Bank of America trims net interest income guidance

July 19, 2019 | 12:02 am

BANK of America Corp. lowered its net interest income guidance due to a weaker rate environment. — *REUTERS*

BANK OF AMERICA Corp. lowered its annual net interest income guidance on Wednesday to reflect a weakened interest rate environment as the second-largest US lender reported higher-than expected earnings fueled by strong consumer trends.

Rate trends have prompted the bank to scale back its expected full-year net interest margin, a key measure of profitability, to 2% from 3%, executives said on a conference call with analysts.

Net interest income, the difference between interest earned from lending and how much the bank pays for deposits, rose 6% last year.

Its interest margin fell in the second quarter to 2.44% from 2.51% three months earlier, though it was still higher than a year earlier.

Chief Financial Officer Paul Donofrio said on a call with reporters the sequential decline was due to lower long-term interest rates.

“When long-term interest rates fall, we see more people pay off their mortgages and that translates into more mortgage-backed securities being redeemed and that forces us to write off some premiums,” he said. “I don’t think you can extrapolate that into the future because long-term rates have stabilized at this point.”

The lender is the most sensitive of the big US banks to interest rate changes because of its large deposit stock and rate-sensitive mortgage securities.

Consumer banking has held up for the big Wall Street banks that have reported second-quarter results this week, cushioning a blow from weakness in trading and advisory businesses.

But warning signs also emerged with JPMorgan, Citigroup and Well Fargo reporting a dip in margins, stoking fears that interest rate cuts could further pressure profit by narrowing the spread between what banks charge on loans and pay on deposits.

In the absence of higher interest rates to help pad revenue, banks can improve margins by reducing expenses.

Chief Executive Brian Moynihan said on call with analysts that 2019 expenses are projected to be lower than 2018, against previous expectations for the bank to have flat expenses through 2020.

Expenses during the quarter were up slightly as the bank invested more in its consumer, commercial and wealth management businesses.

Total loans in its consumer banking unit rose 6%, while deposits were up 3%, pushing income from the business up 13% to $3.3 billion.

“We see solid consumer activity across the board, with spending by Bank of America consumers up 5% this quarter over the second quarter of last year,” Chief Executive Brian Moynihan said in a statement.

Growth in the consumer business helped offset softness in market revenue and Wall Street businesses.

The retail bank and wealth management segments each recorded double digit profit gains while its commercial and markets businesses each saw profit and revenue decline from lower investment banking and trading fees.

Adjusted revenue from Bank of America’s global market business, which includes bond and equities trading, fell 5.7% to $4.18 billion.

Net income applicable to common shareholders rose 10% to $7.11 billion, or 74 cents per share, in the second quarter ended June 30. Excluding items, the bank earned 75 cents per share.

Revenue, net of interest expense, was up about 2% at $23.08 billion.

Analysts had expected a profit of 71 cents per share on revenue of $23.2 billion, according to IBES data from Refinitiv. — Reuters

Robinsons Land opens Galleria mall in Laguna

July 19, 2019 | 12:02 am

ROBINSONS Land Corp. (RLC) is opening its 52^nd shopping mall in the country — the Robinsons Galleria South Mall in San Pedro, Laguna.

In a statement, the Gokongwei-led real estate company said Robinsons Galleria South is the third Galleria mall, after the malls in Ortigas Center and General Maxilom, Cebu City.

“We are excited to open Robinsons Galleria South, which will be of great service and convenience to the residents of Laguna and Southern Metro Manila,” RLC President Frederick D. Go said in a statement.

This is also the company’s 10^th mall in the Cavite, Laguna, Batangas, Rizal, Quezon (Calabarzon) region.

Located along the Old National Highway, Robinsons Galleria South is a four-level lifestyle mall on a 3.8-hectare lot. It has a gross leasable area of 48,000 square meters.

The mall features a food court called Eat Street with a variety of establishments such as Ta Ke Ho Me Sushi, Shou Noodles, Seafoods and Steak, Hot Chicks Fried chicken, Fire Pit, Slice N Dice, Potato Corner, G-Spot Burger Bar, Super Bagnet, Una Gansig, Ilocos Empanada, and Zawrap Shawarma.

