THE BANGKO SENTRAL ng Pilipinas (BSP) fully awarded its offer of short-term securities on Friday as yields went down amid hints of a possible reduction in reserve requirements and lower oil prices. 

The central bank awarded P100 billion in 28-day bills as planned as bids for the offer amounted to P165.88 billion, beating the P117.75 billion logged last week. 

Accepted rates for the papers ranged from 1.7475% to 1.78%, a narrower band compared to the 1.735% to 1.9279% margin in the previous auction. With this, the average rate of the one-month securities inched down by 1.5 basis points (bp) to 1.7619% from 1.7769% last week. 

The BSP bills and the term deposit facility are used by the central bank to gather excess liquidity in the financial system and guide market rates. 

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said rates of the BSP bills inched down after the central bank said it is open to another cut in banks’ reserve requirement ratios (RRR), which would infuse additional liquidity into the financial system. 

The BSP said lowering the RRR remains “on the table”, Bloomberg reported on Wednesday. 

The reserve requirement for big banks is currently at 12%, still one of the highest in the region. The central bank last cut big banks’ RRR in April 2020 with a 200-bp reduction. 

In July 2020, it likewise slashed the reserve requirements of thrift and rural banks by 100 bps to three percent and two percent, respectively.  

The central bank’s easing measures have infused about P2.2 trillion in fresh liquidity into the financial system, equivalent to about 12.1% of gross domestic product. 

The Monetary Board will have its next policy-setting meeting on Aug. 12. However, it has adjusted its RRR outside these meetings in the past. 

The decline in global oil prices also caused the yields on the BSP securities to drop, Mr. Ricafort added. 

Reuters reported that while US crude oil futures picked up on Friday, prices remained on track for their biggest weekly decline since late October due to worries on how restrictions caused by the spread of the Delta variant could affect demand. 

US West Texas Intermediate crude futures declined 6.4% this week, the biggest weekly loss since the end of October. Meanwhile, Brent crude oil futures shed 6.5% this week, the most since March. — L.W.T. Noble with Reuters 

PHILIPPINE Business Bank (PBB) recorded a lower net profit in the second quarter, it said on Friday. 

The bank’s net earnings declined by 10% to P363.8 million from P400.4 million in the same period a year ago as net interest income stood at P1.374 billion, down 1.29% from P1.392 billion. 

This brought its first semester net income to P524 million, 34% lower than the P794.87 million seen last year. 

However, its core income in the period increased by 1.82% to P1.397 billion from P1.372 billion, which PBB attributed to the 53.9% decrease in its interest expense to P431.4 million. 

“In the next two quarters, the bank will continue to strengthen its core business while managing its risk assets and servicing the needs of its key clientele — the small and medium enterprises,” PBB President and CEO Roland R. Avante was quoted as saying. 

The bank’s loans and receivables rose 4.2% to P87.9 billion as of June from P84.346 billion a year earlier. 

On the funding side, PBB’s deposit liabilities stood at P102.9 billion, also up by 8.25% against the P95.053 billion seen at end-June 2020. Current account, savings account (CASA) deposits rose 41%, while time deposits reached P45.3 billion, PBB said. Its portfolio’s mix improved to 56:44 in favor of CASA deposits from 43:57 a year ago.  

Meanwhile, the bank’s assets reached P122.7 billion as of June, rising by 6.8% from P114.848 billion a year earlier. 

Its capital adequacy ratio stood at 14.41% at end-June, well above the regulatory requirement. 

PBB’s shares closed at P10.32 apiece on Friday, down by two centavos or by 0.19% from its previous finish. — LWTN 

DEVELOPMENT Bank of the Philippines (DBP) saw its net profit decline by 62% in the first quarter due to higher expenses. 

The bank’s net income in the January to March period was at to P547.83 million, down from the P1.455 billion booked in the same quarter a year earlier, based on DBP’s financial report published on its website. 

Net interest income after provisions for losses inched up 0.25% to P3.94 billion. This was due to higher interest expenses, which offset the improvement in its interest income. 

