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BUSINESS HEADLINES THIS PAST WEEK...
(Mini Reads followed by Full Reports below)

PESO PLUMMETS TO 6-YEAR LOW


DECEMBER 14 -GOOGLE IMAGES The peso fell to a new six-year low against the US dollar, losing P0.11 to close at 47.345 a dollar Monday, as the anticipated rate hike by the US Federal Reserve this week buoyed the greenback against most currencies. This was the local currency’s weakest level since closing at 47.47 against the dollar on Oct. 28, 2009 at the height of the global financial crisis. The peso settled at 47.235 against the greenback Friday. Total volume turnover on Monday reached $514 million, higher than $486 million Friday. “Actually, most of the regional currencies were affected, except the Japanese yen. Part of the dollar’s strength was the expected rate hike in the US this week,” Emilio Neri Jr., lead economist of the Bank of the Philippine Islands, said in a phone interview. “Also, there was a risk-off sentiment because of this Third Avenue Fund which had a cheap redemption which apparently did not anticipate the interest rates hike by the Fed this month,” Neri said. Neri, however, expressed optimism there would be a relief for the peso after the Fed’s announcement on the rate hike decision on Wednesday (Thursday, Manila time). READ MORE...

ALSO: House OKs 2016  P3.002-trillion budget


DECEMBER 17 -Ratification is the final act for approval of the budget bill. The Senate acted on the report on Monday. Philstar.com/File
The House of Representatives ratified last night the conference committee report on the proposed P3.002-trillion 2016 national budget. Ratification is the final act for approval of the budget bill. The Senate acted on the report on Monday. Speaker Feliciano Belmonte Jr. thanked his colleagues for the timely passage of the appropriations measure. He said the House has consistently approved the budget before the end of the fiscal year since 2011. Davao City Rep. Isidro Ungab, appropriations committee chairman, and his Senate counterpart, Loren Legarda, jointly chaired the conference committee that put together the final version of the proposed budget. Ungab said the conferees restored the P8-billion cut in conditional cash transfer (CCT) program funds approved by the Senate. He said the restoration was the combined initiative of the House contingent and Sen. Ralph Recto. Recto said the P8-billion reduction would have deprived at least 500,000 poor families of cash assistance from the CCT program. Ungab said the conferees also allocated an additional P2.7 billion for senior citizens, P4.7 billion for veterans’ pension and P7 billion to augment funds for the planned four-year salary increase of the 1.5 million government personnel starting next year. He said the P30-billion risk management fund, which the Senate wanted deleted, was kept. He said the fund is for “sovereign guarantees made by the previous administrations that entered into contracts with private companies.” “The government has to honor those contracts,” he said. Recto wanted the fund scrapped. READ MORE...

ALSO: PH firms gear up for global competitiveness with ICT


DECEMBER 2 -(L-R) Globe Chief Technology and Information Officer and Chief Strategy Officer Gil Genio, MIT Leadership Center Executive Director Hal Gregersen, Singtel Group Enterprise CEO Bill Chang and Globe Senior Advisor for Enterprise and IT-Enabled Services Group Michael Frausing at the Globe Enterprise Innovation Forum.
Over 500 business and enterprise leaders gathered at the EDSA Shangri-La Hotel recently for the annual Enterprise Innovation Forum (EIF) presented by Globe Business, the information and communications technology (ICT) arm of Globe Telecom.
With the theme “Gearing up your business for the future,” this year’s forum focused on how industries can maintain competitiveness and relevance in the market through ICT by bringing in thought leaders and speakers from all over the world to instill the importance of innovation in leading businesses and industries. “Businesses today operate in a world that is in an ever-constant change. This change has affected enterprises in such a way that it has disrupted usual thought process and workflow. With the trend of how technologies evolve and become available, these changes in the business environment drive enterprises to transform their business models to remain relevant now and in the future,” shares Globe Senior Advisor for Enterprise and IT Enabled Services Group Mike Frausing. Innovation and Trends Shaping the Enterprise Landscape John Wagner, Boston Consulting Group Bangkok’s partner and managing director, started the CEO Breakfast Forum with his insights on innovations and trends currently shaping the global enterprise landscape. MIT Leadership Center Executive Director Hal Gregersen on “The Innovators’ DNA: Mastering the Five Skills of Disruptive Innovation.” “We have trends like the ‘Internet of Me’ that change the way people behave around the world through technology, placing the end user at the center of every digital experience; ‘The Intelligent Enterprise’ that makes embedding software intelligence into every aspect of its business and drives new levels of operational efficiency, evolution, and innovation; and powers an ‘Outcome Economy’ that enables new business models where the focus shifts from selling things to selling results.” READ MORE...

