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PBB posts higher net income in Q2

PHILIPPINE Business Bank (PBB) posted a higher net profit in the second quarter, backed by stronger core income and trading gains.

The lender’s net income climbed 22.1% to P400.45 million in the April to June period from the P327.893 million booked a year ago, its quarterly report showed.

This brought the bank’s first-half net income to P794.9 million, increasing by 37.3% from the P578.9 million in the prior year.

PBB boosted its loan loss reserves to P400 million in the second quarter against the P75 million set aside in the same period in 2019. Total loan provisioning for the first six months ballooned to P550 million from the P150 million in January to June 2019.

“As a result of a thorough portfolio management and review processes of the Bank, PBB deemed it prudent to provide P550 million in loan loss reserves for the first half of 2020… Even as market conditions continue to be challenging, our good balance sheet position allowed us to deliver robust core income and PTPP (pre-tax pre-provision) numbers,” Roland R. Avante, president and CEO of Philippine Business Bank, was quoted as saying in a statement.

“PBB understands the critical role that the banking industry plays in our economy. Providing liquidity to our SME (small and medium enterprises) partner-clients via well-structured financing is a key driver in jumpstarting the economy. PBB remains committed to being a catalyst in the nation’s economic development as the bank of choice of the SMEs as the bank understands the opportunities present in some business sectors despite the COVID-19 (coronavirus disease 2019) [pandemic],” he added.

The bank’s net interest income climbed 39.4% to P1.39 billion in the second quarter from P998 million a year ago. This, as income from loans and other receivables rose 3.6% year on year to P1.655 billion, while earnings from investments and trading securities surged 76.4% to P128.8 million.

Non-interest expenses inched up 4.8% to P762.5 million due to higher salaries and other benefits paired with bigger costs for management, other professional fees as well as insurance expenses.

Meanwhile, the bank’s trading gains more than doubled to P259.56 million in the quarter from P114.75 million a year ago.

PBB’s core income surged 90.7% to P678.6 million last quarter from P355.88 million a year ago.

Its loans and other receivables totalled P84.35 billion as of June. Bad loans reached P2.63 billion, bringing its non-performing loan ratio to 3.09% at end-June from 2.33% at end-2019. Meanwhile, deposits stood at P95.05 billion. The bank’s loan-to-deposit ratio was at 88.74% in the quarter.

PBB’s assets stood at P114.84 billion at end-June while equity reached P14.04 billion.

The bank’s capital adequacy ratio was at 14.31%, well above the central bank’s required minimum.

PBB’s shares closed at P8 apiece on Thursday, unchanged from its previous close. — L.W.T. Noble

Group behind Golden Globe accused of monopoly conduct

THE press group that organizes the annual Golden Globe awards was accused of excluding journalists that might compete with its members.

The importance of the Golden Globes to the entertainment industry allows the Hollywood Foreign Press Association, whose members vote on the awards, to monopolize access to junkets and interviews with “hot” actors and directors, cutting out non-members, Norwegian entertainment journalist Kjersti Flaa said in an antitrust lawsuit filed Monday in federal court in Los Angeles.

Flaa says the group’s exclusionary practices are inconsistent with its status as a tax-exempt organization, which she says obligates it to protect the interests of all foreign entertainment reporters in Southern California, whether members or not. According to the lawsuit, applicants seeking to join the group are almost always rejected because most of its 87 members are unwilling to share or dilute the “enormous economic benefits” they receive as members.

“The HFPA is so focused on protecting its monopoly position and tax-free benefits that it has adopted by-law provisions that exclude from membership all objectively qualified applicants who might possibly compete with an existing member,” Flaa said.

The relatively obscure membership of the group that picks the Golden Globes and rumors that the process is rife with corruption are a staple of jokes during the awards ceremony. In 2016, host Ricky Gervais joked that stars wouldn’t want to miss a chance to win a Golden Globe, “particularly if their film company has already paid for it.”

The association said it hadn’t yet been served with the complaint.

“The HFPA takes seriously its obligations as an organization and its dedication to foreign journalism and philanthropy, and it will vigorously defend against these baseless claims,” the group said in an e-mailed statement.