Robinsons Galleria South has an area devoted to Japanese and Korean brands called JK Town, as well as a digital playground called PlayLab.

It also has six cinemas, including the first VIP Robinsons Movieworld, and the St. Mother Teresa of Calcutta chapel.

The mall also has a Robinsons Supermarket, Robinsons Department Store, Robinsons Appliances, Handyman, South Star Drug, Robinsons Bank, Daiso Japan, and Arcova. It also has a satellite offices of Social Security System, PhilHealth and Overseas Workers Welfare Administration.

Shares in RLC added 2.27% or 60 centavos to close at P27 each at the stock exchange on Thursday. — Vincent Mariel P. Galang

UAW president to GM: We invested in you, now invest in us

July 19, 2019 | 12:02 am

DETROIT — The UAW and General Motors Co on Tuesday formally kicked off contract talks, with the union’s president calling on the automaker to keep open plants it has slated for closure and to invest in its workforce after the union helped it through a government-led bankruptcy a decade ago.

“We invested in you, now it’s your turn to invest in us,” United Auto Workers’ President Gary Jones said at a joint event with GM executives in downtown Detroit.

This year’s talks on a new four-year contract between the union and the Detroit automakers are expected to be contentious, as US auto sales are slowing after a long boom.

Rising health care costs, job security and the use of temporary workers are also expected to be major sticking points.

GM in particular has been a target of union ire since announcing the closure of five North American plants late last year.

That move drew widespread condemnation, including from Republican US President Donald Trump. Criticism has persisted despite GM’s stated efforts to seek jobs at other plants for all displaced workers.

Workers from GM’s Lordstown, Ohio, plant, wearing red shirts emblazoned with “Invest in Lordstown,” greeted UAW officials with applause as they arrived at the event on Tuesday.

GM is in talks to sell the Lordstown plant to electric vehicle start-up Workhorse Group Inc and an affiliated, newly formed entity.

Workers in Lordstown built the Chevrolet Cruze, a sedan, sales of which had plummeted in the last few years as Americans abandoned passenger cars in favor of larger, more comfortable pickup trucks and SUVs.

GM Chief Executive Mary Barra said in remarks before a formal handshake with Jones that the pace of change in the auto industry has intensified as automakers invest heavily in the race to develop electric vehicles and self-driving cars.

“We are not here just to survive … we are here to win,” Barra said. Winning “represents growth and that means jobs,” she added.

The union and Fiat Chrysler Automobiles NV (FCA) (FCHA.MI) also formally launched talks on Tuesday at the automaker’s Auburn Hills, Michigan, headquarters. In opening remarks, the UAW’s Jones called on FCA to allocate new products to under-utilized assembly plants.

The UAW and Ford Motor Co (F.N) officially launched negotiations on Monday, where Jones had struck a similarly adversarial tone, insisting that workers should share in automakers’ profits and vowing to prevent their jobs being outsourced to Mexico or China. — Reuters

G7 finance chiefs pour cold water on Libra plans

July 19, 2019 | 12:01 am

CHANTILLY, France — Group of Seven finance chiefs cast a cloud over prospects for Facebook’s Libra digital coin on Wednesday, insisting tough regulatory problems would have to be worked out first.

The massive social media company’s plan to launch a digital coin has met with a chorus from regulators, central bankers and governments saying it must respect anti-money-laundering rules and ensure the security of transactions and user data.

But there are also deeper concerns that the powers of big tech companies increasingly encroach on areas belonging to governments, like issuing currency.

“The sovereignty of nations cannot be jeopardized,” French Finance Minister Bruno Le Maire told journalists after chairing the first day of the two-day meeting.

“The overall mood around the table was clearly one of important concerns about the recent Libra announcements, and a shared view that action is needed urgently,” he added.

German Finance Minister Olaf Scholz said Facebook’s plans do not “seem to be fully thought through”, adding that there were also data security questions.

“I am convinced that we must act quickly and that (Libra) cannot go ahead without all legal and regulatory questions being resolved,” Scholz told journalists.

France, which chairs the Group of Seven advanced economies this year, has asked European Central Bank executive board member Benoit Coeure to set up a G7 task force to look into crypto-currencies and digital coins like the Libra.