ALSO: US economy finally recovers from 2008 crisis


DECEMBER 18 -The United States raised its interest rate by a quarter point Wednesday for the first time in over nine years, signaling to the world that the biggest economy is finally over the hump.
The US rate hike will have some negative repercussions on the rest of the world, including the Philippines, as the move will generally prompt other central banks to increase their respective interest rates to make their currencies competitive, and consequently increase the cost of business operations. But the US rate hike presents a bigger economic picture—the American economy is doing well again and has recovered from “the worst financial crisis and recession since the Great Depression.”  The 2008 financial crisis nearly made the US bankrupt and forced the US Fed to hold interest rates to near zero levels to support economic recovery. The ensuing rate hike, in the words of Fed chair Janet Yellen, “takes place in the context of a US economy that is doing well, and is a source of strength to the emerging markets and other economies around the globe.” Yellen adds: “It also recognizes the considerable progress that has been made toward restoring jobs, raising incomes, and easing the economic hardship of millions of Americans. The first thing that Americans should realize is that the Fed’s decision today reflects our confidence in the US economy.”  READ MORE...RELATED, World watches with US Fed expected to raise rate...

ALSO: Outlook on PH banks positive for 2016 – Fitch


DECEMBER 16 -Fitch ratings has assigned the Philippine banking sector a positive outlook, the only one in the Asia-Pacific region that received such assessment from the ratings agency amid expectations of a more challenging year ahead.This followed after the debt watcher revised its ratings outlooks on two state-owned banks, the Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LBP), to positive from stable. This was in line with similar outlook upgrade on the country’s “BBB-” investment grade rating in September.Fitch also assigned a positive outlook to BDO Unibank, Inc. on the back of the bank’s improving profitability and asset quality.In its “2016 Outlook Report,” the ratings firm said banking sectors in the Asia-Pacific region were likely to face additional challenges as financial systems adjusted to slowing growth in China and the prospect of higher US interest rates.“We have a higher proportion of banking systems on negative sector outlooks for 2016 than was the case in 2015,” Fitch said, noting that these were driven by the prospect of deteriorating asset quality, a more cautious risk appetite contributing to weaker credit growth and margin pressures — all of which are likely to lead to slower profit growth.“With respect to the outlook on ratings, we have a stable outlook on the overwhelming majority except Mongolia and the Philippines (negative and positive, respectively),” it added.Fitch said its positive outlook for Philippine banks was based on supportive economic conditions, robust growth, profitability, sound capitalization, and stable funding and liquidity.“Philippine banks’ generally-high capitalization, healthy funding and liquidity, and satisfactory loan-loss reserves help to balance the risks from relatively high credit growth over the past few years,” it said.The ratings also reflect concentrated loan books, developing corporate governance standards and ownership by large family-controlled conglomerates, Fitch added.In terms of economic growth, the debt watcher forecast gross domestic product to expand by 5.9 percent in 2016 from 5.6 percent in 2015.Broadly steady overseas remittances, along with revenues from business process outsourcing services, should help support the country’s external finances and resilience to shifts in investor sentiment, it said.“We believe the Philippines will remain attractive to foreign bank entrants in this environment and banking sector competition will stay keen overall,” it added.With credit growth having eased to 12.6 percent as of end-September from 19.1 percent in 2014, Fitch said it expected similar mid-teen loan growth in 2016.It said banks’ profitability should remain broadly stable in 2016, noting that a continued shift toward higher-yielding consumer and middle-market loans should partly offset sustained competitive pressure on net interest margins. READ MORE...


READ FULL MEDIA REPORTS HERE:

Peso plummets to 6-year low


GOOGLE IMAGES

MANILA, DECEMBER 21, 2015 (MANILA STANDARD) posted December 14, 2015 at 11:55 pm by Julito G. Rada - The peso fell to a new six-year low against the US dollar, losing P0.11 to close at 47.345 a dollar Monday, as the anticipated rate hike by the US Federal Reserve this week buoyed the greenback against most currencies.

This was the local currency’s weakest level since closing at 47.47 against the dollar on Oct. 28, 2009 at the height of the global financial crisis. The peso settled at 47.235 against the greenback Friday.

Total volume turnover on Monday reached $514 million, higher than $486 million Friday.

