banking finance

PhilGuarantee loans to MSMEs rise to P1.47B in end-March

May 10, 2021

THE Philippine Guarantee Corporation (PhilGuarantee) has continued to grow its program for viable but pandemic-hit micro, small and medium enterprises (MSMEs) for the third straight month since its launch in December 2020, with a total of P1.47 billion in loans guaranteed as of end-March this year.      The guaranteed loans represent a remarkable 612-percent increase from the P207 million pilot guarantee portfolio achieved at the launching of the MSME Credit Guarantee Program (MCGP) in December, PhilGuarantee president-chief executive officer Alberto Pascual said in a report to Finance Secretary Carlos Dominguez III.      Pascual informed Dominguez the number of MSME beneficiaries grew by an impressive 312 percent to 12,122 enterprises in March 2021 from 2,948 that were reported to have availed of its guarantee program as of December 2020.      He said the implementation of improved processing and evaluation parameters starting this year led to the increase in the number of beneficiaries under MCGP.      From the start of the MGCP's implementation last year, the PhilGuarantee Governing Board chaired by Dominguez thus far approved a total of P37.7 billion in credit guarantee facilities to 34 banks.      “Majority of the MSMEs covered were from the wholesale and retail sector which accounted for 67.26 percent of the total, or P503.5 million with 9,113 MSMEs assisted,” Pascual said.      Pascual said the second-biggest group with guarantee coverage was the manufacturing sector, which accounted for 7.77 percent or P58.17 million with 1,048 assisted MSMEs.      The agriculture sector was the third biggest sector that have benefited from the MGCP, with 158 MSMEs assisted through guarantees amounting to P33.91 million, which is 4.53 percent of the loans covered so far under this program, he said.      In the severely affected hotel and restaurant sector, Pascual said 573 MSMEs were assisted with guaranteed loans amounting to P28.45 million, while the personal services sector accounted for guarantees amounting to P31.82 million.      The MGCP grants a 50-percent guarantee for working capital loans and a guarantee of up to 80 percent of the amount for term loans of up to seven years for capital expenditures.      The average loan size under the MGCP is less than PHP1 million, with the minimum loan amount set at P100,000, which can be availed mostly by micro-businesses borrowing from thrift banks and rural banks.      “In terms of geographical distribution, all regions of the country had received assistance under the MGCP,” Pascual said.

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Landbank okays P60-B to UCT beneficiaries

May 3, 2021

THE Land Bank of the Philippines (Landbank) has released P60.36 billion in unconditional cash transfers (UCTs) as of December 2020 to beneficiary-households of the Duterte administration's social mitigation program under the Tax Reform for Acceleration and Inclusion Act (TRAIN).      These disbursements were from the program funds for the UCT program released from March 2018 up to December last year, Landbank president-chief executive officer Cecilia Borromeo said in a statement Thursday.       From March 2018 to December 2020, a total of P22.53 billion was disbursed by the Landbank to UCT beneficiaries from the UCT program funds under the 2018 General Appropriations Act (GAA)      Another P23.71 billion under the FY 2019 UCT program funds was released from July 2019 to December 2020, and P14.12 billion from the 2020 UCT program fund in December last year.       Borromeo submitted her report on the usage of the UCT funds transferred by the Department of Budget and Management (DBM) and the Bureau of the Treasury (BTr) to Landbank to Senate President Vicente Sotto III.       Finance Secretary and Landbank chairman Carlos Dominguez III was furnished a copy of the report.       Under the TRAIN, up to 30 percent of the incremental revenues from the law is earmarked for social mitigation measures, such as the UCTs, while 70 percent is earmarked for President Duterte's centerpiece program “Build, Build, Build."      Republic Act (RA) No. 10963 or the TRAIN Law, which also slashed personal income tax (PIT) rates for 99 percent of salary earners, was implemented starting January 2018.       RA 10963 benefits salary earners because the hefty cuts in their PIT tax payments translates into extra income for these taxpayers equivalent to about a one-month take-home pay.      This law also adjusted the excise taxes on fuel, which prompted the inclusion of the social mitigation program to ease the initial impact of the adjustments on the poorest 50 percent of the population.       For 2018, the law provided a UCT of P2,400 each for some 10 million targeted households.        For the succeeding years of 2019 and 2020, each beneficiary-household received P3,600.       The UCT fund for 2018 of P24.488 billion covered the P24 billion in cash grants for 10 million beneficiaries.       While P22.53 billion in UCT funds were disbursed, around P1.47 billion has yet to be distributed because the Landbank is still waiting for the submission by the Department of Social Welfare and Development (DSWD) of the remaining payroll files of beneficiaries under the UCT program.      Under the 2019 national budget, the UCT fund amounted to P36.488 billion, of which P6 billion have yet to be downloaded by the BTr to Landbank, leaving it with P30.488 billion for the implementation of the program.        Of the P30.488 billion, P23.71 billion was released to UCT beneficiaries.       About P6.29 billion in funds have yet to be disbursed, pending the DSWD submission of the beneficiaries’ payroll files.        A total of P5.5 billion of this UCT fund was transferred to the BTr on April 1, 2020, to help fund the government’s coronavirus disease 2019 (Covid-19) response programs, and was returned to the fund on December 29, 2020.      For 2020, the total UCT fund under the GAAs was P36.488 billion, of which P13.19 billion have yet to be downloaded to the Landbank.       The downloaded sum of P23.3 billion covered the P14.12 billion disbursed so far to UCT beneficiaries in December last year, while PHP8.9 billion have yet to be released pending the submission by the DSWD of the beneficiaries’ payroll files. (PR)