Coeure presented a preliminary report to ministers and central bankers at the meeting, in the quaint chateau town of Chantilly, north of Paris.

Central bankers say that if Facebook wants to take deposits, it needs a banking license, which would subject it to the strict regulation that goes with operating in that industry.

Some central bankers also say that allowing people to transact anonymously is a non-starter given financial sector regulations that require payments firms to hold basic information about their customers.

JAPAN: GLOBAL CONSENSUS NEEDED
Bank of Japan Governor Haruhiko Kuroda said the G7 task force was likely to evolve over time into something including a broader range of regulators beyond the group, given the huge impact Libra could have on the global economy.

“If the Libra is aspiring to be used globally, countries must seek a globally coordinated response,” Kuroda said. “This is not something that can be discussed among G7 central banks alone.”

G7 finance ministers are also concerned about how best to tax big tech companies, with France keen to use its presidency of the two-day meeting to get broad support for ensuring minimum corporate taxation.

G7 governments are concerned that decades-old international tax rules have been pushed to the limit by the emergence of companies like Facebook and Apple, which book profits in low-tax countries regardless of the source of the underlying income.

The issue has become more vexed than ever in recent days as Paris defied US President Donald Trump last week by passing a tax on big digital firms’ revenues in France, despite a threat from Trump to launch a probe that could lead to trade tariffs.

Their bilateral dispute aside, France and the United States are in favor of rules ensuring minimum taxation as part of an effort among nearly 130 countries to overhaul international tax rules. — Reuters

What to see this week

July 19, 2019 | 12:01 am

5 films to see on the week of July 19 — July 25, 2019

The Lion King

THE FILM is a live action adaptation of the Academy award-winning Disney animated classic from 1994. In an African savanna is Pride Rock where the future king Simba is born. His father Mufasa teaches him valuable lessons as a lion cub. However, Mufasa’s brother Scar has plans to steal the throne which results in Simba’s exile. With the help of new and long lost friends, Simba must return to claim what is rightfully his. Directed by Jon Favreau, the movie features the voices of Donald Glover, Beyoncé Knowles, James Earl Jones, and Chiwetel Ejiofor. BBC’s Caryn James writes, “You can go back to the original film for its sweep and beauty and for Jeremy Irons. See the new version for its fun and immersion into a fantastical world that feels real. The appealing new Lion King proves that the story and music are endlessly adaptable, and pretty much fool proof.”

MTRCB Rating: G

Extremely Wicked, Shockingly Evil, and Vile

ELIZABETH KLOEPFER refused to believe that her boyfriend Ted Bundy was a serial killer who committed heinous crimes against women. The film shows a chronicle of Bundy’s real-life crimes told through the perspective of Kloepfer. Directed by Joe Berlinger, the film stars Zac Efron, Lily Collins, Haley Joel Osment, and Kaya Scodelario. The Rolling Stone’s Peter Travers writes, “So why doesn’t the movie work, despite Efron giving it his all and then some? It’s one thing for Elizabeth to show a blind eye to the real Bundy. It’s another to ask audiences to share her delusion. The film describes Bundy’s violent acts, but never truly depicts them.” Rotten Tomatoes gives the film a 56% rating.

MTRCB Rating: R-16

Dragged Across Concrete

TWO POLICE detectives are suspended after a video of their strong-arm tactics gets to the media. They then join the criminal underworld as a means of earning a living. Directed by S. Craig Zahler, the movie stars Mel Gibson, Vince Vaughn, and Tory Kittles. The Guardian’s Peter Bradshaw writes, “Dragged Across Concrete doesn’t drag. This is a long film, but there is something so horribly compelling about its unhurried slouch towards the precipice.”

MTRCB Rating: R-13

My Letters to Happy

THINGS CHANGE when a workaholic who has given up on falling in love meets a girl named Happy online and she convinces him otherwise. Directed by Pertee Briñas, the movie stars Glaiza de Castro and TJ Trinidad.

MTRCB Rating: PG

The Haunted

IT IS Emily’s first night shift as a carer to an elderly dementia patient. Events turn creepy when she is tormented by a vengeful spirit. Directed by David Holroyd, the film stars Maggie Daniels, Nick Bayly, and Kirstie Steele.