“Actually, most of the regional currencies were affected, except the Japanese yen. Part of the dollar’s strength was the expected rate hike in the US this week,” Emilio Neri Jr., lead economist of the Bank of the Philippine Islands, said in a phone interview.

“Also, there was a risk-off sentiment because of this Third Avenue Fund which had a cheap redemption which apparently did not anticipate the interest rates hike by the Fed this month,” Neri said.

Neri, however, expressed optimism there would be a relief for the peso after the Fed’s announcement on the rate hike decision on Wednesday (Thursday, Manila time).

READ MORE...

“It makes sense for the peso to depreciate… The peso’s weakness is good for BPOs [business process outsourcing] sector and overseas Filipino workers….,” Neri said.

The peso breached the 47-a-dollar level on Nov. 9, closing at 47.16 from 46.935 a day earlier. It further weakened to 47.26 a dollar on Nov. 10, as the imminent Fed lift-off strengthened the dollar against other currencies.

Nicholas Antonio Mapa, research officer of BPI, earlier said the strong dollar trend could be seen this month or until “any weak US data or comments from the Fed send the currency pair back lower.”

Bangko Sentral Deputy Governor Diwa Guinigundo earlier said the exchange rate target of 43 to 46 a dollar remained doable this year, despite the volatilities in the global financial markets.


PHILSTAR

House OKs 2016 budget By Jess Diaz (The Philippine Star) | Updated December 17, 2015 - 12:00am 0 2 googleplus0 0


Ratification is the final act for approval of the budget bill. The Senate acted on the report on Monday. Philstar.com/File

MANILA, Philippines - The House of Representatives ratified last night the conference committee report on the proposed P3.002-trillion 2016 national budget.

Ratification is the final act for approval of the budget bill. The Senate acted on the report on Monday.

Speaker Feliciano Belmonte Jr. thanked his colleagues for the timely passage of the appropriations measure.

He said the House has consistently approved the budget before the end of the fiscal year since 2011.

Davao City Rep. Isidro Ungab, appropriations committee chairman, and his Senate counterpart, Loren Legarda, jointly chaired the conference committee that put together the final version of the proposed budget.

Ungab said the conferees restored the P8-billion cut in conditional cash transfer (CCT) program funds approved by the Senate.

He said the restoration was the combined initiative of the House contingent and Sen. Ralph Recto.

Recto said the P8-billion reduction would have deprived at least 500,000 poor families of cash assistance from the CCT program.

Ungab said the conferees also allocated an additional P2.7 billion for senior citizens, P4.7 billion for veterans’ pension and P7 billion to augment funds for the planned four-year salary increase of the 1.5 million government personnel starting next year.

He said the P30-billion risk management fund, which the Senate wanted deleted, was kept.

He said the fund is for “sovereign guarantees made by the previous administrations that entered into contracts with private companies.”

“The government has to honor those contracts,” he said.

Recto wanted the fund scrapped.

READ MORE...

“There is P30 billion in such fund in the 2015 budget and another P30 billion for next year, for a total of P60 billion. But we do not know who are the private investors who will benefit from this huge amount of taxpayers’ money,” he said.

Finance Secretary Cesar Purisima has recommended to President Aquino the use of the fund to settle P12 billion in claims made by two public utility firms.

Isabela Rep. Rodolfo Albano III said the ratification of the conference committee report on the budget “is solid proof of the commitment of Congress to pass on time an appropriations program aimed at improving the quality of life of Filipinos.

“It will allow President Aquino to sign the spending bill before yearend and averts the possibility of the government running on a reenacted 2015 budget,” he said.

It would also enable the Department of Budget and Management to release funds at the start of the New Year “so we can sustain the nation’s economic growth.”

Albano pointed out that both Aquino and Congress did not want a reenacted budget “even though it would favor the administration, especially during an election season.”


ABS-CBN

PH firms gear up for global competitiveness with ICT BN
By Globe Business Posted at 12/02/2015 8:20 AM


(L-R) Globe Chief Technology and Information Officer and Chief Strategy Officer Gil Genio, MIT Leadership Center Executive Director Hal Gregersen, Singtel Group Enterprise CEO Bill Chang and Globe Senior Advisor for Enterprise and IT-Enabled Services Group Michael Frausing at the Globe Enterprise Innovation Forum.

MANILA - Over 500 business and enterprise leaders gathered at the EDSA Shangri-La Hotel recently for the annual Enterprise Innovation Forum (EIF) presented by Globe Business, the information and communications technology (ICT) arm of Globe Telecom.

