banking finance

Land Bank to expand banking services in remotest provinces

September 4, 2019

THE Land Bank of the Philippines (LBP) will expand the coverage of its banking services by setting up additional satellite centers and deployment of mobile tellers in remotest and depressed provinces nationwide.      In an interview with the Philippine News Agency, LBP First Vice President for Strategic Planning Elcid Pangilinan said the bank has approved in principle the opening of over 250 banking outlets in an effort to strengthen and improve the financial infusion for un-banked areas.      The bank has targeted to complete the project in the next five years aimed at improving the urgent need for financial infusion in areas not being reached by the LBP.      Pangilinan explained the deployment of mobile tellers was in line with bank’s objective of educating people, specifically the farmers and fisherfolk in far-flung provinces, to appreciate the value of the bank.      He noted that majority of those in the farm and fisheries sector have not been exposed or introduced in rightful way of depositing and withdrawing their hard-earned money.      Citing the Bangko Sentral ng Pilipinas report, Pangilinan said there are about 533 unbanked provinces and municipalities and "it is our aim to reach out to these places and serve the people."      Of the approved over 250 places deprived of the banking services, the LBP branches will be set up in the northern part of Luzon, Visayas in its eastern part, and in western part of Mindanao.      While he did not divulge the amount which the bank will infuse in the two projects, Pangilinan assured that it has sufficient money to carry out its commitment, noting that LBP has been named as top four in terms of assets and deposits.      Pangilinan was one of the official representatives to the two-day meet on Reducing Disaster Risks Towards a Resilient Agricultural Sector hosted by the Southeast Asian Regional Center for Graduate Studies (SEARCA) here from Aug. 29 to 30, 2019. (Lulu R. Principe/PNA)

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Diokno vows another rate slash for 2019

August 30, 2019

BANGKO Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said yesterday there will be another 25 basis points (bps) cut in the benchmark policy rates by the end of the year, completing a 75 bps interest rates reduction for 2019.      Diokno said he could not say as yet which would come first, the policy rate cut or the reduction in banks’ reserve requirement ratio (RRR). He reiterated that both actions are “live issues” and could come at any time.      “There’s another 25 bps (before the end of the year),” Diokno told a forum organized by the Economic Journalists Association of the Philippines on Tuesday. He cited the global monetary easing actions and continued benign inflation as factors for the impending cut.      Diokno said they will again reduce the RRR this year, on top of the 200 bps RRR cut they implemented in tranches in May, June and July. He however said that it may not be as much as another 200 bps cut, equivalent to P190 billion in fresh liquidity.      “We have another RRR cut this year but maybe not 200 bps (it could be) 150 bps,” said Diokno. When asked if like before, the policy cut will happen prior the RRR cut, he said – “we don’t know yet (because) it’s a live issue. It could be before the late September (Monetary Board) policy meeting. It could be after … we will just look at the data.”      The Monetary Board’s next monetary policy meeting is September 26. It will have two more after, on November 26 and December 12, for a total of eight policy meetings for 2019.      “As we are all aware, the specter of slowing global economic growth looms larger than ever on the horizon as protectionist policies and geopolitical tensions continue to dominate the global growth narrative,” Diokno told forum participants. “Greater global economic uncertainty may lead to higher risk aversion as international investors turn to safe-haven assets, resulting in volatility in our domestic financial markets. When this happens, this could have adverse consequences on our price and financial stability objectives, and ultimately on the country’s growth momentum.”      Since global growth risks may “further escalate” because of the US-China trade conflict, Diokno said that in response, “central banks around the world, including the Philippines, have responded by easing their respective policy rates to stimulate their domestic economies. In fact, some central banks have surprised the markets by reducing their rates by more than what was expected. This indicates that the global monetary policy easing cycle could gather momentum and last longer and deeper than previously anticipated.”      The BSP policy rate was reduced by 25 bps last May 9 and by another 25 bps last August 8 for a total of 50 bps. During its last policy meeting, the BSP further slashed its inflation forecast for 2019 to 2.6 percent from 2.7 percent, while the 2020 and 2021 estimate was 2.9 percent, still within the two-four percent government inflation target.      Diokno has said that third quarter inflation average will drop below two percent due to base effects. He is also hoping that the last quarter’s inflation average could be “much lower” than what their flow charts show because of lower global oil prices      Inflation rate averaged at 3.8 percent in the first quarter 2019 before falling to three percent in the second quarter. With the latest July inflation of 2.4 percent, the year-to-date inflation averaged at 3.3 percent.      Diokno said the decision to reduce interest rates last May 9 came from its assessment that price pressures have continued to ease and that inflation expectations have also moderated further.      The main factors that contributed to the BSP’s benign inflation outlook and the revision of the forecasts came from the continuing relaxation of food price pressures.      Last year, the BSP raised interest rates by 175 bps to curb high inflation at the time, because of higher oil and rice prices. Inflation peaked at 6.7 percent in September and October.