MTRCB Rating: PG

Subtle campaign against militant workers

July 19, 2019 | 12:01 am

Our manufacturing company is in big trouble. We have a high rate of turnover, low quality and decreased labor productivity. And our human resource manager has resigned to join another company. Our operational issues are compounded by some workers who are rumored to be talking to some militant union leaders from elsewhere. What can we do in the future? What are your thoughts? — Frantic Soul.

A survey on workplace safety showed that 90% of accidents on staircases involved either the top or the bottom stair. The same information was fed into a computer with the latest software on artificial intelligence to find out how stairway accidents could be reduced. The computer’s answer? “Remove the top and bottom stairs.”

Many of us are just like robots and computers. We operate on auto pilot, without applying logic to a particular situation or even without having complete information to arrive at an intelligent decision. And we often resort to a reactive approach when things go from bad to worse.

When you analyze and dissect your situation, it often boils down to one thing — a lack of a proactive communication between employees and their management. Undoubtedly, poor communication is one of the many reasons why things can go wrong in the workplace. But more than that, even if management has a dynamic employee communication program, being convincing is an indispensable requirement to make everyone happy and productive.

So take the time to think through whether your management is initiating, making, and perpetuating an effort to create a sound, proactive, two-way communication program with employees. In doing this, the following general approaches should be helpful:

One, conduct an employee morale and satisfaction survey. Of course, you may already know the answer to this, which include issues like high attrition rate, low product quality and low labor productivity, among other issues. But, it is not enough as you may only know the result but not the root causes. With an annual survey like that, you will know the general sentiments of the majority of people participating in an anonymous environment and analyzed by an external and objective expert.

The result could be your baseline in improving the overall workplace atmosphere. It could show you many things that include how the workers perceive the style or inadequacy of your line managers, the company’s working conditions, policies and many more.

Two, focus on the weak points of management or the organization. If the employees believe they’re receiving low salary and benefits and you think the opposite, show proof by offering the latest industry data from independent sources. It’s not enough to reject the contention of people in the absence of any evidence to support management view. If there are weaknesses on how managers treat their workers, then try to find out if a training program could help.

Even when one does not have a budget for training, the new HR manager could help train other line executives on how to properly supervise, counsel, and motivate their employees. In general, however, the basic thing here is that every manager must be sincere in helping their employees to achieve their career goals and aspirations in life.

Three, focus on small things that matter big to the workers. Each and every issue, no matter how trivial, is very important to a person. These things include: minor irritants between workers, a disapproved one-day vacation leave, a request for change in work schedule to pursue a college degree or other similar requests. Sometimes, it helps a little probing for management to gather all information because at times, a minor issue may be masking a more difficult situation that the employee does not want to raise.

Take note of how your managers interrupt people just because they don’t agree with what is being said. If the workers don’t agree, then your management must endeavor to patiently explain everything to those concerned.

Last, listen to what is not being said by the workers. That’s because many people don’t want to antagonize management, if not burn bridges when they leave the organization. This happens when managers think their ideas are the best and should not be questioned by low-ranking workers. So they simply leave toxic bosses and the damaged work environment.

If you’re not doing all of these four basic approaches in people management, then I will not be surprised if the workers start to invite a third party to help them form a labor union and that would spell disaster for you and your organization.

ELBONOMICS: Two people can see different things in different ways.

Send anonymous questions to elbonomics@gmail.com or via https://reyelbo.consulting

Operations of Belmont Hotel Boracay to begin next month

July 19, 2019 | 12:01 am

MEGAWORLD Corp. is opening its P2.1-billion Belmont Hotel in the newly renovated Boracay Island next month, as it continues to expand its footprint in the hospitality sector.

In a statement Thursday, the listed property developer said the hotel project undertaken by its subsidiary Global-Estate Resorts, Inc. (GERI) will feature three towers housing 442 rooms.

The hotel is located inside Boracay Newcoast, GERI’s 150-hectare integrated leisure and tourism estate in the northern part of the island.

Amenities include a swimming pool with in-pool lounge, Aqua Spa, courtyard, landscaped gardens, fitness center with shower and changing rooms, business center, function halls, meeting rooms, a 24-hour in-room dining service, and complimentary shuttle services.

