Higher forecasts for PH after strong Q2

POSTED ON 08/30/2013 12:39 PM  | UPDATED 08/30/2013 12:57 PM


MANILA, Philippines – Global banking giants Citi and HSBC upgraded their growth forecasts for the Philippines this year following “better-than-expected” growth in the 2nd quarter.

Citi raised its 2013 gross domestic product forecast for the Philippines to 7.3% from 7%, while HSBC hiked its projection to 7.1% from 6.4%.

Both said exports will improve in the 4th quarter, boosting growth, and added household and government consumption will remain strong.

“We expect net exports to improve, especially in Q4 when growth in the US, Japan, China and eurozone should accelerate,” said HSBC in a research note.

The Philippines grew 7.5% in the 2nd quarter – the same pace as China – making the two countries the fastest growing in Asia. This brought growth in the 1st half to 7.6%, above the government’s 2013 target of 6% to 7%.

Growth was largely driven by consumer and government spending, but investments also provided support.

Citi and HSBC said remittance inflows, a weaker peso and benign inflation will continue to drive household consumption.

Citi however warned that delays in the implementation of infrastructure projects under the Public-Private Partnership program “lead us to be more sober in our investment growth forecasts.”

It said financial volatility due to the anticipated winding down of the US Federal Reserve’s stimulus program can also impact investments.

HSBC nevertheless said that sound fiscal and monetary policy will “help the Philippines weather the recent volatility triggered by the withdrawal of US liquidity.”

New growth trajectory?

The 2nd quarter marked the 4th consecutive quarter that the Philippines grew above 7%.

Socioeconomic Planning secretary Arsenio Balisacan said the country is moving away from being largely consumer-driven to investment-led. He said it is now on a higher growth trajectory.

But Citi said the Philippines’ prospects in the 2nd half and next year “retain a slower growth trajectory” of “less than 7% growth.”

“Lacking strong export recovery also downplays a higher trajectory.”

It said a more important concern is the “rising potential of relying on consumer-driven growth” for GDP growth of 7% or more. It warned this growth will not necessarily lead to higher job creation.

Balisacan said sustained investments and industry gains, particularly in manufacturing, are the ones “with the ability to provide high-quality jobs for Filipinos.” – Rappler.com


China Bank lends PAL $329 M for new planes


16MANILA, Philippines – China Banking Corp. (China Bank) has arranged a $329 million financing for Philippine Airlines’ purchase of seven new Airbus aircraft as part of the flag carrier’s re-fleeting program.

China Bank, which is part of the SM group of companies, is the sole arranger for the financing for seven Airbus A321-200 aircraft.

The first of these state-of-the-art jets, said to be among the most modern and safest airplanes to soar in Philippine skies, arrived in Manila from Hamburg, Germany last August 7.

The aircraft were being financed through an innovative operating lease basis which the bank said was reflective of PAL’s ability to “diversify its funding sources and effectively manage its capital requirements.”

“China Bank is honored to support PAL in its fleet renewal program and the modernization of the country’s aviation sector,” China Bank president Peter Dee said in a press statement on Friday, which coincides with the bank’s 93rd anniversary celebration.

China Bank is a key player in aircraft financing. It also acted as sole arranger for the acquisition of four new airplanes of another airline company early this year.

The arrival of its first A321 officially puts in motion Philippine Airlines’ fleet renewal that covers firm orders for 65 aircraft from Airbus in what is the largest aircraft purchase in Philippine history.

The A321 joins the Airbus fleet at PAL that currently includes 22 320 aircraft flying on domestic and regional routes, with eight in service with affiliate carrier PAL Express. PAL also operates eight wide-body A330s on higher capacity routes across Asia and six A340-300s on its transpacific flights.

PAL plans to operate the twin-engine A321s primarily on select domestic, regional and international routes, confident that this aircraft type offers a competitive advantage owing to its seat capacity, cost efficiency and modern look.

China Bank offers a wide range of financial products and services through over 300 branches nationwide, which it plans to expand to 415 by 2014, and more than 500 strategically-located ATMs (including thrift bank subsidiary China Bank Savings).

The bank recently announced its first semester profits of P2.96 billion, up by 46 percent year-on-year, driven by improvements in core operations.

Swapping of PNB-Allied shares to complete merger


MANILA, Philippines—Philippine National Bank plans to offer new shares to all stockholders of Allied Bank at P70 per share pursuant to the merger between the two banks via a share-swap.

PNB plans to offer 423.96 million common shares worth a total of P29.68 billion to Allied Bank shareholders, based on the bank’s application for registration of securities at the Securities and Exchange Commission.

This offer was based on the exchange ratio of 130 PNB common shares for each Allied Bank common share and 22.763 PNB common shares for each Allied Bank preferred share.

As a result of the merger, PNB will have a combined outstanding capital stock of 1.086 billion common shares of which 423.96 million new common shares are issued to Allied Bank stockholders with an issue value of P29.68 billion.

An application to list the new shares is expected to be submitted to the Philippine Stock Exchange before the end of this month.

While PNB and Allied Bank executed their merger last February, this offer will complete the consolidation of shares into PNB which will be the surviving bank.

“The merger marks a special milestone for both PNB and Allied Bank. The synergies arising from the broadened network, diversified deposit base and improved scale will provide a compelling value proposition for their various stakeholders,” PNB said in the regulatory filing.

“In creating the country’s fourth largest privately -owned bank, the merged bank will be in a prime position to improve customer experience and lead industry innovation. Moreover, it will yield substantial benefits for its customers and provide more opportunities for its employees,” it added.

While there are no cash proceeds from the merger, it is expected to result in revenue enhancements and cost savings from branch re-engineering, economies of scale, consolidation of overlapping systems and corporate indirect overheads, realignment of front offices and optimization of back office processing and support functions