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EastWest Bank earnings climb in Q2

EAST WEST Banking Corp. (EastWest Bank) booked higher earnings in the second quarter, driven by higher income from fees and commissions, trading gains, and lower credit costs.

In a disclosure to the local bourse on Wednesday, the bank said it posted a P1.41-billion net profit in the second quarter, climbing from the P1.279 billion it earned in April-June 2018.

The bank return on equity stood at 12.3% as of June versus last year’s 11.1%.

Net interest income climbed to P4.99 billion last quarter from the P4.77 billion booked in the same period last year on higher earnings from service charges, fees and commissions and an increase in trading gains as well as trust income.

Income from service charges, fees and commissions climbed to P1.41 billion from P1.064 billion in the comparable year-ago period, while trading gains amounted to P198.46 million, up from the previous year’s P80.72 million. Trust income rose to P15.16 million from last year’s P11.9 million.

Meanwhile, total operating expenses grew to P4.71 billion in the three-month period from P4.65 billion last year.

EastWest Bank’s first-semester net income stood at P2.7 billion, 21% higher than the P2.23 billion posted in the same period in 2018.

Net interest margin was at 6.5% for the semester.

“For the second half of 2019, we anticipate our net interest margins to recover as the liquidity situation improves and interest rates to normalize,” EastWest Bank President and Deputy CEO Bobby S. Reyes said in a statement.

“Last quarter, we mentioned that due to tight liquidity and higher funding costs, our margins were ‘squeezed’. We are slowly seeing improvement on this and anticipate a better second half for 2019,” Mr. Reyes added.

The bank’s capital adequacy ratio stood at 13% at end-June, while its common equity Tier 1 ratio was at 10.3%.

Total assets stood at P389.5 billion as of June 30 growing by 22% from the same period last year.

As of June 30, EastWest Bank had a total of 390 stores, with 212 of these stores in Metro Manila. Its total automated teller machine (ATM) network was at 583, composed of 399 on-site ATMs and 184 off-site ATMs.

EastWest Bank shares went up two centavos or 0.17% to P11.54 each.

1st Lugang Café in Mindanao opens in Davao

DAVAO CITY — Lugang Café of China’s Bellagio Group of Restaurants has opened its first branch in Mindanao at the SM City Ecoland here and several more are planned in other cities in the island.

Jonathan Kevin J. Bangayan, Lugang Café Davao operations manager, said two other branches are targeted to open in Davao before the end of the year and by 2020. They will be located at the Ayala Abreeza Mall and SM Lanang Premier.

The other target cities are Cagayan de Oro (CDO), Tagum, and General Santos.

“I have friends in CDO who also urged us to open there because people there are looking for it, maraming Chinese doon pero walang mahanap na (there are many Chinese living there but one cannot find) Taiwanese or Chinese food,” said Mr. Bangayan, referring to both Filipino-Chinese and Chinese nationals.

“But no tangible date, maybe in the next three to five years pa,” he added.

Mr. Bangayan, whose family bagged the Lugang Café franchise for the entire Mindanao, said their decision to bring the chain here is to fill the unmet need for an upscale Chinese restaurant and his mother’s love of the cuisine.

“What you are lacking here in Davao is a good fine dining Chinese restaurant… (and) my mom loves Chinese food and she always goes to Lugang Café in Manila,” he said in an interview during the restaurant’s “Feast All You Can” promo which is being offered in time for the ongoing Kadayawan Festival.

“She looked at Davao and thought that it is appropriate already to open Lugang. We talked to the owners, and the rest is history,” he said

A Chinese chef from Lugang has been brought in to oversee the kitchen and ensure adherence to the restaurant chain’s standards.

Mr. Bangayan said some of the ingredients they use are sourced locally, but most other items, such as the seasonings, come from China.

“When you look at Taiwanese food, it’s more of less sauce and the use of ginger and basil. A lot of general Taiwanese cuisine usually comes from Lugang, Shantou. This is where most of the food comes from,” he said.

“If we do change our ingredients to the ones available here, baka maiba ’yung lasa (it might change the taste),” he said. — Maya M. Padillo

Boracay’s alcohol diet

ONE OF President Rodrigo Duterte’s signature decisions that earned him more respect and adoration from the vast majority of the people (including myself) was when he temporarily closed the country’s most famous tourist island resort, Boracay — a move that was unprecedented in more ways than imagined. Boracay was an income generating avenue for the government, and this move to rehabilitate an island that our president made notorious when he called it a “cesspool” was one of the gutsiest choices ever made by a leader.