Meanwhile, non-interest income increased 16% to P812.509 million in the January to March period from P699.426 million a year earlier. 

Operating expenses climbed by nearly a third (32%) to P3.684 billion from P2.79 billion in the first quarter last year.  

The bank set aside provisions for impairment losses worth P403.642 million, down by 23.5% against the P527.865 billion in the same period last year. 

On the other hand, its provisions for income tax rose 37% to P520.479 billion from P378.893 billion a year ago.  

The state-owned lender’s loan portfolio rose 12% to P414.72 billion in the first three months of 2021 from P371.01 billion a year ago, DBP President and Chief Executive Officer Emmanuel G. Herbosa said in a statement. 

“The increase in loans to priority sectors reflects the bank’s firm commitment to ensure the steady and gradual recovery of the national economy, despite the looming uncertainties of the current public health emergency,” Mr. Herbosa said. 

More than half or 53% of the loans, equivalent to P218.65 billion, went to infrastructure and logistics projects. Other sectors such as social services and community development initiatives (P82.56 billion); environmental projects (P44.72 billion); and micro, small and medium enterprises (P32.79 billion) also received loans from DBP. 

Meanwhile, deposits with the bank climbed 57% to P879.83 billion in the first quarter from P559.68 billion a year earlier. Mr. Herbosa said this was “driven by renewed public confidence in the stability of DBP as a strong and stable government financial institution”. 

DBP’s total equity rose 26% to P76.64 billion in the January to March period from P61.1 billion the previous year. This was mainly backed by the P12.5-billion capital infusion for the bank granted under the Republic Act 11494 or the Bayanihan to Recover as One Act.  

Through the capital infusion, DBP’s Rehabilitation Support Program on Severe Events (RESPONSE) was able to provide P6.4 billion in credit assistance to 29 borrowers. The bank was also able to restructure loans of 41 borrowers with loans worth P5.7 billion through RESPONSE. 

Meanwhile, the program also provided assistance to 13 small business borrowers with total loan approvals of P2.3 billion. 

“We shall continue to leverage on our recent financial gains such as being a trillion-peso bank and utilize our expanded asset base to create a myriad of viable and sustainable set of opportunities for our clients and for our fellow Filipinos,” Mr. Herbosa said.  

Based on central bank data, DBP, the country’s designated infrastructure bank, was the sixth largest lender with assets worth P1.102 trillion at end-March. — LWTN 

THE PESO weakened versus the greenback on Friday as imports continued to increase, reflecting a likely increase in dollar demand as external trade improves. 

The local unit closed at P50.40 per dollar on Friday, shedding 16.5 centavos from its P50.235 finish on Thursday, data from the Bankers Association of the Philippines showed. 

Week-on-week, the peso also depreciated by 43 centavos from its finish of P49.97 on Aug. 30. 

The peso opened Friday’s session at P50.30 per dollar. Its weakest showing was at P50.47, while its intraday best was at P50.20 against the greenback. 

Dollars exchanged declined to $1.28 billion on Friday from $1.47 billion on Thursday. 

The peso declined following the release of June trade deficit data, which showed imports continued to rise, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort. 

Data released by the Philippine Statistics Authority on Friday showed the trade deficit widened to $2.83 billion in June against the $1.42-billion gap a year earlier. Last month’s trade deficit, however, narrowed compared to the $3.17-billion shortfall in May. 

Imports climbed 34.2% to $9.33 billion in June from a year earlier while exports increased 17.6% to $6.51 billion from last year. 

Year to date, the trade balance widened to a $17.44-billion deficit from the $11.37-billion gap in the first semester of 2020. 

Meanwhile, a trader attributed the peso’s weakness to preference for the greenback amid positive market sentiment due to positive US jobless claims data. 

Data from the US Labor Department showed initial claims for state unemployment benefits dropped 14,000 to a seasonally adjusted 385,000 for the week ended July 31, Reuters reported. This was its lowest level since the pandemic started in March 2020. — L.W.T. Noble with Reuters