Michaela L. Payong 1BSA1C Managerial Economics Oct. 21,2019 Dr. Cesar C.

Estaquio

Profit of Philippines banks up 28% in Jan-March

MANILA, Philippines — Earnings of Philippine banks surged by more than 28 percent to P57.06 billion
in the first quarter from P44.42 billion in the same quarter last year on the back of higher trading gains and
interest income, according to preliminary data from the Bangko Sentral ng Pilipinas.

Total operating income of the banking industry jumped by 29 percent to P205.43 billion from P159.03
billion as interest earnings zoomed 47.9 percent to P232.62 billion from P157.21 billion, while interest
expense almost doubled to P75.89 billion from P38.68 billion.

This translated to a 32.3 percent rise in net interest income to P156.59 billion from P118.38 billion.

On the other hand, non-interest income increased by 20 percent to P48.84 billion from P40.65 billion as
earnings from fees and commissions rose by 26 percent to P26.9 billion from P21.34 billion.

Data showed the trading income of Philippine banks climbed by 8.4 percent to P16.16 billion in the first
quarter from P14.91 billion in the same quarter last year as foreign exchange profits reached P1.3 billion
compared to P248.97 million, while realized gains from foreign exchange transactions amounted to P1.51
billion versus P402.41 million.

The peso has strengthened since the start of the year and now ranges from 51 to 52 against the dollar after
emerging as the third worst performing currency in the region, shedding 5.3 percent to close 2018 at 52.58
to $1 from 49.93 to $1 in 2017.

Realized gains from sale or redemption amounted to P6.24 billion, reversing a net loss of P4.58 billion,
while unrealized gains from marking-to-market of securities plunged 86 percent to P1.5 billion from P10.8
billion.
Non-interest expenses of banks including compensation and fringe benefits, taxes and licenses, fees and
commissions, administrative expenses, among others rose 28.1 percent to P131.23 billion from P102.45
billion.

Profits of universal and commercial banks or big banks jumped by nearly 25 percent to P49.54 billion from
P39.77 billion, while earnings of thrift banks or mid-sized banks slipped 11.8 percent to P3.57 billion from
P4.05 billion.

Last year, profits of Philippine banks climbed by 6.4 percent to P178.83 billion from P168.07 billion in
2017.

The financial soundness indicators affirm that the banking system is stable and resilient despite global
uncertainties.

According to the central bank, the banking industry’s capital, mainly comprised of common equity and
retained earnings, remained well above domestic and global benchmarks; credit quality was satisfactory
notwithstanding double-digit loan growth; profits generated primarily from core income were at record
high; and the banks’ high quality liquid assets were sufficient to absorb shocks while adequately providing
the financing needs of the growing economy.

The BSP’s surveillance activities are complemented with proactive engagement with supervised financial
institutions promoting effective management and monitoring of incipient risk to the system.
Michaela L. Payong 1BSA1C Managerial Economics Oct. 21,2019 Dr. Cesar C. Estaquio

IMF slashes 2019 growth forecast for PH anew

By: Ben O. de Vera - Reporter / @bendeveraINQ
Philippine Daily Inquirer / 09:07 PM October 15, 2019

The International Monetary Fund (IMF) further cut its 2019 growth projection
for the Philippines to 5.7 percent—the lowest among multilateral lenders—on
the back of the disappointing domestic expansion at the start of the year and a
slowing global economy.

The IMF’s World Economic Outlook (WEO) report for October 2019, which was
launched on Tuesday, showed that the Washington-based lender now expected
the Philippines’ gross domestic product (GDP) growth this year to settle not
only below the government’s 6-7 percent target range but also at a lower rate
than its previous projection of 6 percent.

In July, the IMF downgraded its 2019 forecast from 6.5 percent in the April 2019
WEO report.

“Since our last update, the second-quarter GDP growth has turned out to be lower
than expected. The latest WEO forecast takes into account this growth outcome and
the worsening external environment,” IMF resident representative in the Philippines
Yongzheng Yang said in an email.

To recall, GDP growth skidded to 5.5 percent during the second quarter—the slowest
expansion in 17 quarters—mainly as government underspending took its toll, no
thanks to the delayed approval of the 2019 budget.
In its latest WEO report, the IMF said “the global economy is in a synchronized
slowdown, with growth for 2019 downgraded again—to 3 percent—its slowest pace
since the global financial crisis.”
The IMF described the projected slide in global growth this year from 3.8 percent in
2017 as a “serious climbdown,” as the world was “in a synchronized upswing” two
years ago.
It said this subdued growth was a consequence of rising trade barriers; elevated
uncertainty surrounding trade and geopolitics; idiosyncratic factors causing
macroeconomic strain in several emerging market economies, and structural factors,
such as low productivity growth and aging demographics in advanced economies.
In the case of the Philippines, the IMF projected GDP growth in 2020 to improve to
6.2 percent, although below the government’s 6.5-7.5 percent target for next year.
By 2024, Philippine economic growth will be a faster 6.5 percent, IMF projections
showed.

Among multilateral lenders, the IMF had the lowest 2019 growth forecast for the
Philippines, below the World Bank’s updated projection of 5.8 percent, and the Asian
Development Bank’s 6 percent.

All three lenders’ latest full-year GDP growth forecasts were lower than the actual
expansion of 6.2 percent in 2018—the slowest in three years amid last year’s elevated
inflation episode.

The IMF nonetheless sees inflation this year settling at 2.5 percent—within
government target range of 2-4 percent, before the rate of increase in prices of
basic commodities further slows to 2.3 percent next year.

Last year, headline inflation averaged 5.2 percent—a 10-year high—due to new
or higher excise taxes slapped on consumption under the Tax Reform for
Acceleration and Inclusion Act, skyrocketing global oil prices, and domestic
food supply bottlenecks, especially of rice.

So far this year, inflation was on a downtrend given declining rice prices after
importation was opened up, on top of base effects from last year’s high rate.

Also, the IMF sees the Philippines’ current account deficit narrowing from 2.6
percent of GDP last year to 2 percent this year before widening again to 2.3
percent next year.

Unemployment, meanwhile, was expected to further decline from 5.3 percent in

2018 to 5.2 percent in 2019 and 5.1 percent in 2020.

By 2024, the IMF projected inflation in the Philippines at 3 percent, and its
current-account deficit at 1.9 percent of GDP.
source: https://business.inquirer.net/281160/imf-slashes-2019-growth-forecast-for-
ph-anew#ixzz631UdCrkZ