So on April 26, 2018, Boracay island was shut to non-residents and started an ambitious six-month-long rehabilitation. The revenue loss was estimated to be between P15-30 billion, with hundreds of establishments shut down because of environmental violations and thousands of jobs lost in the process. The island was reopened to tourists on Oct. 26 last year, with several new regulations imposed, including limiting the number of tourists, checking for confirmed hotel bookings (no more backpackers sleeping on the beaches), no more fire eaters, fire dancers, masseuses, vendors, and, of course, no more drinking of alcohol beverages within five meters of the beach areas, riverbanks and public parks.

THEN AND NOW
I have been going to Boracay since 1998. Two decades ago, it was really like paradise on earth, with a certain charm and allure that even seemed magical. This was not the case when I returned to the island earlier this decade, prior to the rehabilitation. Not only was Boracay losing its shoreline and much of its cleanliness because of vast commercialization and uncontrolled tourism overflow, but it had lost the previous enchanting and diverse demographics of the people — both residents and tourists that used to occupy the island.

Gone were the days where a small Italian restaurant owner would cook authentic pasta meals for you, or a French restaurateur would serve you genuine crème brulee. Instead Station 1 and Station 2 are now hubs for big chains like Jollibee, McDonald’s, KFC, Shakey’s, Yellow Cab, Starbucks, 7-11, etc. — so no more unique food and beverage experience.

Gone were the days, too, when you’d see more Caucasians from Europe and North America. Instead, we see mostly mainland Chinese and Koreans. They seemed to even outnumber Filipino tourists. Chinese and Korean restaurants dominate the scene outside of the big chains. Most establishments — from hotels to restaurants — have both Chinese and Korean translation on their menu as an obvious indication of the times.

THE NEW BAR SCENE
OM, Nigi Nigi Nu Noos Bar, Summer Place, Epic Club, and Paraw Club were some of the most happening drinking sanctuaries in Boracay before the shutdown and rehabilitation, but when I was there just last week, even on a Saturday, none of these places were full. Before the rehabilitation, these bars were all jampacked and standing room only. Granted that there was inclement weather last week, still, every single flight to Caticlan, other than a few that got delayed, from Philippine Airlines and Cebu Pacific to AirAsia, were fully booked. I had a chance to see each and every one of the bars I listed above when I was strolling from Station 1 to Station 2 at night.

My chitchats with the waiters and security guards of these establishments revealed that the bar business in Boracay is indeed down — way below compared to the levels prior to the temporary closure. Bars are now asked to close by midnight, too, so it is no longer possible to see people drinking silly and getting wasted till the wee hours of the morning, like it was before. There are also police, both on foot and in patrol vehicles, monitoring the bars at the stations.

Even the wine shops on the island have experienced lower sales after the island was reopened to tourists. While wine shops are not directly affected by the curfew on bars, the shop keepers say that it is the kind of tourists they have now who are not buying as much as the ones before. Caucasians are known to be bigger alcohol consumers generally than Asians. Even the quality of alcohol is down. Local spirits are selling much more than imported spirits. When it comes to wines, expensive wines priced above P1,000 per bottle are almost non-existent now. People buy wines at P500 per bottle and below only.

Locals however tell me that there is a way around the midnight curfew on drinking. The easiest is obviously to buy from 7-11 or Budget Mart and bring the alcohol back to your hotel rooms to get further inebriated, or buy beers at the 24-hour convenience stores and drink inside the store. Some locals even suggested that sari-sari stores will welcome drinking after midnight — but this offer is only good for Filipino tourists. In both cases (convenience stores and sari-sari stores) only beers are allowed past midnight, not wine nor spirits. Alcohol consumption in general is way down because of the curfew, the restricted number of the incoming tourists, the “no drinking in beach” policy, and the absence of the Caucasian tourists.

ROADS NEED TO IMPROVE
While the beach front has indeed shown much improvement, with trash rarely seen, and people more disciplined with their personal garbage disposal, the roads are, however, still pretty bad.