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House panel approves bill to develop PHL capital markets

April 21, 2021

A PROPOSAL to reform the current private pension system to make it portable and actuarially fair was approved on committee level by the House of Representatives.      The House Committee on Banks and Financial Intermediaries on Thursday approved the committee report on the proposed Capital Market Development Act of 2021 subject to style and amendments. The panel has been holding hearings on the measure since last month.      Economic managers earlier backed the measure, saying it will help develop capital markets by expanding the local investor base.      “I’d like to express my deepest gratitude to my esteemed colleagues for helping process this very important measure. I think we have thoroughly discussed it and consulted all possible stakeholders who have likewise actively engaged with us,” Quirino Province Rep. Junie E. Cua, the bill’s author and the committee’s chair, said during the hearing on Thursday.      If enacted, the proposed law will establish the Employee Pension and Retirement Income (EPRI) Account, which will be mandatory for all employees covered under the Labor Code of the Philippines. Workers will also get to decide on what investments they can make using their EPRI assets as long as these are legal and accredited.      Employers are required to contribute an initial 4% to the EPRI account while workers will allocate at least 0% to 1% to their own pensions, depending on how much they earn. The EPRI account will also have a portability feature, which will follow the employee/account holder regardless of change in employer. The measure also mandates the inclusion of financial literacy in the basic education system.

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BSP wants to allow banks to operate satellite tech

April 21, 2021

THE central bank wants the government to allow banks to operate satellite broadband to help boost their operations following the liberalization of the sector.      THE CENTRAL BANK is asking the government to allow banks to operate satellite broadband to help boost their operations and give their clients better access to financial services.      This was the central bank’s input for the proposed implementing rules and regulations (IRR) for Executive Order (EO) 127, which gives registered internet and value-added service providers access to satellite systems to build broadband facilities even without a congressional franchise.      “One such input is to allow banks or a consortium of banks to register under EO 127 so they can operate their own satellite broadband for their operations for the benefit of their consumers,” central bank Governor Benjamin E. Diokno said at an online briefing on Thursday.       “[It could also be] banks in conjunction with other local financial service providers. The more open it is, the less constrictions there are, the better,” he added.      Under EO 467 signed by former President Fidel V. Ramos which was amended by EO 127, only enfranchised telecommunications entities authorized by the National Telecommunications Commission and broadcast service providers are given access to international fixed and mobile satellite systems.      “By leveraging liberalized access to satellite technology, banks and other financial service providers in remote areas may now be able to put up more access points such as automated teller machines, cash agents, and branch lite operations,” Mr. Diokno said.      “They can also offer digitalized payment transaction services accessible via the internet,” he added.      Bangko Sentral ng Pilipinas (BSP) Financial Inclusion Office Acting Deputy Director Cesar Augusto E. Villanueva said the BSP contributed to the crafting of the IRR as head of the government’s Financial Inclusion Steering Committee, which aims to bring more Filipinos into the formal financial system. He added that they are still waiting for updates from the Department of Information and Communications Technology.      “The IRR was supposed to be issued last April 10 but there was a slight delay, because there was a request for extension from the Philippine Space Agency because it wants to submit its comment,” Mr. Diokno said.      Internet penetration in the country is uneven across Luzon (60%), Visayas (40%, and Mindanao (30%), based on the BSP’s 2019 Financial Inclusion Survey. Mr. Diokno believes satellite technology will help “rural areas where setting up terrestrial infrastructure is not economically justifiable.”      “With EO 127 in place, we expect to bridge the digital divide in the country as it enables the deployment of infrastructure for areas that are currently unserved or underserved by incumbent providers,” he said.      The central bank wants 70% of adult Filipinos to be part of the financial system by 2023, from about only 29% in 2019.      It also targets a cash-lite economy in 2023 where digital payments make up 50% of total transactions both in terms of volume and value.