The case is Flaa v. Hollywood Foreign Press Association, 20-CV-06974, US District Court, Central District of California (Los Angeles). — Bloomberg

How PSEi member stocks performed — August 6, 2020

Here’s a quick glance at how PSEi stocks fared on Thursday, August 6, 2020.

PHL consumer spending seen declining 7.8% in 2020 — Fitch

HOUSEHOLD SPENDING will decline by 7.8% this year with consumption expected to remain muted over the remainder of 2020, failing to recover to its pre-pandemic levels even when lockdown restrictions ease, according to Fitch Solutions Country Risk and Industry Research.

“We now forecast household consumption growth to come in at -7.8% in 2020, before a gradual rebound to 5.5% in 2021,” Michael Langham, Senior Asia Country Risk Analyst for Fitch Solutions, said in an e-mail. The analysis factors in the two-week reversion to modified enhanced community quarantine in Metro Manila and nearby provinces.

This latest estimate reverses the 3.4% household spending growth outlook it issued in May.

“The pandemic and related economic shock has hit households through several channels: a deteriorating labor market, weaker remittances, (and) a confidence shock, which will prompt higher savings rates,” Mr. Langham said.

He added willingness to consume will be dampened over the coming quarters.

Travel mobility, shopping, and recreation were down by an average of 53.6%, Fitch Solutions said in a note Thursday, citing data from Google. Mobility to essential stores like groceries and pharmacies also declined by an average of 23.5% between June 1 and July 19, when restrictions were gradually eased.

“This suggests that significant demand-side risks still exist in the country and many consumers are still not returning to pre-COVID-19 retail,” Fitch Solutions said.

It said spending patterns have been disrupted with the most exposed categories thought to be cosmetics and hospitality.

Temperature checks, queues, and social distancing are also expected to diminish the appeal of shopping and dining out, thereby affecting consumption related to fashion, homeware, and food services.

“While in the short term it will take time for consumers to adapt to the new normal, the easing of lockdown restrictions is good news for the country’s economy,” it said. — Luz Wendy T. Noble

Companies required to have isolation rooms for sick workers

BUSINESSES may soon be required to set up or have access to isolation rooms, according to upcoming health protocols to be released by the government.

Companies may either set up their own coronavirus disease 2019 (COVID-19) isolation room or partner with a nearby institution, Trade Secretary Ramon M. Lopez said in a television interview Thursday.

“Para kung may mga mag-positibo sa kanilang hanay na mga workers, meron paglalagyan ng mga isolation rooms. At pinaigting pa ‘yung protocol dito, ‘yung pagte-testing, pag-PCR (polymerase chain reaction) test nitong mga symptomatic o kaya ‘yung mga dineclare na may exposure (In case any worker tests positive, the companies will need isolation rooms. The protocols have been tightened up on this. They also need to conduct PCR testing of symptomatic cases or those who were exposed),” he said.

Small businesses with fewer resources can work with their local government health response team for isolation measures, he said.

The new health protocols are awaiting approval from the Inter-Agency Task Force managing the coronavirus outbreak.

Businesses will also be required to have health protocol training sessions and assign health officers, and will be audited more frequently.

These protocols will be required regardless of the severity of the lockdown declared over any given area.

“At saka ‘yung required na pagre-report ng mga cases dahil ‘yung mga iba na nakarating sa atin minsan may kaso na hindi pa nare-report (A reporting requirement will also be in place, because there have been cases that went unreported),” Mr. Lopez said.

In March, the National Privacy Commission warned companies against disclosing the identities of employees under investigation or confirmed positive for COVID-19. They said businesses should only collect data required by the government and ensure safeguards are in place to secure the information.

Public announcements on cases should only come from the Department of Health instead of company press releases, the commission said. — Jenina P. Ibañez BUSINESSES may soon be required to set up or have access to isolation rooms, according to upcoming health protocols to be released by the government.

Companies may either set up their own coronavirus disease 2019 (COVID-19) isolation room or partner with a nearby institution, Trade Secretary Ramon M. Lopez said in a television interview Thursday.