With the theme “Gearing up your business for the future,” this year’s forum focused on how industries can maintain competitiveness and relevance in the market through ICT by bringing in thought leaders and speakers from all over the world to instill the importance of innovation in leading businesses and industries.

“Businesses today operate in a world that is in an ever-constant change. This change has affected enterprises in such a way that it has disrupted usual thought process and workflow. With the trend of how technologies evolve and become available, these changes in the business environment drive enterprises to transform their business models to remain relevant now and in the future,” shares Globe Senior Advisor for Enterprise and IT Enabled Services Group Mike Frausing.

Innovation and Trends Shaping the Enterprise Landscape John Wagner, Boston Consulting Group Bangkok’s partner and managing director, started the CEO Breakfast Forum with his insights on innovations and trends currently shaping the global enterprise landscape.


MIT Leadership Center Executive Director Hal Gregersen on “The Innovators’ DNA: Mastering the Five Skills of Disruptive Innovation.”

“We have trends like the ‘Internet of Me’ that change the way people behave around the world through technology, placing the end user at the center of every digital experience; ‘The Intelligent Enterprise’ that makes embedding software intelligence into every aspect of its business and drives new levels of operational efficiency, evolution, and innovation; and powers an ‘Outcome Economy’ that enables new business models where the focus shifts from selling things to selling results.”

READ MORE...

Wagner added, “Internet of Things is beginning to be widely adopted in enterprise Business-to-Business (B2B) contexts. I believe that there will come a time that businesses will need to respond quickly to today’s dynamic business environment of seasonal spikes or unexpected surges of activity.”


Singtel Group Enterprise CEO Bill Chang sharing the importance of cybersecurity in the enterprise landscape.

Staying ahead of the curve in cybersecurity

Singtel Group Enterprise CEO Bill Chang was one of the two plenary speakers showcasing new trends in cybersecurity, one of the biggest issues confronting enterprises today. Chang highlighted various business areas that are particularly vulnerable to cyber attacks, and the specific measures that can be undertaken to avoid them.

“Cyber attacks affect governments, enterprises and consumers. This is no longer a technology related issue but has become a significant business challenge. With most Boards, Cyber attacks rank among the top current risk issues that must to be addressed urgently.

In fact, a recent report puts into perspective how widespread the problem has become. It is estimated that 98 percent of web-based applications are vulnerable to attack, while 1 in 6 mobile apps is malware-related. As many as 1 million malware is being distributed on a daily basis,” Chang said. To illustrate the prevalence of cyber threats, Chang then cited several recent cases where big brands were successfully targeted and breached. In each case, the companies suffered reputation loss and faced disruption to their financials and business operations.

Chang also showcased how businesses can secure their data and network with Trustwave's Managed Security Services (MSS), a comprehensive network security solution that ensures uninterrupted security protection against internal and external threats. MSS also encompasses a different suite of security capabilities such as managed firewalls, managed intrusion detection and prevention system (IDPS), managed anti-virus software, and managed web filtering which protects business critical IT and information assets against malicious network traffic.


Boston Consulting Group Partner and Managing Director John Wagner taking center stage at the CEO Breakfast Forum shares trends currently shaping the global enterprise landscape.

The Innovator's DNA: Mastering the Five Skills of Disruptive Innovators

The main plenary speech was delivered by Hal Gregersen, MIT Leadership Center’s Executive Director, focusing on “The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators”. The global authority of building innovative leaders shared how companies can develop the skills necessary to move progressively from idea to impact and come up with disruptive innovations.

Gregersen began his plenary talk with a story about the beginnings of photography. Using one of the leading photography related businesses as an example, he showcased how a once-disruptive innovator can go bankrupt if it doesn’t continue to be an industry leader. He also emphasized the importance of asking questions in order to continue the creation of new ideas.

“Kids are good at doing what innovators do: they ask questions. They observe things. They try things. That’s exactly what we should all do. Innovators ask questions that are catalytic. What’s working? What’s not? Why? It’s not about finding the right answers but finding the right questions. If you have challenges you need to solve at work, you must recognize that the reason these challenges exist is because you’re asking the wrong questions," revealed Gregersen.
For the afternoon sessions, the crowd dispersed into five breakout sessions: Inspiring Corporate Culture, The Internet of Everything, Network Without Limits, Consumerization of the Enterprise, and Cyber Security.

