MANILA, October 20, 2005
 (STAR) By Rocel C. Felix - The Bangko Sentral ng Pilipinas (BSP) said the banking system remains generally sound with total resources in the second quarter increasing to P4.479 trillion compared to the year-ago level of P4.049.6 trillion.

In the Economic and Financial Developments report for the second quarter of 2005, the BSP noted that the growth in the banking system’s resources was due to the rise in receivables from BSP such as interest and loan receivables, as well as the customer liability acceptances account of commercial banks.

Commercial banks accounted for the bulk of the total resources of the banking system with a share of more than 90 percent

Of the total banking resources of P4.479 trillion, commercial banks contributed P4.043 trillion from P3.643 trillion during the same period in 2004.

Thrift banks’ resources grew to P326.7 billion from P307.7 billion in the previous year.

Savings banks’ resources during the period also improved to P239.4 billion from P221.5 billion. On the other hand private development banks share in the banking system’s resources was at P89.6 billion compared to only P64.9 billion in the previous year.

Stocks savings and loan associations contributed a total of P17.4 billion to the banking system, lower from the previous level of P21.1 billion.

Rural banks‚ total resources was at P109.1 billion compared to P98.6 billion during the same period in 2004.

The BSP report noted that the growth in the system’s resources was matched by similar increases in deposit liabilities and lending activity during the period.

The BSP added that reflective of its ongoing effort to further strengthen the banking system, banks’ capital adequacy ratio increased to 18.1 percent in the first quarter and their asset quality improved with the decline in the non-performing loan ratio (NPL ratio) to a single digit level of 9.8 percent in June 2005.

The BSP also pointed out that a generally liquid position, strong capital buffer, and improving asset quality enabled banks to perform their role in terms of financial intermediation and risk management.

In the second quarter, the banking system’s deposit liabilities expanded 2.2 percent compared to the end-March level but grew 11.7 percent during the same period in 2004.

This developed as demand deposit which comprised the least of the total deposit liabilities grew 4.5 percent in end-June compared to end-March.

BSP said time and savings deposits had a modest quarter-on-querter growth growth of 2.6 percent and 1.5 percent, respectively. It noted that savings deposit still comprised more than half of the banks’ stable funding base.

Supreme Court ruling on EVAT lifts share prices The Philippine Star 10/20/2005

Stocks rose yesterday after the Supreme Court on Tuesday cleared the way for broader value-added taxes, a move which could allow the government to balance its budget two years ahead of schedule.

Philippine Long Distance Telephone Co. (PLDT) and Petron Corp. led gains by the market’s biggest companies by value.

"The government is showing it has the political will to pursue fiscal reforms,’’ said Jonathan Ravelas, market strategist at Banco De Oro. "This provides investors an initiative to buy stocks."

The Philippine Stock Exchange composite index rose 6.96 points, or 0.4 percent to 1,954.29, ending five days of losses. It declined 0.9 percent the previous five days.

The Philippines and China were the only Asian markets to advance yesterday as concerns that US interest rates will increase further weighed on stocks in other regions.

The Supreme Court affirmed the tax law, lifting a three-month suspension that was introduced after it was challenged by opponents for being unconstitutional.

The law is a centerpiece of the government’s plan to cut debt and reduce the budget deficit. A third of the government’s budget is spent paying interest on debt.

Finance Secretary Margarito Teves said the law, which imposes a value-added tax (VAT) on a range of previously exempt goods and services, will take effect Nov. 1. Teves said the taxes will allow the nation to balance its budget by the end of 2008, two years ahead of President Arroyo’s plan.

"The market welcomed the final Supreme Court ruling on the EVAT, which is key to solving our fiscal woes," said Astro del Castillo, managing director at First Grade Holdings.

Analysts also were hopeful the ruling will boost Philippine credit ratings. In July, when the Supreme Court suspended the expanded VAT law, the country’s credit ratings outlook was downgraded to negative from stable by all major credit agencies.

The EVAT law is expected to boost state revenue by about P82 billion next year.

PLDT, the nation’s biggest company by market value, added P5, or 0.3 percent, to P1,665, its first gain in four days. Petron, the largest of the nation’s two oil refiners, added 10 centavos, or 3.1 percent, to P3.35, its biggest gain in six days.

"This is good for the economy and the markets in general," said Paul Chan, who helps manage $1.3 billion at Invesco Asia Ltd. in Hong Kong. "The government’s fiscal program is a problem and this is a solution to that problem.’’

JG Summit Holdings Inc., controlled by tycoon John Gokongwei, climbed 15 centavos, or 3.7 percent, to P4.20, its highest since March 11. - AP

Dell Computers to set up large call center in Philippines 10/19 4:40:58 PM

MANILA (AFP) - Dell, the world's largest personal computer producer, announced Wednesday it was setting up a major customer call center in the Philippines.

The call center, to be located in a special mall in a suburb of the Philippine capital, will initially employ 100 when it opens in February, 2006 but this will eventually increase to 700 in a few months, Dell Computers Southeast Asia vice-president Rajan Anandan said.

The company also formally opened a recruitment and training center in the Makati financial district on Wednesday and will begin interviewing applicants on November 1.

Andanan said Dell chose the Philippines as the site of its newest call center because of the high English proficiency of Filipinos and the telecommunications infrastructure.

He declined to say how much Dell was investing in this country.

Chief News Editor: Sol Jose Vanzi

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