The main road, the Boracay Highway Central, has long stretches where it is barely passable even on one lane. I also did not get to see ongoing construction work during my four-day visit, and this should not happen even if it was raining. Instead I saw a bulldozer, an excavator, and a couple of dump trucks just taking road space. If you stay in Station 2, you may not get to see the bad roads, but if you stay in Station 1 and further to the north in hotels like Alta Vista, Movenpick, Crimson, and the like, the ride to the main commercial hub will be very rocky and wobbly every time. It is such a huge eyesore for the island so the DPWH better get the roads done with no further delay.

I have to admit that Boracay is not as appealing to me as it was before, even after the reopening. However, I am still 100% in agreement with our president on his decision to stop the cancer within Boracay, and rehabilitate it despite the economic and perhaps even political implication of such a tough but wise decision. Now that Boracay is once more open to tourists, the rehabilitation should continue, the discipline and new regulations should be followed, and the roads should all be fixed as planned. There is no turning back now, even if it means me drinking less alcohol when I am in Boracay.

The author is a member of UK-based Circle of Wine Writers. For comments, inquiries, wine event coverage, and other wine-related concerns, e-mail the author at protegeinc@yahoo.com. He is also on Twitter at twitter.com/sherwinlao.

Global Ferronickel profit rises 43% in April-June

GLOBAL Ferronickel Holdings, Inc. (GFNI) booked a 43% increase in its attributable net income in the three-month period ending June, on the back of improved volume and higher nickel ore prices.

In a regulatory filing, the Philippines’ second-largest nickel ore producer said its income stood at P241.69 million in the second quarter, versus P168.74 million during the same period last year.

Revenues jumped 19% to P1.71 billion during the April to June period.

For the first half, GFNI’s attributable income surged to P105.97 million, from P3.98 million a year ago. Revenues rose 23% to P1.77 billion, “due to the increase in volume shipped, higher grade ore shipped and higher average realized price compared to the same period in 2018.”

GFNI sold 1.812 million wet metric tons (WMT) of nickel ore during the January to June period, up 16.8% from a year ago. The company shipped 33 vessels of nickel ore this year versus 28 vessels a year ago.

The average realized nickel ore price stood at $18.82/WMT for the first half, up 7% from $17.59/WMT during the same period last year.

“Our commitment to excellence and growing expertise in the mining business have allowed us to increase our revenue and improve on our profitability,” Dante R. Bravo, president of GFNI, said in a statement.

“Despite the challenges we’ve faced in recent years, we continue to thrive and remain positive in the overall health of the industry,” he added. — Vincent Mariel P. Galang

Smart home tech makes inroads into China’s emerging elderly care market

WEIFANG, CHINA — Charging elderly clients just 1 yuan or about 15 cents a day, little-known Lanchuang Network Technology Corp. has embarked on one of the most ambitious undertakings in aged care by a private sector firm in China.

Provided with a setup box, a webcam paired with a TV set and “Xiaoyi,” a Siri-like voice assistant, customers gain access to telemedicine and an SOS system as well as for-pay services that include housekeeping and meal deliveries.

A small robot that can ring up a medical center in response to verbal calls for help costs an extra 2 yuan per day.

Launched just four months ago, Lanchuang’s smart care system has already signed up 220,000 elderly clients in 16 cities, half of which are in Shandong, a rapidly aging province in eastern China where the company is based.

It is targeting as many as 1.5 million users this year, 12 million next year and 30 million in 2021, when it hopes to list on China’s new Nasdaq-style tech board.

The aim, however, is not to make money from its clients, some of whom get by on pensions as low as a few hundred yuan a month, but to take a cut from providers of offline services.

“China’s market for elderly care is huge, but services in the industry are fragmented,” CEO Li Libo told Reuters in an interview at his company’s headquarters in Weifang city.

“Scattered on the ground are pearls,” Li, 47, said of the products and services available, adding it was his company’s aim to string them together.

Lanchuang, which is also working with China Mobile Ltd. on a smartphone for seniors, is an example of growing, albeit still nascent, attempts by entrepreneurs to provide comprehensive smart home care services for China’s vast number of elderly.

China has a quarter of a billion people aged 60 or over, and by 2050, that number is set to climb to almost half a billion, or 35% of the population, according to government estimates.

