Hazy and fuzzy

Published November 20, 2020, 6:00 AM

by Fil C. Sionil

“It’s yet to be a buyer’s market,” Astro del Castillo, president and managing director of First Grade Holdings Inc.,  said during our e-conversation.

He strongly opposed the observations of some market movers that the decrease in the number  of Philippine Offshore Gaming Operations (POGO) resulted in the reduction in real estate values. Up until early this year POGO has been one of the drivers in the rise of real estate prices, including rentals.

It is not yet time to buy because the actual market value of real estate property remains fuzzy until the end of the first quarter of the coming year with the expiration of the incentives embodied in the Bayanihan 1 and 2 to Heal as One laws.

 Officials of top lenders – Security Bank President and Chief Executive Officer Sajiv Vohra, Philippine National Bank (PNB) President Jose Arnulfo “Wick” Veloso, and Bank of the Philippine Islands (BPI) Senior Vice President for Treasury Dino Gasmen  said the correct valuation on their respective bank’s real estate assets is hazy with some of the businesses’ protected by the Bayanihan laws.

As Mr. Dino described it “The picture is opaque at the moment due to the Bayanihan.”  Add to this is the inconclusiveness of small and medium term enterprises (SMEs) to finally do an Elsa and “let it go. Many of them are still trying.”

The loosening of lockdown restrictions brought a semblance of normalcy for many as the government gradually opened up the economy. Several public companies and private sector firms are slowly coming out of the pandemic as seen in their third-quarter report, despite the slow rebound in the Gross Domestic Product of the country.

The banking industry,  the lifeblood of the economy, took the brunt of this pandemic. As expected, local banks saw an increase in non-performing loans (NPL) due to several factors such as the extended loan moratorium, restructured loans allowed in the Bayanihan and  the extended lockdown restriction in August.

 Preliminary data from the Bangko Sentral ng Pilipinas (BSP) recorded that the sector’s gross  was 3.4 percent, its highest gross NPL ratio in seven years. The Ayala-led lender was hard-hit by the pandemic  with  a hefty drop in its net income by 22.1 percent to P17.17 billion because of higher loan loss provisioning.  It is not a surprise the NPL ratio has gone up since Security Bank, BPI, BDO and all other lenders have been supportive of the needs of their account holders and SMEs.

Security Bank, for example, saw a net income of P6.7 billion in the first nine months, driven by increases in net interest income and trading gains.  The revenues of PNB and Security Bank, increased despite the higher loan loss provisioning,

On Wednesday, during the “Seeing Through the Lens: Global and Local Market Outlook Forum” webinar sponsored by Maybank Philippines, which coincides with the celebration of the bank’s 23rd year, Phil Hagedorn, chief investment officer of ATR Asset Management, assessed banks’ NPL have “gone up,” though, not to the levels of the 1997 financial crisis. “We have to buckle down to work.”

In this pandemic  while there are losers, there are winners as well – those that can adapt and are resilient.

Although, the vision of the horizon remains fuzzy, the wheels of the banking are churning  slowly back on track to keep their balance sheets afloat.

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