“Para kung may mga mag-positibo sa kanilang hanay na mga workers, meron paglalagyan ng mga isolation rooms. At pinaigting pa ‘yung protocol dito, ‘yung pagte-testing, pag-PCR (polymerase chain reaction) test nitong mga symptomatic o kaya ‘yung mga dineclare na may exposure (In case any worker tests positive, the companies will need isolation rooms. The protocols have been tightened up on this. They also need to conduct PCR testing of symptomatic cases or those who were exposed),” he said.

Small businesses with fewer resources can work with their local government health response team for isolation measures, he said. The new health protocols are awaiting approval from the Inter-Agency Task Force managing the coronavirus outbreak.

Businesses will also be required to have health protocol training sessions and assign health officers, and will be audited more frequently. These protocols will be required regardless of the severity of the lockdown declared over any given area.

“At saka ‘yung required na pagre-report ng mga cases dahil ‘yung mga iba na nakarating sa atin minsan may kaso na hindi pa nare-report (A reporting requirement will also be in place, because there have been cases that went unreported),” Mr. Lopez said.

In March, the National Privacy Commission warned companies against disclosing the identities of employees under investigation or confirmed positive for COVID-19. They said businesses should only collect data required by the government and ensure safeguards are in place to secure the information.

Public announcements on cases should only come from the Department of Health instead of company press releases, the commission said. — Jenina P. Ibañez

Senate resolution seeks inquiry into farm aid funds disbursement

THE Senate Committee on Agriculture and Food said it will be looking into the disbursement of the Agricultural Competitiveness Enhancement Fund (ACEF) to expedite the delivery of aid to farmers during the pandemic.

Under Senate Resolution No. 347, the committee asks the Department of Agriculture (DA) to report on the status of the fund, intended to provide support to farmers.

“We would like to know if the funds are being distributed and utilized for their intended purposes and beneficiaries,” Senator Cynthia A. Villar said in a statement Thursday.

“The Senate Committee which I chair has oversight authority over ACEF, so we would like to look into it and get regular updates from the DA.”

Ms. Villar also said the committee will be asking the Department of Budget and Management about farmer complaints regarding unreleased funds.

“We are in a crisis now, so farmers need all the support they can get… If the funds are there, then they should be released to the farmers and fisherfolk.” The fund was provided under the Agricultural Tariffication Act, which expired in 2015, but was later extended until 2022. Ms. Villar also said the inquiry will deter any misuse of the funds.

“ACEF was mishandled and misused before. We don’t want a repeat of that,” she said.

“The loans were extended to big corporations and influential people instead of to small farmers and fisherfolk.”

The law provided that 80% of the fund will be disbursed in the form of credit with minimal interest and should not exceed P5 million per project loan. This covers the acquisition and establishment of agri-based production and processing machineries, equipment and facilities.

The other 10% will be extended as grants for agricultural research and development, while the remainder will be used for scholarship grants and grant-in-aid programs. — Charmaine A. Tadalan

DoE sets energy-saving threshold at 15% to qualify for tax breaks

THE Department of Energy (DoE) said it is preparing guidelines for granting fiscal incentives for energy efficiency and conservation (EEC) projects, setting 15% in projected energy savings as the qualifying standard.

In a draft circular, the department outlined the process for acquiring its endorsement to the Board of Investments (BoI) to avail of income tax holidays and other incentives for energy-saving projects.

The department’s Energy Utilization and Management Bureau will be in charge of the applicants, and track projects granted tax breaks.

“The anticipated savings, due to energy efficiency and conservation measures to be installed/adopted will be double-checked by the technical staff without prejudice to making his own calculations,” it said.

“I(n) case discrepancies arise, the calculation of the technical staff shall be regarded as final,” it added.

The final decision on providing such incentives, though, lies with the BoI.

Republic Act No. 11285, or the EEC Act, requires the BoI to include energy-saving projects in the annual investment priorities plan for incentives provided under Executive Order No. 226, or the Omnibus Investments Code.

The guidelines provide for penalties against applicants failing to file a report within 30 days after the completion of their projects, and also require independent verification of any energy-saving claims.

The DoE is soliciting comments on the draft circular until Aug. 17. — Adam J. Ang

Rural utilities told to use locally available resources to power remote areas

THE National Electrification Administration (NEA) said off-grid power providers must use locally-available resources when possible to ensure affordable and reliable electricity.

