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DBP 2019 net profit rises amid strong infrastructure lending

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DEVELOPMENT BANK of the Philippines (DBP) said net profit rose 5.94% to P6.06 billion in 2019 after exceeding its loan approval target, with much of its financing going to infrastructure projects.

In a statement Friday, DBP President and CEO Emmanuel G. Herbosa said the bank realized “healthy returns (from) its lending and investment activities,” with interest income growing 27.64% to P29.64 billion.

The state-owned bank’s total loan portfolio grew 25.88% to P414.06 billion last year.

DBP said infrastructure and logistics loans totaled P164.8 billion, while those issued to social services projects P71.2 billion. It extended P27.8 billion worth of loans to the micro, small and medium enterprises (MSME) sector and P44.3 billion to environmental projects.

The bank’s mandate is to provide credit to sectors deemed strategic by the government.

Mr. Herbosa said the bank exceeded by a wide margin its P75-billion target for loan approvals in 2019, approving P133.1 billion worth of loans.

“DBP boosted its lending activities in 2019, in support of the national government’s goal of increasing investments in the infrastructure sector, so as to further build up the economy and promote inclusive growth especially in areas outside of traditional urban centers,” he was quoted as saying in the statement.

The bank’s deposits totaled P554.63 billion in 2019, up 16.9%, while its net worth was P60.29 billion at the close of the year.

Deposits by public-sector entities amounted to P408.72 billion.

Assets totaled P762.17 billion in 2019, growing 13.83%.

The bank has 129 branches, 11 branch-lite units and 836 automated teller machines.

DBP is the Philippines’ eighth-largest bank by assets. — Beatrice M. Laforga

Gov’t-issued credit guarantees P216 billion after 2019 mergers

THE national government’s total credit guarantee portfolio was P216 billion in 2019 after five agencies with guarantee functions consolidated into a single fund run by Philippine Guarantee Corp. (Philguarantee).

In a statement Friday, the Department of Finance (DoF) said this year Philguarantee will have an estimated P241 billion worth of guarantees in its porfolio this year, with P220 billion for the housing sector, P6 billion for agriculture and P15 billion for the corporate sector, including small and medium enterprises (SMEs).

In a report to Finance Secretary Carlos G. Dominguez III, Philguarantee said the consolidation last year pooled P55.5 billion worth of assets, with its equity and investment funds valued at P24.5 billion and P28 billion, respectively.

It collected P37.2 million worth of non-performing loans and sold off P291.76 million worth of non-performing assets

Philippine Export-Import Credit Agency (PhilEXIM) merged in 2019 with the Home Guaranty Corp. The guarantee functions, programs and funds of the Small Business Corp. (SB Corp.) and the administration of the Agricultural Guarantee Fund Pool and the Industrial Guarantee and Loan Fund were also transferred to PhilEXIM, which is now called Philguarantee.

An Executive Order issued by President Rodrigo R. Duterte in 2018 which became effective in Aug. 31, 2019, required government-run guarantee firms to merge and transfer their functions and assets to a single entity.

Philguarantee said it hopes to widen credit guarantee support to “priority sectors of manufacturing, export, infrastructure, renewable energy and energy efficiency projects and commercial agriculture projects; as well as to SMEs; low-cost, socialized and medium-cost housing developers; and small farmers and fisherfolk.”

Philguarantee President Alberto E. Pascual said the company has been granting credit guarantee facilities to lending institutions such as universal, commercial, savings and rural banks, and cooperatives, non-government organizations and associations of farmers.

“We also expect additional credit guarantees to be generated in 2020 with the designation of PhilGuarantee as program administrator for the World Bank’s Clean Energy Fund/Philippine Renewal Energy Development Project and the transfer of P800 million from the Electric Cooperative-Partial Credit Guarantee Program from the LGU Guarantee Corp. (LGUGC),” Philguarantee said in the report.

Among its priorities this year are to continue implementing the post-merger process initiatives and projects, to resolve and dispose of major non-performing assets and settle outstanding payables, and improve risk management. — Beatrice M. Laforga

BSP orders Cagayan rural bank to close

THE Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) ordered the closure of Providence Rural Bank, Inc., which is based in Cagayan Province, and directed the Philippine Deposit Insurance Corp. (PDIC) to take over the institution.

In a statement Friday, PDIC said MB Resolution No. 291.B dated Feb. 27, bars Providence Rural Bank from operating further.

PDIC said the resolution also ordered the insurer to take over and proceed with the liquidation of the rural bank starting Friday, Feb. 28.