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Loans for Covid-19 vax program best strategy for PH: DOF chief

April 19, 2021

TAKING out loans to help finance the coronavirus disease 2019 (Covid-19) vaccination program is the best approach for the government, Finance Secretary Carlos Dominguez III said Thursday.       “We chose this financing strategy because we want to assure the public of two things: First, that the vaccines we are buying are internationally accepted, and have passed the stringent criteria for safety and effectiveness. Second, that the vaccine procurement is totally transparent,” he said during a virtual briefing organized by Philippine Ambassador to the US Jose Manuel Romualdez in Washington DC.       The government has secured total loans amounting to about P58.4 billion ($1.2 billion) from the World Bank (WB), Asian Development Bank (ADB), and the Asian Infrastructure Investment Bank (AIIB)  to help finance the vaccination deployment plan.      It has secured over 140 million doses of Covid-19 vaccines, 15 percent of which is scheduled for delivery in the first half of this year while the bulk, or 85 percent, is set for delivery in the second half.       Despite the supply issues, it has started vaccination drives around the country using the supplies donated by China.       The government plans to inoculate at least 70 million adult Filipinos this year.      “The Philippines strongly supports the statement of Mr. David Malpass, former US Undersecretary of the Treasury for International Affairs and now the World Bank President, who underscored the importance of releasing Covid-19 vaccines from countries with excess supplies as soon as possible,” he added.       During the same briefing, United States Agency for International Development (USAID) acting Administrator Gloria Steele announced that the agency is providing “USD3.5 million to further support the Philippines in delivering vaccines received from COVAX”, referring to global risk-sharing mechanism for pooled procurement and equitable distribution of Covid-19 vaccines.       “Our assistance will strengthen vaccine supply chains and support local governments to plan, track, and deliver vaccines. And it will help the Philippines’ Department of Health and local government distribute essential public health messaging around the vaccines,” she said.

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RCBC’s sustainable loans hit P52B in 2020

April 19, 2021

RIZAL COMMERCIAL Banking Corp. (RCBC) continued to boost its sustainable lending portfolio through credit for green and social projects related to transport, energy, water management, and housing.      RCBC said in a statement on Wednesday that its sustainable loan portfolio reached P52.165 billion in 2020. Broken down, P32.722 billion funded 15 eligible green projects and P19.432 billion went to 9,947 social projects.      More than half (61%) of its eligible green portfolio consists of renewable energy projects related to clean transportation and energy efficiency (18%), and sustainable water management (3%).      Meanwhile, its social portfolio includes affordable housing projects (36%), employment generation (32%), access to essential services (24%), and socioeconomic advancement and empowerment (8%).      “As the economy gradually rises from the ruins of the pandemic, RCBC will be a strong partner in support of the BSP (Bangko Sentral ng Pilipinas), not just in rebuilding, but in championing the ESG (Environmental, Social, and Governance) agenda and sustainable practices,” RCBC President and CEO Eugene S. Acevedo was quoted as saying.      In 2020, the bank said it will stop financing coal-fired power projects in the Philippines in support of the Department of Finance’s drive to hike the country’s share of renewable energy power source to 43%.      Meanwhile, the bank raised P17.8 billion through 2.5- and 5.25-year ASEAN sustainability bonds in March, which it said will be used to refinance green and social projects.      RCBC’s net income fell 7% to P5 billion in 2020 from P5.388 billion in 2019 as it ramped up loan loss provisions during the crisis.

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