It will also house two food and beverage outlets, namely the Zabana Pool Bar located at the second level deck, and the Trellis Garden on the landscaped deck which connects two of the hotel’s towers.

“Our second hotel under the Belmont brand will offer an exclusive nature experience in the paradise island of Boracay, as it allows guests to see the island’s panoramic natural scenery from one building to another,” Luxury Global Hotels and Leisure, Inc. Managing Director Raymundo Melendres said in a statement.

Luxury Global operates Belmont Hotels under the Megaworld Hotels Group.

Megaworld first opened a Belmont Hotel in its Newport City township in Pasay City in 2015. Following Boracay Newcoast, the company will also open a Belmont Hotel in Iloilo Business Park in Mandurriao, Iloilo in 2023.

“Our continuing thrust to help boost tourism in the country is even gaining more momentum as we open more hotels across our tourism townships,” GERI President Monica T. Salomon said in a statement.

The company also has four other homegrown brands aside from Belmont Hotel, namely Richmonde Hotels, Savoy Hotels, Twin Lakes Hotel, and Hotel Lucky Chinatown, bringing its total room count close to 3,000.

It will also unveil new homegrown brands in Parañaque, Bacolod, Iloilo, Boracay, and Laguna in the next five years.

Megaworld’s hotel business grew 56% to P574 million in the first quarter of 2019. Overall, the company’s attributable profit was up 16% to P3.8 billion, driven by a 15% increase in consolidated revenues to P14.9 billion.

Shares in Megaworld were unchanged at P6.25 each at the stock exchange on Thursday. — Arra B. Francia

Growth and inflation outlook of select Asian economies

July 19, 2019 | 12:00 am

The persistence of love

July 19, 2019 | 12:00 am

By Michelle Anne P. Soliman, Reporter

THEATER REVIEW
Stop Kiss
By Diana Son
Presented by Positive Space, MusicArtes, and New Voice Company
Ongoing until July 21
Power Mac Center Spotlight, Circuit Makati

SARA and Callie are out late one evening at NYC’s West Village and share their first kiss. A bystander then viciously attacks them — Sara’s injuries are so bad that she falls into a coma.

It is sad to realize that Stop Kiss, Diana Son’s 1998 play, remains relevant — 21 years later some people’s freedom to love who they wish to is still something to be fought for.

The play opens during the first meeting between Callie (played by Gawad Buhay award winner Missy Maramara), a traffic reporter, during her first meeting with Sara (played by Gawad Buhay award nominee Jenny Jamora), a third grade teacher who has just moved to town, at Callie’s apartment. The scene then shifts to Callie recounting the events of the attack to Detective Cole (Robbie Guevara).

The entire story is told through a juxtaposition of events in the past and present with tension building until it ties up in the middle. The story is presented with a panel that slides from one side of the stage to the other, separating the past from the present. Gawad Buhay Award and Aliw Award winner Ed Lacson, Jr. both directed the play and did the stage design.

Despite Callie’s stable job and ongoing “friends with benefits” relationship with George (Tarek El Tayech), she finds it difficult to navigate to a happy life until Sara comes along and she learns how to love.

The play is very familiar to Maramara and Jamora as they were in the play’s first staging in 2003 — though they switched roles this time around. The actors were superb. Ms. Maramara was wondrous to watch as she shifted from warm and friendly host to compassionate and selfless lover in between light to emotional scenes. Ms. Jamora’s is a strong and convincing portrayal of Sara, her stuggle to communicate with her loved ones while recovering physically from her coma is very realistic.

In the pivotal scene is where Callie shows her love for Sara by dressing her up. It was a very raw scene.

In a world where queer love is still contested despite its continuing progress towards acceptance, we need stories like Stop Kiss to remind us that love is a choice — a free one.

Tickets are available at www.ticket2me.net/e/2445/stop-kiss and http://www.tinyurl.com/StopKissMNLTickets.

How PSEi member stocks performed — July 18, 2019

July 19, 2019 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Thursday, July 18, 2019.

Duterte signs law providing incentives for start-ups

July 18, 2019 | 10:38 pm

PRESIDENT Rodrigo R. Duterte has signed into law a measure seeking to provide tax breaks and remove barriers to the founding of start-up companies.