According to BSP data, the rural bank had 2,431 deposit accounts at the end of last year, with P33.4 million worth of deposits. Some 92.99% or P31.06 million are insured.

“PDIC assured depositors that all valid deposits and claims shall be paid up to the maximum deposit insurance coverage of P500,000.00,” it said.

Providence Rural Bank. is a single-branch bank located in Camalaniugan, Cagayan. — Beatrice M. Laforga

Peso weakens on further global spread of coronavirus

THE peso weakened against the dollar Friday, reflecting deepening fears about the global impact of the coronavirus disease (Covid-19), which is now spreading rapidly outside its country of origin, China.

The peso closed at P50.97 against the dollar Friday, against its Thursday finish of P50.815, according to the Bankers’ Association of the Philippines.

Week-on-week, the currency also depreciated from its P50.94 close on Feb. 21.

The peso opened at P50.82 and hit a intrasession low of P51.01. The high was P50.80.

Dollar volume rose to $1.684 billion from $1.420 billion\ Thursday.

The peso weakened after the World Health Organization said that it is deliberating to declare the coronavirus outbreak as a global pandemic.

A trader and an analyst said the spread of coronavirus cases in Europe, the Americas, Africa and elsewhere in Asia left the market jittery.

“The peso weakened after the World Health Organization (WHO) said that it is deliberating declaring the coronavirus outbreak a global pandemic,” the trader said in an email.

Reuters reported that WHO Director General Tedros Adhanom Ghebreyesus said that countries should make preparations, adding that the virus has “pandemic potential” with new infections reported around the world now surpassing those discovered in China.

“The peso seems to be tracking global markets again as fears continue to heighten with fresh evidence that Covid-19 is spreading outside China,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a text message.

Reuters reported that Nigerian Health Minister Osagie Ehanire announced that an Italian man who arrived in the country on Feb. 25 ago was Nigeria’s first coronavirus case.

“The patient is clinically stable, with no serious symptoms,” Mr. Ehanire said, adding that Nigeria has been taking measures to contain and control the disease.

The Lithuanian government also confirmed its first coronavirus infection on Friday. The patient is a woman who returned this week from a visit to Verona, Italy.

Italy is thought to be the worst-hit country in Europe with case numbers at 350 and deaths at 17. — Luz Wendy T. Noble

February Inflation likely settled at 2.4-3.2% — BSP

INFLATION probably settled at 2.4-3.2% in February due to lower fuel, utility and food prices, according to the Philippine central bank.

“Lower prices of petroleum products, electricity and rice as well as other food products are expected’ to temper price pressures in February,” the economic research department of the Bangko Sentral ng Pilipinas (BSP) said in a statement on Friday.

Consumer prices rose 2.9% in January, the fastest in eight months, according to data from the Philippine Statistics Authority.

Manila Electric Co. (Meralco) earlier said typical households can expect a P118 cut in their monthly bills for February after new power supply deals helped bring down the cost of electricity.

The country’s largest distribution utility said the electricity rate this month for most homes that consume 200 kilowatt-hour (kWh) would go down by P0.59/kWh to P8.8623/kWh from last month.

The decrease for the second straight month this year brings the cost of power to its lowest in two years, the company said.

For consumers using 300 kW, 400 kWh and 500 kWh, the cut in their monthly electricity bills will be P177, P236 and P295, respectively.

Meralco said its competitive selection process had helped bring down the power generation charge by P0.3949 to P4.509/kWh.

Reuters reported that oil prices continued to fall for the fifth consecutive day on Thursday to reach their lowest level in more than a year as the continuous spread of the coronavirus disease 2019 (covid-19) spook investor fears that the outbreak could dent the global economy.

Saudi Arabia, the world’s top oil exporter, is reducing crude supplies to China in March by at least 500,000 barrels per day due to slower refinery demand after the coronavirus outbreak, Reuter said, citing unidentified sources.

The Philippine Statistics Authority will report February inflation data on Mar. 5.

“Looking ahead, the BSP will remain watchful of economic and financial developments to ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,” the central bank said. — Luz Wendy T. Noble

SM Investments income up 20% as businesses post strong growth

SM INVESTMENTS Corp. posted a 20% rise in net income last year to P44.6 billion as its business segments performed strongly to boost revenues, the Sy-led company told the stock exchange on Friday.

“We had a good year in 2019 with all our core businesses delivering strong revenue and profit growth. The Retail Group added over 400 stores nationwide whilst the Property Group sustained its growth momentum led by residential and commercial developments. The Banking Group had a particularly good year as net income improved,” SM President Frederic C. DyBuncio said in a statement

Consolidated revenues last year rose 12% to P501.7 billion.