Liu, 66, a native of Jinan, Shandong’s capital, knows how hard taking care of the elderly can be. In her mother’s final years, her urinary tract would get obstructed despite wearing a catheter and often in the middle of the night, to her daughter’s despair.

“If only I had been able to reach a doctor to help my mother, but doctors are not reachable 24 hours a day,” said Liu, who only gave her surname.

The retired accountant, who was unaware of tech products aimed at the elderly, now lives alone and is reluctant to trouble her own daughter and son-in-law.

Care of aging parents has traditionally fallen on the shoulders of children, but in modern China, where the one-child policy was abolished only in 2016, the son or daughter has to look after as many as four aging people including in-laws. Often, children have moved to cities far away for work.

Retirement and nursing homes are on the rise, but are too pricey for most families and largely perceived as ridden with abuse. Three-quarters of old people prefer to live out their days at home, official surveys show.

LOCAL AUTHORITIES
While Beijing has been eager to establish a policy framework for a formal aged care system, local governments have been reluctant to support aged-care services which they see as nice-to-haves or just too much work.

But change is afoot.

In April, Beijing issued a detailed policy document outlining services to be developed for the sector, including smart technology, as well as financial support.

The central government provided almost 22 million yuan ($3 million) in subsidies for Lanchuang’s smart platform and the Shandong provincial government has given 3 million yuan.

That level of encouragement is a far cry from a decade ago when entrepreneurs consistently met with local resistance.

“Why are you doing this? What has this got to do with me?” said US entrepreneur Wang Jie, 59, as he recalled skeptical looks when he sounded out local authorities in China about trials of motion sensors at people’s homes.

Wang had to go to Canada for his trials. When he returned to Beijing in late 2013 to kick start a venture, Wang had to convince local authorities, district by district, of the virtues of his sensors — which help family members monitor activity levels of elderly people via an app but are not as intrusive as cameras.

Wang, who sits on the National Advisory Committee on Smart Elderly Care, has since managed to make inroads into two Beijing districts, with talks underway with three others.

The two districts have helped Wang identify high-risk individuals, typically those aged 70 and above, who live alone and might be willing to use his sensors.

His firm, Beijing eCare Smart Tech Co., has sold several hundred sets of sensors in Beijing so far this year under three-year contracts with community organizations. Wang’s company also helps train grassroots emergency response crews as part of the deal. Households pay nothing.

“If an elderly person dies and the body is only discovered after three days, this creates negative publicity for the local government, publicity that it wants to avoid,” Wang said.

EARLY DAYS
Entrepreneurs in other graying economies such as the United States, Britain and South Korea have similarly seized on opportunities in the sector, touting technologies from voice recognition for home appliances to robot companions for lonely old people.

But it is still early days in China.

In Weifang, Zhuojing Healthcare Center, one of 147 community medical service providers connected to the Lanchuang network, said it has only receives 1-2 calls through the system a day.

On a Reuters visit organized by Lanchuang to the homes of two elderly clients in Weifang, both said they use the platform mainly for video chats with family.

Zhao Xi’e, 55, said she uses it to talk to her mother who lives nearby.

Zhao’s shopping and food delivery panels on her TV display were grayed out, indicating zero service providers in her neighborhood.

She was also unaware the red button on her handheld control had an SOS function.

“Is that an on/off button?” she asked. — Reuters

NRCP posts higher net income

NATIONAL Reinsurance Corporation of the Philippines (NRCP) posted a higher net income in the second quarter amid a climb in its underwriting profit as its premiums rose.

In its quarterly report posted on the local bourse on Wednesday, NRCP said it booked a P14.127-million net income in the second quarter, a reversal of the P31.017-million loss it posted in April to June last year.

The reinsurer’s net underwriting profit stood at P22.9 million in the three months ended June, up 164% from P35.7-million loss it booked in the same period last year.

“Positive underwriting results in 2019 mainly resulted from higher earned premiums, better loss experience…and lower commission costs…relative to premiums earned. Higher earned premiums in 2019 was due largely to higher net premiums written,” it said.

Net premiums written for the quarter went up 18% to P663 million from P561.4 million in the same period in 2018, “resulting mainly from business growth and lower cost of excess of loss facility in 2019.”

Gross premiums written net of returns amounted to P1.05 billion, 6% more than the P991 million booked last year.