The agency, which is tasked with fully energizing the country, told rural utilities in a recent virtual consultation to study electrification solutions drawing on locally-available resources.

“Energy access matters during the pandemic. Hence, we urge the electric cooperatives to consider setting up microgrids and solar home systems to connect remote communities without access to electricity,” NEA Administrator Edgardo R. Masongsong was quoted as saying in a statement.

The Department of Energy will be assisting electric cooperatives developing small-scale power facilities running on renewable sources like hydro and solar, according to Undersecretary Emmanuel P. Juaneza.

The NEA is celebrating its 51st anniversary this month, which is also National Electrification Awareness Month.

Recently, it launched a strategy conference with 121 electric cooperatives to draft a two-year sustainability plan, which includes enhancements to the industry’s resiliency during the pandemic.

The Philippines is now 96% electrified with around 13.81 million households powered out of 14.34 million. — Adam J. Ang

Wawa Bulk Water supply project wins IP approval

THE WAWA Bulk Water Supply project has won the approval of the Dumagat and Remontado indigenous peoples (IPs) of Antipolo, one of the requirements for proceeding with construction, the WawaJVCo, Inc. said.

On July 28 and 29, WawaJVCo, Inc. pursued negotiations and eventually forged a Memorandum of Agreement (MoA) with the Antipolo IPs for their support and approval of the construction of the Wawa Bulk Water Supply Project – Tayabasan Multi-Basin System.

The project aims to boost the water supply for Metro Manila and Rizal province.

The company said the agreement enables the project to move to the next step in the “Free, Prior, and Informed Consent” (FPIC) process in accordance with the Indigenous Peoples Rights Act of 1997.

WawaJVCo, Inc. said the negotiations represent the first FPIC process to resume after the lockdown protocols due to the coronavirus disease 2019 (COVID-19) pandemic.

The company’s authorized representative, Melvin John Tan, said he is looking forward to advancing the FPIC process in the Montalban ancestral domain. WawaJVCo, Inc. is a joint venture between Prime Metroline Infrastructure Holdings Corp. (Prime Infra) and the San Lorenzo Ruiz Builders and Developers Group, Inc. — Revin Mikhael D. Ochave

German regulator tenders for 4,000 MW of hard coal plant closures

FRANKFURT — Germany’s energy regulator on Tuesday set a Sept. 1 bidding date for a first auction inviting operators of hard coal-fired power stations to compete for compensation to close 4,000 megawatts (MW) of capacity under laws seeking to curb carbon emissions.

The auction system implements parts of a wide-ranging package of bills passed by the German government in June to arrange the long-term exit from coal mining and generation activities by 2038.

“The tenders create an incentive to quickly take the most climate-damaging hard coal-fired power plants off the grid. At the same time, security of supply remains guaranteed,” said Jochen Homann, president of the federal network regulator, the Bundesnetzagentur.

Last year, a total 20,000 MW of hard coal plant capacity supplied 9% of Germany’s generation output.

A series of tenders will be carried out between 2020 and 2027, in which operators will declare the price at which they would be prepared to shut their plants in return for funds to offset some of their financial losses.

The maximum price in the first round would be 165,000 euros ($194,403.00) per MW of generation capacity, the Bundesnetzagentur said in a statement.

The ultimate price decided upon would take into account bidders’ offers and the relevant CO2 emissions levels of the plants in question.

Some operators of plants run on imported hard coal have complained that they face heavy write-downs on their assets under the rulings.

They have raised objections to utility incumbents such as RWE and Uniper — that mine domestic brown coal and then burn it in adjacent plants — being set to receive high, fixed compensation to fund lay-offs and help affected regions.

Unlisted Steag, which operates 5,500 MW, last week said it was preparing to challenge the coal exit conditions in the country’s constitutional court to secure higher payments, citing interference with ownership rights. — Reuters

PHL stocks extend climb despite GDP contraction

By Denise A. Valdez
Senior Reporter

PHILIPPINE SHARES continued to rise on Thursday despite government data showing the economy entered its first recession since 1991.

The bellwether Philippine Stock Exchange index (PSEi) gained 69 points or 1.18% to close at 5,902.58 on Thursday. The broader all shares index also increased 29.32 points or 0.84% to 3,485.61.