SM Retail Inc. posted a 9% rise in revenues to P366.8 billion, while its net income grew by 10% to P12.5 billion. Retail operations consist of non-food department stores and specialty stores, as well as food stores SM markets.

Last year, The SM Store opened two stores in Ortigas in Pasig City and Olongapo in Zambales, bringing the total gross selling areas of all 65 department stores to 806,230 square meters (sq.m.).

The food group — which includes SM Supermarket, SM Hypermarket and Savemore, Alfamart and WalterMart — added 248 new stores in 2019.

In all, SM Retail added 412 new outlets last year across its portfolio. It ended the year with a total of 2,799 outlets, which are comprised of 65 The SM Stores, 1,609 specialty retail outlets, 58 SM Supermarkets, 52 SM Hypermarkets, 201 Savemore, 60 WalterMart and 754 Alfamart stores.

In the property business, SM Prime Holdings, Inc. registered a consolidated net income growth of 18% to P38.1 billion as consolidated revenues rose by 14% to P118.3 billion.

Mall revenues in the Philippines rose 8% to P57.8 billion, driven by the 7% same-mall-sales growth across mature malls. The cinema and event ticket sales grew by 6% to P5.5 billion. Revenues from amusement, merchandise sales and others jumped by 15% to P3.9 billion.

In the Philippines, SM Prime has 74 malls spanning 8.5 million sq.m. of gross floor area, while in China it has seven malls with 1.3 million sq.m.

SM Prime’s residential group, led by SM Development Corp., posted a revenue growth of 24% to P45.2 billion after higher construction accomplishments.

The rest of its businesses recorded a combined revenue growth of 14% to P9.6 billion. This includes the contributions of ThreeE-Com Center, the opening of National University Mall of Asia, and the new Park Inn by Radisson hotels in Iloilo and in North EDSA, Quezon City.

In banking, BDO Unibank, Inc. reported a 35% rise in net income to P44.2 billion. Net interest income increased by 22% to P119.9 billion, while gross customer loans improved 9% to P2.2 trillion. Deposits rose 3% to P2.5 trillion.

China Banking Corp. posted a 24% rise in net income to P10.1 billion. Its net interest income climbed by 14% to P26.1 billion after a 13% rise in gross loans to P577.9 billion. Total deposits expanded by 7% to P775.4 billion.

“We are confident about the long term growth potential of the country and we will continue to expand. We are committed to maintain a strong balance sheet that gives us the financial flexibility to fend off short term risks and to take on opportunities that may come our way,” Mr. DyBuncio said.

On Friday, shares in SM Investments lost P12.50 or 1.27% to close at P974.50 each. — Victor V. Saulon

Belle net income falls 9.6%

BELLE Corp. reported a 9.6% decrease in consolidated net income last year to P2.92 billion as the company recorded a double-digit fall in revenues with the impact of small-town lottery operations on its business of leasing online betting equipment.

Revenues in 2019 plunged 12.1% to P7.47 billion after the weaker results of Pacific Online Systems Corp., which leases the betting equipment to the Philippine Charity Sweepstakes Office (PCSO) for the agency’s lottery and keno operations.

Pacific Online, which is 50.1%-owned by Belle subsidiary Premium Leisure Corp. (PLC), posted a 48.7% drop in revenues to P990 million.

“This was due to competition from the small-town lottery, and the temporary suspension of lottery and keno operations by the PCSO during the third quarter of 2019,” Belle said in its disclosure to the stock exchange on Friday.

“With the suspensions since lifted, Pacific Online is working closely with the PCSO and its network of agents to boost the attractiveness of the pari-mutuel games it offers, and is working to implement cost efficiency measures across its operations,” it added.

Belle’s real estate operations registered an 11% rise in revenues to P3.5 billion, of which P2.67 billion came from leasing the land and building comprising City of Dreams Manila to Melco Resorts and Entertainment (Philippines) Corp. Real estate sales and property management activities at the Tagaytay Highlands complex contributed the balance of P832 million.

Belle said its primary growth driver last year was its share in the gaming revenues at City of Dreams Manila. It remained resilient during the period, the company said.

PLC had a share of P2.98 billion in the gaming earnings of the integrated resort in 2019, although that slice is lower by 7% compared with the P3.21 billion a year earlier.

Belle said to mitigate the decline, it decreased its total costs and expenses by 16% to P3.34 billion, allowing the company to post a recurring net income of P3.44 billion or just slightly lower than the level a year earlier.