Globe Business holds the annual forum for leaders and corporations to participate in an insightful learning session and sharing of best practices that maximize innovation to stay ahead of competition and become role models in their respective industries.

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RELATED FROM THE INQUIRER

World watches with US Fed expected to raise rate @inquirerdotnet Agence France-Presse  02:45 PM December 16th, 2015


Traders work on the floor of the New York Stock Exchange during the morning of December 14, 2015 in New York City. The Federal Reserve may make an announcement this week raising interest rates. Photo by Andrew Burton/Getty Images) Andrew Burton/Getty Images/AFP

WASHINGTON—The US Federal Reserve is expected Wednesday to increase its base interest rate for the first time since 2006, a momentous step that will have repercussions across the global financial system.

With the world’s biggest economy now growing steadily — if not robustly — the Fed is expected to conclude that it is time to get away from the ultra-low interest rates that have underpinned the recovery from the 2008-2009 Great Recession.

READ: Decisive US Fed seen ending wild market swings

Most economists expect the so-called federal funds rate will be lifted from the current 0-0.25 percent by a quarter percentage point.

The move, a well-signaled and modest increase, will mark the beginning of a likely slow series of rate hikes to “normalize” central bank policy over the next two years.

But it will also mean raising the cost of borrowing for everyone from foreign governments and companies to home and carbuyers, while also better rewarding savers on their bank accounts.

READ: PH resilient from US Fed rate hike

A Fed rate increase “is a positive sign for the US economy — to be welcomed, not feared,” said Stuart Hoffman, chief economist at PNC Financial Services Group.

Some economists argue the US economy is still not ready for tighter money, and that there is still no compelling reason to hike — like the threat of inflation.

But most analysts believe the Federal Open Market Committee, the Fed policy board, will take the first step, and then see what happens before plotting their next move.

READ MORE...

“The Fed is not trying to slow down a fast-growing economy or dampen runaway inflation,” said Sam Stovall, equity strategist at S&P Capital IQ. A hike would be “an attempt to recalibrate, not restrain.”

Arguing for an increase, Fed Chair Janet Yellen said on December 2 that the Fed expects the economy will continue to grow steadily through 2016 and that the challenges of low inflation and jobs market slack will diminish next year.

Moreover, she added, if the Fed waits too long, “we would likely end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of our goals.”

The FOMC will announce its decision at 2:00 pm (1900 GMT), along with Fed projections for growth, inflation and interest rates over the next two years.

Shortly after that, Yellen meets the media to explain the decision.

Too soon?

Raising the rate by a notch is not a big change in monetary policy — “a baby step,” said Hoffman — but after nearly three years preparing the ground, it is a monumental stride for the FOMC.

Even so, the move remains somewhat controversial, especially as much of the rest of the world is easing monetary policy to counter weak economic growth.

Economist Paul Krugman warned that a rate hike “could end the run of good economic news.”

“And this would be much more serious than a modest uptick in inflation because it’s not at all clear what the Fed could do to fix its mistake.”

Historically, noted John Normand at JP Morgan Securities, “Macroeconomic and market conditions have rarely looked so fragile ahead of the first Fed hike.”

So the spotlight will be on Yellen’s press conference to see how she characterizes the economy’s strength and depicts plans for future rate increases.

Speculation on how fast the Fed will hike ranges from between two and four quarter-point increases next year, depending on inflation. A faster pace would more quickly tighten the economy and send the US dollar higher, and possibly dampen equity markets.


MANILA TIMES

US economy finally recovers posted December 18, 2015 at 12:01 am

The United States raised its interest rate by a quarter point Wednesday for the first time in over nine years, signaling to the world that the biggest economy is finally over the hump.

The US rate hike will have some negative repercussions on the rest of the world, including the Philippines, as the move will generally prompt other central banks to increase their respective interest rates to make their currencies competitive, and consequently increase the cost of business operations.

But the US rate hike presents a bigger economic picture—the American economy is doing well again and has recovered from “the worst financial crisis and recession since the Great Depression.”

The 2008 financial crisis nearly made the US bankrupt and forced the US Fed to hold interest rates to near zero levels to support economic recovery. The ensuing rate hike, in the words of Fed chair Janet Yellen, “takes place in the context of a US economy that is doing well, and is a source of strength to the emerging markets and other economies around the globe.”

Yellen adds: “It also recognizes the considerable progress that has been made toward restoring jobs, raising incomes, and easing the economic hardship of millions of Americans. The first thing that Americans should realize is that the Fed’s decision today reflects our confidence in the US economy.”