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BSP cuts TDF offering for next week

August 30, 2019

THE Bangko Sentral ng Pilipinas (BSP) will offer lower volume during the term deposit facility (TDF) auction on August 28.      In an advisory, the central bank said a total of P80 billion will be offered next week, lower than the P100 billion this week.      Specifically, the seven- and 14-day facilities will be offered for P20 billion each, while the 28-day offering is P40 billion.      During the auction on Thursday, a day late due to the holiday last Wednesday, the six-day facility was offered for P40 billion but was undersubscribed at P35.82 billion.      Banks also offered low bids for the 13-day facility after they submitted tenders amounting to PP26.055 billion against the P30 billion offering.      On the other hand, there was strong demand for the 27-day TDF after bids reached P41.119 billion, higher than the P30 billion offer.      BSP Deputy Governor Francisco Dakila Jr. attributed this week’s auction results to “appetite for longer-tenored term deposits.”      “At the same time, the results of the auction indicated the banks' preference to hold on to their cash in view of the long weekend and month-end liquidity requirements,” he said.      Dakila, however, noted that the total tenders received across all TDF tenors at about P103 billion were in line with the BSP's liquidity forecast for the week. (PNA)

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SSS benefit, pension disbursements up

August 23, 2019

THE SOCIAL Security System (SSS) has released benefits and pensions worth P95.71 billion in the first six months to its 3.19 million members, with the bulk going to retirement funds.      In a statement on Tuesday, the state pension fund said it disbursed P55.7 billion worth of retirement benefits to 1.57 million pensioners from January to June, 8.6% higher than the P51.28 billion released in the same period last year.      Payouts for death claims by one million beneficiaries saw an increase of 4.8% to P28.63 billion in the first half from P27.32 billion a year ago.      Disbursements for disability and funeral benefits in the January-June period respectively totalled P3.59 billion, up 7.8% year-on-year, and P2.14 billion, up 9.7%, and went to 208,863 recipients.      Sickness benefits also climbed 14.9% to P1.51 billion in the first semester from the P1.32 billion logged in the same period last year, and went to 235,000 members.      SSS President and Chief Executive Officer Aurora C. Ignacio said in the statement that the growth in beneficiaries and claims may be attributed to the implementation of the Republic Act (RA) 11220 Expanded Maternity Leave Law in May and RA 11199 or the Social Security Act of 2018 signed into law last February.      RA 11220 increased the paid maternity leave to 105 days from 60 days, with an additional 15 days for solo mothers.      Meanwhile, RA 11199 adjusted SSS’ contribution rate to 12% from 11% and the monthly salary credits of its members to a minimum of P2,000 and P20,000 maximum.      “In the first half of 2019 alone, the number of beneficiaries and claims have already posted significant growth since the implementation of new laws and policies of the administration,” Ms. Ignacio said.      Meanwhile, total revenues of the state pension fund increased to P115.53 billion in the first half, up 20.9% from last year’s P95.55 billion, SSS said in the statement.      Broken down, contribution collections and investments and other income stood at P99.08 billion and P16.45 billion, respectively, in the first half, which SSS said climbed due to the higher contribution rate and monthly salary credit.      “Further, our investment and other income bounced back this period driven by strong and favorable market conditions,” Ms. Ignacio added.      SSS’ assets stood at P542.27 billion at end-June, 6% higher than the P511.47 billion booked in the comparable year-ago period.      “With our strong financial performance this semester, we are hoping to further strengthen the fund and ensure the continued service and providing for more and more members in the future until perpetuity,” Ms. Ignacio said.

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BSP posts P29.88-B net income in H1

August 23, 2019

THE Bangko Sentral ng Pilipinas (BSP) had a net income of P29.88 billion in the first six months of 2019, almost unchanged from same time last year of P29.45 billion, partly due to modest foreign exchange (FX) rate gains.      The BSP registered FX rate gains – which are realized gains from FX rate fluctuations – of P9 billion end-June this year versus P21.51 billion same period in 2018.      Based on the BSP’s latest unaudited statement of income and expense, revenues were up significantly by 76.2 percent year-on-year to P65.32 billion from P37.08 billion, while expenses also increased by 42.3 percent to P41.43 billion from P29.12 billion.      Interest income from its international reserves and domestic securities, for the first six months, was up by 48.3 percent to P53.22 billion from P35.88 billion end-June 2018. Miscellaneous income which includes trading gains, fees, penalties and other operating income, increased to P12.10 billion from just P1.19 billion last year.      Interest expenses for the first six months also went up by 65 percent to P21.49 billion from P13.02 billion. Other expenses totaled P19.94 billion which was also higher by 23.85 percent from the previous year’s P16.10 billion.      As of end-June, the BSP’s assets reached P5.107 trillion, up 8.1 percent from P4.726 trillion same time in 2018. Total liabilities also rose by 7.9 percent year-on-year to P4.963 trillion from P4.616 trillion.      Last year, the BSP reported a net income of P39.85 billion which was higher by 69.50 percent from P23.51 billion in 2017. Its FX rate gains was at P53.13 billion from only P15.48 billion in 2017. The central bank’s amended law or Republic Act 11211 (“An Act Amending Republic Act No. 7653, Otherwise Known as the ‘New Central Bank Act’, and for Other Purposes”) has allowed the BSP to increase its capitalization by P150 billion, or from P50 billion to P200 billion. This will be funded solely from the declared dividends of the BSP.