On Friday, the listed developer of tourism and leisure destinations in the Philippines saw its shares climb by 1.32% to close at P1.54 each. — Victor V. Saulon

PSALM refutes SMC claim about non-billing of nearly P24B payables

STATE-LED Power Sector Assets and Liabilities Management Corp. (PSALM) has refuted the claim of San Miguel Corp. (SMC) that it has not been billed by the agency for a subsidiary’s supposed P23.94 billion payables, saying it has proof showing receipt of demand letters.

PSALM, a company created by law to privatize the government’s energy assets and take over the debts of the state power company, said it had transmitted monthly invoices to SMC’s South Premiere Power Corp. (SPPC).

“Clearly, there is no truth to SPPC’s claim that it only learned about its payables to PSALM through statements released to the media. PSALM’s monthly billings, demand letters and court pleadings all prove that SPPC is aware, or ought to be aware, of its payables to PSALM,” said Irene Joy Besido-Garcia, PSALM president and chief executive officer, in a statement on Friday.

PSALM said monthly billings sent to SPPC as the Ilijan plant’s independent power producer administrator reflect the amounts due to PSALM. It said SPPC’s underpayments of these billings accumulated and led to PSALM’s claim of P23.94 billion as of Dec. 31, 2019.

“SPPC cannot feign ignorance of its payables to PSALM because it received all the monthly billings,” it said.

PSALM said that aside from the monthly billings, it had sent many demand letters to SPPC over the past several years. It submitted samples of the letters sent to SPPC when it was asked about the matter in the House of Representatives during the Feb. 26, 2020 committee hearing.

In particular, it cited demand letters sent to SPPC on Aug. 9, 2019, Sept. 3, 2018, and May 9, 2018.

“There were earlier letters sent to SPPC demanding payment. The specific amounts claimed in these letters were varying because of the different cut-off dates for SPPC’s accountabilities,” it said.

PSALM said in filed in court late last year its amended answer with counterclaim against SPPC amounting to P23,677,232,704 as of Nov. 30, 2019. It said SPPC was given a copy of the amended answer with counterclaim. — Victor V. Saulon

3 Filipinos from cruise ship monitored for covid-19

THREE of the more than 400 Filipinos who came home from a coronavirus-infected cruise ship in Yokohama have been identified as persons under investigation after showing respiratory illnesses, the Department of Health (DoH) said on Friday.

The patients include a 39 year-old man who experienced cough and two other men aged 34 and 27 years old who complained of throat discomfort, it said.

The more than 400 Filipinos don’t have fever, while two had tested negative, Health Secretary Francisco T. Duque III said at a briefing.

Also on Friday, an inter-agency task force said Filipinos from North Gyeongsang, Daegu and Cheongdo in South Korea, where cases of the coronavirus disease 2019 (covid-19) have ballooned in the past days, won’t be allowed to come home to the Philippines.

Travelers who visited these places in the past two weeks have also been banned from entering the country, DoH said.

Nine new countries have confirmed cases of the novel coronavirus strain, which has killed about 2,800 people worldwide, the vast majority in mainland China, according to the World Health Organization (WHO).

New cases were reported in Brazil, Denmark, Estonia, Georgia, Greece, Norway, Pakistan, Romania and North Macedonia in the past 24 hours, WHO said on its website.

There have been more than 82,000 cases in 46 countries, with infections in every continent except Antarctica.

At least 11 European countries now have confirmed cases of covid-19, while the number of people infected in South Korea has risen to 1,700

At least 13 people have died from the virus in South Korea, according to the South Korean Centers for Disease Control and Prevention.

WHO Director-General Tedros Adhanom Ghebreyesus said the virus could be contained if countries act aggressively.

“You can prevent people getting sick,” according to a transcript of his opening remarks at a briefing posted on the WHO website. “You can save lives. So my advice to these countries is to move swiftly,” he added.

“The epidemics in the Islamic Republic of Iran, Italy and the Republic of Korea demonstrate what this virus is capable of,” the WHO chief said. “But this virus is not influenza. With the right measures, it can be contained.”

He noted that in Guangdong province in China, 320,000 samples had been tested but only 0.14% tested positive for the disease.

Several countries, including the Philippines, have not reported new infections in two weeks.

Confirmed cases in the Philippines remained at three, all of whom were Chinese nationals from Wuhan City, where the virus was first detected.