The market was unaffected by the release of gross domestic product (GDP) data in the morning, which showed Philippine GDP contracted 16.5% in the second quarter, worse than its 0.7% decline in the first quarter and reversing the 5.4% growth in the same period last year.

“I think that the negative GDP is already priced in for the PSEi, and investors are looking for cues for economic recovery once the (stricter lockdown) is lifted,” Philstocks Financial, Inc. Research Associate Piper Chaucer E. Tan said in a text message. Metro Manila and key cities are under stricter quarantine measures again until Aug. 18 as President Rodrigo R. Duterte agreed to give healthcare workers a “time out” amid rising coronavirus disease 2019 (COVID-19) cases.

The Philippines is close to replacing Indonesia as the country with the most COVID-19 cases in Southeast Asia as local cases hit 115,980 on Wednesday, edging closer to Indonesia’s 116,871.

Aside from local catalysts, the PSEi was also affected by activities overseas as investors anticipated developments on a new US stimulus package.

“Sentiment was also boosted on expectations that a stimulus deal will be reached by this week,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile message.

The US Congress is currently discussing a new coronavirus stimulus package, which is eyed to support temporary unemployment benefits, a report by The Washington Post said.

US stocks advanced on Wednesday: the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite indices grew 1.39%, 0.64% and 0.52%, respectively. Most Asian stocks were treading in red territory on Thursday when the local market closed.

Five of six sectoral indices at the PSE ended the session with gains. Industrials rose 138.91 points or 1.84% to 7,673.06; holding firms accelerated 86.40 points or 1.44% to 6,067.16; services added 12.86 points or 0.92% to 1,397.36; property increased 23.62 points or 0.83% to 2,850.81; and financials climbed 4.17 points or 0.36% to 1,142.84.

Mining and oil was the sole declining index, losing 113.51 points or 1.96% to 5,673.12.

Value turnover stood at P6.53 billion with 7.27 billion issues switching hands, up from the previous day’s P5.38 billion with 2.04 billion issues.

Decliners beat advancers, 90 against 88, while 46 names ended unchanged.

Foreign investors snapped a seven-day selling streak, posting a net buying of P551.31 million on Thursday from the previous day’s P257.5-million net outflow.

Peso at new high even as PHL sinks into recession

THE PESO strengthened to a new three-year high versus the greenback on Thursday as investors have already priced in the economy’s contraction in the second quarter.

The local unit ended trading at P49.05 against the dollar on Thursday, gaining 2.50 centavos from its P49.075 close on Wednesday, data from the Bankers Association of the Philippines showed.

Thursday’s finish is the peso’s best in more than three years or since its P48.95-per dollar close on Nov. 11, 2016. The peso opened Thursday’s session at P49.06 per dollar. Its weakest was at P49.09 while its intraday best was at P49.01 against the greenback.

Dollars traded decreased to $587.1 million on Thursday from the $699.71 million seen on Wednesday. The local unit’s strength showed investors already expected a deeper contraction in gross domestic product (GDP) in the second quarter, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.

“The peso closed stronger as the weaker GDP is already priced in [by the market] and they considered older data with month- on-month recovery such as manufacturing and exports.

The economy shrank by 16.5% in the second quarter, worse than the 0.7% drop in the first quarter and a reversal of the 5.4% growth in the same period in 2019, data from the Philippine Statistics Authority (PSA) released Thursday showed. This means the country has already entered a technical recession as it has logged two consecutive quarters of economic contraction. The 16.5% contraction is the deepest so far for the country based on available PSA data and is worse than the 10.7% decline in the third quarter of 1984.

Meanwhile, a trader said the market preferred the peso as they await economic data from the United States. “The local currency appreciated on expectations of elevated initial jobless claims report this Thursday,” the trader said in an e-mail.

Reuters reported that initial claims for unemployment benefits rose by 12,000 to a seasonally adjusted 1.434 million in the week ending July 25, data released by the US Labor department showed. For today, Mr. Ricafort sees the peso ranging between P48.95 to P49.15 versus the dollar while the trader expects the local unit to move around the P49.00 to P49.20 band. — L.W.T. Noble with Reuters

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