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Economists forecast at least 25 bps cut in BSP rates

August 12, 2019

ECONOMISTS are expecting at least a 25 basis point cut in the Bangko Sentral ng Pilipinas’ (BSP) key rates on Thursday on the back of slower inflation in July 2019.      The Philippine Statistics Authority (PSA) on Tuesday reported that rate of price increases decelerated anew to 2.4 percent, reminiscent of the July 2017 figure, from last June’s 2.7 percent, thanks to the lower annual rate registered by the heavily-weighted food index.      Average inflation to date is 3.3 percent while inflation rate in July 2018 is higher at 5.7 percent.      Also, core inflation, which excludes volatiles food and oil items registered slower rate of 3.2 percent from month-ago’s 3.3 percent, resulting to an average of 3.6 percent to date.      Standard Chartered Bank Asia economist Chidu Narayanan, in a report, said the slowdown of domestic inflation rate provides the BSP’s policy-making Monetary Board (MB) a leeway to slash the central bank’s key policy rates when it meets on Thursday, August 8.      “Today’s lower inflation, combined with a likely lower Q2 GDP growth of 5.9 percent, may cause BSP to deliver a 25bps rate cut when it meets on Thursday. We expect another 50bps from BSP this year, following the likely 25bps cut later this week,” he said.       The Philippine Statistics Authority (PSA) is scheduled to report the domestic economy’s second quarter performance, as measured by gross domestic product (GPD), on Thursday.      In the first three months this year, the domestic economy posted a slowdown to 5.6 percent from quarter-ago’s 6.3 percent, which economic managers pointed to the impact of the delay in the approval of this year’s national budget.      Authorities said the government was not able to spend as programmed because spending was hampered by the limitations under the re-enacted budget.      Economic managers, however, assured the public that a spending catch-up plan has been put in place to lift government spending and, in turn, help boost domestic growth.      With regards to the inflation rate, Narayanan forecasts this to fall below two percent in August to September and this, he said, is seen to bring average inflation this year to about 2.7 percent.      “A combination of lower food prices, lower oil prices, and a high base effect will help contain inflation,” he said.      The slowdown in inflation rate, which peaked at 6.7 percent in September and October last year, was the driving force behind the 25 basis points reduction the BSP rates last May.      The MB also boosted domestic liquidity through the total of 200 basis points slash in major banks’ reserve requirement ratio (RRR) from May to July this year. Authorities said a 100 basis points cut in RRR releases about P90 billion into the system.      Despite these cuts, Narayanan said “monetary conditions in the Philippines continue to remain tight.”      He said the bank’s Monetary Conditions Index (MCI) for the Philippines “indicates conditions are still at their tightest in three years on a stronger REER (real effective exchange rate), higher real interest rates and softer credit growth.”      “The likely further drop in inflation below 2 percent is likely to cause conditions to tighten much further,” he added.      Relatively, ING Bank Manila senior economist Nicholas Mapa, in a report, said deceleration of inflation last July increased expectations for a rate cut on Thursday, especially following the cut in the Federal Reserve’s key rates last week.      He cited Philippine monetary officials’ statement that they remain data-dependent vis-à-vis their policy decisions but also noted that BSP Governor Benjamin Diokno has hinted of additional 50 basis rate cut for the remaining months of the year after last May’s reduction.      “We believe we will see at least a 25 bps rate cut (with door open for 50 bps) all the more given that 2Q GDP is likely to settle below the six percent handle,” he added.      ANZ Research, in its report, said effects of elevated inflation rate last year along with weaker demand pressures may result in the decline of inflation below two percent in the next few months.      “Today’s data support the view that inflation remains on a clear downtrend and so we expect the Bangko Sentral ng Pilipinas (BSP) to cut its policy rate by 25bps at its meeting this Thursday,” it added.      Also, UnionBank chief economist Ruben Carlo O. Asuncion, in his report, said the inflation outturn last July is a big factor in the possible cut in the BSP’s key rates this week. “This, however, will also depend on Q2 output results,” he said, projecting second quarter GDP to be around 5.9 percent. (PNA)

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