READ MORE...

Global financial markets welcomed the US Fed move, as stocks rallied after experiencing an extended volatile period. A strong US economy should be good for Asia and the rest of the world. It gives exporters in the region, including the Philippines, a bigger opportunity to sell their goods to the US, given the improved purchasing power in the north American nation.

Philippine businessmen, meanwhile, must adjust to the new economic order. Every emerging economy will vie to increase its pie in the US market. The Philippine government, for its part, should do its share to make local products more competitive. It can start by lowering the cost of electricity, a major production cost, and improve the business climate to lure more foreign investors.


MANILA TIMES

Outlook on PH banks positive for 2016 – Fitch December 16, 2015 10:06 pm by MAYVELIN U. CARABALLO, REPORTER

Fitch ratings has assigned the Philippine banking sector a positive outlook, the only one in the Asia-Pacific region that received such assessment from the ratings agency amid expectations of a more challenging year ahead.

This followed after the debt watcher revised its ratings outlooks on two state-owned banks, the Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LBP), to positive from stable. This was in line with similar outlook upgrade on the country’s “BBB-” investment grade rating in September.

Fitch also assigned a positive outlook to BDO Unibank, Inc. on the back of the bank’s improving profitability and asset quality.

In its “2016 Outlook Report,” the ratings firm said banking sectors in the Asia-Pacific region were likely to face additional challenges as financial systems adjusted to slowing growth in China and the prospect of higher US interest rates.

“We have a higher proportion of banking systems on negative sector outlooks for 2016 than was the case in 2015,” Fitch said, noting that these were driven by the prospect of deteriorating asset quality, a more cautious risk appetite contributing to weaker credit growth and margin pressures — all of which are likely to lead to slower profit growth.

“With respect to the outlook on ratings, we have a stable outlook on the overwhelming majority except Mongolia and the Philippines (negative and positive, respectively),” it added.

Fitch said its positive outlook for Philippine banks was based on supportive economic conditions, robust growth, profitability, sound capitalization, and stable funding and liquidity.

“Philippine banks’ generally-high capitalization, healthy funding and liquidity, and satisfactory loan-loss reserves help to balance the risks from relatively high credit growth over the past few years,” it said.

The ratings also reflect concentrated loan books, developing corporate governance standards and ownership by large family-controlled conglomerates, Fitch added.

In terms of economic growth, the debt watcher forecast gross domestic product to expand by 5.9 percent in 2016 from 5.6 percent in 2015.

Broadly steady overseas remittances, along with revenues from business process outsourcing services, should help support the country’s external finances and resilience to shifts in investor sentiment, it said.

“We believe the Philippines will remain attractive to foreign bank entrants in this environment and banking sector competition will stay keen overall,” it added.

With credit growth having eased to 12.6 percent as of end-September from 19.1 percent in 2014, Fitch said it expected similar mid-teen loan growth in 2016.

It said banks’ profitability should remain broadly stable in 2016, noting that a continued shift toward higher-yielding consumer and middle-market loans should partly offset sustained competitive pressure on net interest margins.

READ MORE...

The ratings firm also expects Philippine banks to maintain high core capitalization over 2016 amid more demanding capital requirements for domestic systemically important banks, to be phased in from 2017 “and are likely to apply to all Fitch-rated banks to some degree — as they are each among the 10 largest banks in the Philippines.”

It noted that customer deposits comprise the bulk of banks’ funding.

“The system’s loan/deposit ratio remains low at below 70 percent, and we expect system liquidity to remain generally healthy over the next year even with robust loan growth,” Fitch said.

Meanwhile, Fitch said a sovereign ratings upgrade would have a corresponding effect on the ratings of DBP, LBP and potentially BDO.

“Such an upgrade may reflect a general improvement in domestic operating conditions and governance standards, which would be likely to be positive for the overall operating environment and credit profiles of the Philippine banks as well,” it said.

A more diversified loan portfolio over time, and improved corporate governance standards — including addressing the inherent conflicts of conglomerate ownership — could be positive for the ratings, assuming the banks’ balance-sheet strengths are sustained, Fitch continued.

Lastly, the debt watcher said the ratings could face pressure if large acquisitions, excessive lending to more volatile sectors — such as real estate, consumption-related and small and medium enterprises loans — or rising concentration risk caused bank credit profiles to deteriorate


Chief News Editor: Sol Jose Vanzi

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