This resulted in net premiums earned of P720 million for the second quarter, up 15% from the previous year’s P627.5 million.

“Higher net premiums earned in 2019 resulted mainly from higher net premiums written in 2019,” NRCP said.

The reinsurer’s second-quarter performance brought its first semester bottom line to P199.6 million, almost ten times its P18.5-million net profit in the same period last year.

NRCP’s assets totalled P14.683 billion as of June 30, 6% higher than the P13.871 billion booked at end-December 2018.

Shares in NRCP closed at P1.01 each on Wednesday, up three centavos or 3.06%.

Which asian stock markets are expensive/cheap?

Which asian stock markets are expensive/cheap?

How PSEi member stocks performed — August 14, 2019

Here’s a quick glance at how PSEi stocks fared on Wednesday, August 14, 2019.

 

DFA signals openness to bigger foreign role in EEZ surveys

FOREIGN AFFAIRS Secretary Teodoro L. Locsin, Jr. is considering opening up marine surveys of the Philippines’ exclusive economic zones (EEZs) to more foreign participation, subject to the condition that they use Philippine ships or cede leadership of the survey mission to Filipinos.

Mr. Locsin was responding to a proposal put forward by the University of the Philippines Institute of Maritime Affairs and Law of the Sea Director Jay L. Batongbacal, who noted that foreign scientist joined the Bureau of Fisheries and Aquatic Resources in an expedition to the Benham Rise in May 2016.

“Well there you go. Let the foreigners hitch a ride on our marine survey ships,” he said in a social media post on Wednesday.

Mr. Locsin had earlier threatened to ban Chinese survey ships win the Philippines’ EEZ, which he later learned was prohibited under the United Nations Convention on the Law of the Sea.

He noted, however, that while the Philippine government cannot impose a ban, it can refuse to grant authority to conduct marine surveys.

Mr. Locsin is also considering the possibility of allowing foreign-owned survey ships to enter Philippine waters, as long as that Filipinos are in charge.

“We can’t join their ships as just passengers; foreigners (need to) turn over command and control, all data gathering facilities, the entire enchilada to Filipinos,” he said in a separate post.

Mr. Batongbacal said in a social media post that Mr. Locsin’s openness to foreign participation will help researchers move forward a number of pending research proposals.

“I hope we can in future also work out system for proposals for PH use of foreign vessels (eg, collaborative project w/ Japan or Korea for deep-sea geological research in Benham Rise Region),” Mr. Batongbacal said Wednesday.

He also said the plan to sign cooperation agreements in exploring the Philippine EEZ is viable and has been practiced in previous joint research projects. “If we don’t have the appropriate ship and gov(ernment)-provided budget, we could do that. Without enough money, we have had to enter into cooperation agreements so that our scientists can use their ships, or we joined (international) research projects that also cover our areas of research.” — Charmaine A. Tadalan

Banks expect national ID to enable faster loan processing

THE Philippine Identification System Act (PhilSys) is expected to lead to the expansion of bank lending by enabling faster processing of loan applications, a bank official said.

Philippine National Bank (PNB) President and CEO Jose Arnulfo A. Veloso said the Philippine ID (PhilID) will help the banks establish a reliable credit scoring system which will speed up loan decisions.

Kapag nagkaroon ng ID national system, isipin mo ‘yung 65% unbanked. (With a national ID system, we can more easily serve the 65% of Filipinos who are unbanked) If I have an idea that this vendor is a good borrower, wala lang syang ID, may national ID lang sya (even if all he has is a national ID), now I’ll be able to help him” with a business proposition which the bank can finance, Mr. Veloso told reporters in a briefing Tuesday night.

The national ID system is due to be launched in a September test run involving priority segments of the population. By 2022, the government hopes to register 107 million Filipinos.

PhilSys or Republic Act 11055 was signed into law in August 2018, requiring the government to establish a single national identification system for all citizens and residents, as a means of improving financial inclusion and raise the efficiency of government service delivery.

“The moment na lumabas yang national ID system, dapat nakaprepare na tayo dito (We should be prepared the moment the national ID becomes available),” he added.

Mr. Veloso also expects mobile internet costs to drop, which will allow the banking industry to reach clients without having to build branches.

