2021,” Mr. Basilla was quoted as saying.

“This gives customers from the Visayas and Mindanao regions access to the same catalogues available in Metro Manila, almost at the same time that it is launched,” he added.

Meanwhile, 2GO projects a growth for the new service solution as the Philippine economy continues its recovery from the pandemic.

“2GO is confident that with our continuous innovation, we will not only help businesses meet their needs, but more importantly, connect them to the ultimate consumer in a timely manner,” Mr. Basilla said.

For the third quarter of 2020, 2GO reduced its net loss to P311.66 million against the P627.67-million net loss it reported in the similar period the previous year. Its revenues for the quarter also fell 9.7% to P4.60 billion.

Shipping revenues declined 35.7% to P987.55 million, and logistics and other service revenues dropped 4.9% to P1.58 billion. Meanwhile, sale of goods improved 7.3% to P2.03 billion.

On Thursday, 2GO shares at the stock exchange fell 2.73% or 23 centavos to end at P8.20 each. — Revin Mikhael D. Ochave

Banks maintain stricter lending standards

MOST BANKS maintained strict lending standards last quarter and expect to continue to do so in the coming months due to sustained worries amid the pandemic, even as some economic indicators show signs of improvement, a survey by the Bangko Sentral ng Pilipinas (BSP) released Thursday showed.

The latest Senior Bank Loan Officers’ Survey released by the BSP showed most respondent banks maintained their credit standards for both enterprises and households during the October to December period, based on the modal approach.

“The latest survey results reflected a slight improvement compared to the Q3 2020 survey where almost half of the respondent banks stated that they tightened credit standards amid the continued economic and business disruptions caused by the ongoing COVID-19 pandemic,” the central bank said in a statement.

Meanwhile, based on the diffusion index (DI) approach, there was a net tightening of overall credit standards for both enterprises and households last quarter, similar to the previous three-month period.

“Banks tightened their lending standards anew on concerns of a further escalation in non-performing loans,” BSP Officer-in-Charge Francisco G. Dakila, Jr. said in an online briefing.

“Nonetheless, the BSP remains confident in the soundness and resilience of the banking sector, as capital adequacy ratios have stayed well above the mandatory standards,” he added.

Previous results of the survey showed banks have generally tightened credit standards since the second quarter of last year, reflecting worries over an increase in soured loans.

The Senior Bank Loan Officers’ Survey, which assesses banks’ lending decisions, reflected answers from 45 out of 64 banks surveyed from Nov. 25, 2020 to Jan. 11 for a response rate of 70.3%.

More than half or 63.4% of the respondent banks reported unchanged credit standards for loans to enterprises last quarter, based on the modal approach.

The DI approach meanwhile showed a net tightening of lending standards across borrower firms of all sizes.

“As indicated by respondent banks, the observed tightening of overall credit standards was largely due to less favorable economic outlook, deterioration in the profitability of bank’s portfolio and profiles of borrowers, and reduced tolerance for risk, among other factors,” the BSP said.

“On specific credit standards, the net tightening of overall credit standards was reflected in terms of reduced credit line sizes; stricter collateral requirements and loan covenants; and increased use of interest rate floors. Meanwhile, some form of easing was revealed in terms of narrower loan margins and longer loan maturities,” it added.

The modal approach showed banks expect their credit standards for enterprises to remain unchanged this quarter. However, DI-based results showed some banks continue to expect tighter standards “due to a more uncertain economic outlook” and a conservative risk appetite as firms continue to reel from the impact of the pandemic.

HOUSEHOLD LENDING
Majority or 77.8% of respondent banks likewise said they maintained their credit standards for household loans last quarter, based on the modal approach.

The DI-based results however showed a net tightening of overall standards for credit to households like housing and personal or salary loans due to dim economic prospects and reduced tolerance for risk. Meanwhile, standards for credit card and auto loans remained unchanged as equal portions of respondent banks said they tightened or eased their criteria for these.

“In terms of specific credit standards, the overall net tightening of credit standards for loans to households was revealed in reduced credit line sizes and stricter loan covenants,” the central bank said.

“Meanwhile, some easing of credit standards for loans to households was also observed in terms of narrower loan margins, less restrictive collateral requirements, longer loan maturities, and decreased use of interest rate floors,” it added.

For this quarter, majority of respondent banks said they expect to retain their credit standards, based on the modal approach.

Meanwhile, DI-based results showed an expected tightening in loan standards for households as the pandemic’s economic impact has affected borrowers’ capacity to pay.

Most of the respondent banks see unchanged loan demand from both enterprises and households this quarter, indicating an increase in confidence of firms and consumers amid the gradual rise of economic activities, the modal approach showed.

DI-based results meanwhile showed expectations of a net increase in overall loan demand from businesses as they seek financing. Consumers are also expected to borrow due to higher household consumption, lower income prospects, and lack of other sources of funds.

Amid tighter credit standards and weak borrower confidence, lending growth slumped to 0.3% year on year in November, the slowest since the 1.9% in September 2006.

Banks’ non-performing ratio stood at 3.81% as of end-November, rising from the 3.72% in October as well as the 2.19% a year earlier, based on BSP data, as bad loans surged 73.6% year on year to P404.687 billion in November. — L.W.T. Noble

Bayad Center rebrands as it ramps up online presence

BILLS PAYMENT firm CIS Bayad Center, Inc. had rebranded to Bayad as it boosts its digital presence.

“Expect a bigger Bayad as we continue to grow our network of partners as we navigate in this new normal,” CIS Bayad Center President and Chief Executive Officer Lawrence Y. Ferrer said during the online launch of the rebranded bills payment arm of Manila Electric. Co. on Thursday.

Mr. Ferrer said Bayad’s new look and identity “speaks to the younger generation of payers.”

Users can tap Bayad’s services at www.online.bayad.com or through its app.

The revamped Bayad Online include a bill reminder feature and a dashboard for payments where users can manage their transactions.

“The app carries an array of valuable features such as e-wallet and e-load, bills viewing and payment, personal financial manager, QR payments, rewards, insurance, savings accounts, personal loans, and credit scoring system,” the company said in a statement on Thursday.

Bayad said it had seen a decrease in transaction volumes amid restriction measures.

“[This is because the majority of our channels are brick and mortar,” Bayad Marketing Head Wendell P. Labre said.

He said they saw digital payments grow to make up 30% of total transactions from just 10% before the pandemic.

“In terms of volume, we’re normally processing 10 million transactions monthly. During lockdown, transactions went down to as low as 30%, but as of December [it has been] gradually growing at 80% of monthly volume,” Mr. Labre said.

More firms have been shifting to electronic transactions to adapt to the changes caused by the crisis.

The central bank wants to make the country a cash-lite society by 2023 where e-payments will make up 50% of total transactions both in volume and value. — L.W.T. Noble

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