“Fear and panic doesn’t help,” Mr. Ghebreyesus said. “People can have concerns and rightly so. People can be worried and rightly so. The most important thing is to calm down and do the right things to fight this very dangerous virus.” — Vann Marlo M. Villegas and Charmaine A. Tadalan

Ex-Finance official acquitted of graft

THE country’s anti-graft court has acquitted a former Finance official and eight other executives of private companies of graft in connection with a P380-million tax credit certificate (TCC) scheme.

The Sandiganbayan said the prosecution had failed to present sufficient evidence about the illegality of the transfer of the certificates to Pilipinas Shell Petroleum Corp. approved by Uldarico P. Andutan, Jr., former deputy executive director of the One Stop Shop Inter-Agency Tax Credit and Duty Drawback Center.

“The prosecution’s basis for stating that the transfers of the subject TCCs were not supported by proper/required requirements has no solid ground,” it said in a decision promulgated on Feb. 21.

The anti-graft court said the prosecution “did not provide or alleged what required documentation has not been complied with” in the first place.

The court lifted the hold orders against the accused and released their cash bonds. — Genshen L. Espedido

Philex bottomline slides

PHILEX Mining Corp. posted P647.79 million net loss attributable to equity holders of the parent firm in 2019, reversing the earlier year’s income of P608.46 million, the copper and gold producer’s financial report to the stock exchange shows.

Core net income slipped 74% to P155.63 million, although its quarterly performance showed improved towards year-end. It said core income was highest in the fourth quarter, or double that of the third quarter and a reversal of the net loss in the first quarter.

Despite the full-year profit fall, the company is looking at this year positively.

Eulalio B. Austin Jr., Philex president and chief executive officer, said the mining company’s Silangan project is one of the main priorities for 2020.

“Philex should be able to bring Silangan into operation before Padcal mine in Benguet ceases operations projected by end of 2022. Vicinity explorations at Padcal however is being pursued relentlessly,” he said.

Revenues last year reached P6.79 billion, down 11.1% from P7.64 billion the previous year. Cost and expenses rose 1.5% to P6.92 billion.

The company said it aims to sustain and maximize the potential of the Padcal mine operations while searching for additional mine assets that it can develop within or at the vicinity of the mining area.

It also said that the management, along with its financial advisors, is doubling efforts to find a strategic partner to implement the Silangan project in Surigao del Norte, which has obtained regulatory permits.

It said the improvement of tonnage, metal outputs and sustained metal prices in 2019 is “a jumpstart for a positive outlook for 2020 and will provide a window” to undertake debt reduction program from this year onwards.

On Friday, shares in Philex slipped by 1.69% to close at P2.90 each.

Philex Mining Corp. is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Metro Pacific Investments Corp. and PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Revin Mikhael D. Ochave

Manila Water income down 16%

MANILA WATER Co., Inc. posted a 16% decrease in 2019 net income to P5.5 billion, saying its performance was dampened by the impact of a regulatory penalty, a one-time bill waiver, and higher expenses caused by the water shortage in the first half.

“These challenges were coupled with the continued management of the constrained raw water supply and additional expenses for potential exposures,” the Ayala-led company told the stock exchange on Friday.

Metro Manila’s east zone water concessionaire said that faced with these challenges, it continued to work towards operating efficiency. It reconfigured its distribution network operations to provide reliable service.

In 2019, operating revenues rose 11% to P21.95 billion, while operating costs and expenses climbed 22% to P9.83 billion.

The company said it derived 75% of its operating revenues from the sale of water, net of the bill waiver, while 16% came from environmental and sewer charges.

The increase in cost and expenses was largely because of the penalty imposed by the Metropolitan Waterworks and Sewerage System in relation to the water shortage in the first half.

Manila Water said its performance last year was backed by the contribution of its domestic subsidiaries, with Manila Water Philippine Ventures, Inc. (MWPV) recording a net income of P450 million, up 131% from the previous year. It said the main drivers were Estate Water, Laguna Water, and Boracay Water.

It said on a consolidated MWPV level, revenues rose by 45% to P4.85 billion.

“A significant contributor to this improvement was the higher revenues of Estate Water coming mostly from its supervision fees for the provision of design and project management services in the development of water and used water facilities,” Manila Water said.

It also said that portions of the increase in revenues were due to higher average tariff levels in Boracay Water and Laguna Water.

“Several subsidiaries also saw increases in billed volume during the year, namely Boracay Water and Estate Water, with the re-influx of tourists and the takeover of more property development projects, respectively,” it said.

On Friday, shares in Manila Water fell by 3.13% to close at P11.76 apiece. — Revin Mikhael D. Ochave

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