“In three years time, the cost of data will be so cheap that (online business might overtake that of) bricks and mortar operations,” he said.

The law provides for the initial issuance of the national ID to be free of charge. — Beatrice M. Laforga

Israeli company signs financing deal to build crop processing plants

A FARM equipment manufacturer said it has partnered with an Israeli company to help finance $100 million worth of processing plants.

In a briefing, James P. Amparo, president and chief executive officer of Yovel East Research and Development Inc., said that the funding will be provided by Israel’s Mima Tech, while Yovel will build the facilities.

“This is in partnership with the Philippine government, so Yovel, Mima Tech, and GGVC (Gilan Global Ventures Corp.) will be partnering with the Department of Agriculture (DA)… we will work closely with the government kasi gusto namin s’yang dalhin doon ito sa mga (because we want to bring this to the) local governments… who will be able to benefit from this loan facility,” he said Wednesday in Quezon City.

President Rodrigo R. Duterte witnessed the signing of several cooperation agreements including some with agricultural technology firms during his visit to Israel last year.

Mima Tech is seeking to break into the Philippine market for post-harvest processing technology, while GGVC will serve as consultant on the projects.

Mr. Amparo said that he is planning to begin with rice farmers, who were heavily affected by the implementation of the Rice Tariffication Law, but hopes to move on to other crops and commodities. The DA will help determine where to establish the plants.

“As of now we can give (borrowers) 10 to 15 years to pay. For interest we are still looking at 3% to 4%, and it is self-liquidating, meaning the process facility can earn on its own,” he said.

The processing facility can accept undried palay from farmers, eliminating the need to dry the unmilled rice on any flat surface available, sometimes on public roads, resulting in damage to the grain that lowers quality and yields.

Yovel will build the facility for the farmers, purchase the produce, or offer marketing services. The facility will also be co-managed with local government for three to five years to properly familiarize the farmers on plant operations before the plants are fully handed over to them. — Vincent Mariel P. Galang

DoE to evaluate 3 exploration bids, warns participating firms to meet qualifying requirements

THE Department of Energy (DoE) has warned three entities which nominated areas to explore for possible petroleum or gas deposits that it will disqualify any of them should they fail to meet eligibility requirements.

“The lack of any documentary requisite in the PCECP Guidelines and Application Checklist, which includes legal, technical and financial qualification documents, will warrant an automatic disqualification,” the DoE said in a statement on Wednesday.

PCECP, or the Philippine Conventional Energy Contracting Program, is the department’s initiative to revive exploration activity. The DoE identified 14 areas with potential for oil and gas finds. It also welcomed any entity to nominate areas outside the ones it enumerated.

It was able to receive three bids, one for the Sulu Sea Basin, which will be first to be disclosed to the public on Aug. 16. A second area, Northwest Palawan Basin, is set for disclosure on Aug. 19, and the third, Southeast Luzon Basin, on Aug. 20.

Challengers are welcome to come forward on these dates at the agency’s headquarters in Taguig City.

“The DoE has set up a one-stop-shop at the venue to accommodate any last-minute submissions from challengers until the prescribed deadline,” the agency said.

Challengers have until 11:00 a.m. on each day to submit their application requirements before bids are opened at 1:30 p.m.

The department said each of the three nominating companies had complied with area clearance and nomination requirements prescribed under Department Circular (DC) No. 2017-12-0017 on the PCECP Circular and Guidelines.

It said members of the centralized review and evaluation committee, or C-REC, will be running the bid opening process and conduct a “completeness check” for each submitted proposal.

Qualified applications will be subjected to further evaluation from the C-REC, before the endorsement of the highest-ranked application to Energy Secretary Alfonso G. Cusi. The signing of a corresponding service contract by President Rodrigo R. Duterte follows.

The DoE said it has been “pushing to reinvigorate petroleum exploration and development activities in the country to serve as a cushioning measure against the volatility of oil prices, which has a direct impact on the costs of transport and power.”

It cited a successful case — the Malampaya deep water gas-to-power project — the largest natural gas industrial project in the Philippines, which it said recovered all costs in four years.

“Thus, the Department is committed to ‘Explore, Explore, Explore’ in its pursuit of energy independence, security, and sustainability through the effective and reasonable development of all indigenous energy resources in the Philippines,” the DoE said. — Victor V. Saulon