The measure goes into the books as Republic Act No. 11337, or the Innovative Startup Act, after it was signed on April 26. The Palace released copies of the law on Thursday.

The law qualifies for incentives “any person or registered entity in the Philippines which aims to develop an innovative product, process, or business model.”

“It is hereby declared the policy of the State to foster inclusive growth through an innovative economy by streamlining government and non-government initiatives, in both local and international spheres, to create jobs and opportunities, improve production, and advance innovation and trade in the country,” according to the law.

The law creates the Philippine Startup Development Program led by Department of Science and Technology (DoST), Department of Information and Communications Technology (DICT), and Department of Trade and Industry (DTI).

Under the law, incentives, benefits, and special programs will be established for start-ups and start-up enablers.

The programs, benefits, and incentives will include full or partial subsidies for business registration, application, and permit processing costs; endorsement of the host agency for the expedited or prioritized processing of applications with other government agencies; full or partial subsidy for the use of facilities, office space, equipment, and services provided by government or private institutions; full or partial subsidy in the use of repurposed government spaces and facilities of the host agency as the registered business address; and grants-in-aid for research, development, training, and expansion projects.

Asked to comment, Ramon D. Escueta, director for Energy, Power and Water of the Philippine Chamber of Commerce and Industry, said via e-mail: “With the signing of the President, he brings the country in step with the more developed countries as far as creating an environment for innovation and transformation of the economy for the future. It also sends a message to MSMEs (micro, small and medium enterprises) and to the whole world that the Philippines is willing to adopt a culture of innovation and devote its resources to innovation that will make it competitive in the world markets.”

He added: “It presents a tremendous opportunity for innovators, inventors, startups, incubators, accelerators, academe, and capitalists in the Philippines to develop the necessary ecosystem for development.”

The new law takes effect 15 days from its publication in the Official Gazette and in at least one newspaper of general circulation.

The DoST, DTI, and DICT, in coordination with other agencies are tasked with promulgating the law’s implementing rules and regulations within 60 days from the day of its effectivity. — Arjay L. Balinbin

Mile Long development targeted for this year

July 18, 2019 | 10:38 pm

THE Department of Finance (DoF) intends to start the redevelopment of the 2.2 hectare Mile Long Property in Makati this year in order to generate rental income for the government, with the proceeds to help fund retirement costs for military personnel, according to Finance Secretary Carlos G. Dominguez III.

“I hope we can start the process before the year end,” Mr. Dominguez said in a text message to BusinessWorld.

In 2017, President Rodrigo R. Duterte said that he wanted more production out of a government asset like the Mile Long property, which had been leased to Sunvar Realty Development Corp. owned by the Rufino and Prieto families, for 14 years, generating no revenue for the government.

The President said that if sold, the property could generate funds to build housing for soldiers.

The DoF initially disclosed its plans to sell a portion of the property, but later on said in 2018 that it would rather redevelop it under the Bases Conversion Development Authority (BCDA).

Mr. Dominguez clarified in the text message that “The plans were modified after it was determined that this asset could be developed as a mixed-use rental property with the income assigned to support the retirement fund for military personnel.”

“We are not selling any property of the government. The only property we are selling are those that are from the PDIC (Philippine Deposit Insurance Corporation). That’s from the banks that went bankrupt, and the PDIC has to sell those properties to recover what they spent. And also, what is with the PMO (Privatization Management Office). But otherwise, [there is] no intention of selling any other property,” Mr. Dominguez said in a phone call.

Mr. Dominguez said that the funds Mile Long will generate when redeveloped will not be used to build housing for soldiers but rather serve “as a source of continuing income for the retirement fund.”

In a statement in the previous day, the DoF said that it has earned P142.6 million from the Mile Long property which it took over from Sunvar in August 2017.

In the statement, the DoF’s Privatization and Management Office (PMO) said that the property is earning around P6.7 million on average per month. According to the Department, Mile Long has 128 establishments occupying 219 of its 309 units as of June, for a 71% occupancy rate.

The PMO said that the government is also earning from the lease of three Mile long parking areas. — Reicelene Joy N. Ignacio