Tuesday, 16 June 2009

Philippine remittances grow 2.6% in 1st 4 mos.

Jun Vallecera
Business Mirror
http://www.businessmirror.com.ph/home/top-news/11812-remittances-grow-26-in-1st-4-mos.html

THE remittances of overseas Filipino workers (OFWs) rose 2.6 percent in the first four months to $5.5 billion, lifting hopes it should still rise this year despite widespread expectations to the contrary.

Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. refused to change the central bank’s original forecast of flattish growth for OFW remittances this year, telling reporters on Monday the zero-growth scenario remains in place.

“I would still maintain a flat growth rate. Yes, I prefer to be conservative so that the ‘revenge’ will be sweeter!” Tetangco said.

His demeanor betrayed an unveiled optimism that OFW flows, which help fund all consumption activities in the Philippines, should end the year at a level higher than last year’s $16.4-billion mark.

This, as yet another report on Monday showed mild economic stirrings, boosting hopes that consumption is improving and, with it, chances for better growth.

Consumer loans rose 1.5 percent higher in March, the BSP said, indicating that Filipino consumers engaged in an increasing number of residential real-estate loans and credit-card purchases.

The higher loans came amid government data that consumption activities as a whole grew by only 0.8 percent in the first quarter. As the Philippine economy is consumption-driven, local output—measured as the gross domestic product—grew at a tepid pace of only 0.4 percent during the period.

IMF bearish on remittances

Experts at the International Monetary Fund (IMF) just last week did not hide expectations the year’s OFW remittances were to decline before ultimately recovering next year.

“The projected recession in many of the host countries, lower commodity prices and recent trends in remittances and deployment figures underpin our projection
for a decline in total remittances this year before recovering in 2010,” IMF mission leader Il Houng Lee said at the conclusion of their staff visit.

But Tetangco said: “Steady remittance flows—averaging US$1.4 billion in 2008 and in January to April 2009—continued to be driven mainly by sustained demand by host countries for Filipino skills and competence. This, combined with expanded and easier access to enhanced banking services by overseas Filipinos and their beneficiaries, helped sustain remittance flows into the country.”

A tendency among many families of OFWs to scrimp in the first quarter had been noted, as they faced a steady stream of reports about OFWs being retrenched abroad as the global crisis started to cut deep even in labor-hosting countries.

The Philippine Overseas Employment Administration (POEA), however, reported that demand for Filipino workers abroad has remained broadly strong.

As of May 29, a total of 758,412 active job orders have been reported, of which 37 percent have been processed and 63 percent are still to be filled up. The bulk of the job orders were in the production, services, and professional skill categories, according to the POEA.

It also reported the deployment in May of 273 health workers (93 candidate-nurses and 180 candidate-caregivers) who will undergo training under the Japan-Philippines Economic Partnership Agreement before taking the licensure examination that will enable them to work in Japan on a regular status.

Tetangco said while weaker global economic conditions continued to pose some risk to the continued strength of the deployment of Filipino workers abroad, the government remains focused on job-generation programs to help displaced overseas workers find alternative jobs in emerging markets and in countries only mildly affected by the global financial meltdown.

“As a result, the increase in the number of displaced OFWs has decelerated in recent weeks,” Tetangco said.

As for the latest report on consumer loans in March the BSP said consumer loans (CLs) of universal, as well as commercial banks plus and thrift banks, reached P385.8 billion, up by 1.5 percent from last quarter’s P380.0 billion.

This was also up by 18.7 percent from year ago total of P325.1 billion.

Meantime, the ratio of total CLs to total loan portfolio (TLP), exclusive of interbank loans, went up to 15.2 percent from last quarter’s 14.8 percent.

This was 15.4 percent lower than a year ago, the BSP said.

Auto loans and other consumer loans were the next biggest loans equal to 21.1 percent or P81.6 billion and 9.6 percent or P37.0 billion of total loans, respectively.

The bulk of total loan exposure was accounted for by the big universal license as well as by the regular commercial banks, equal to 59.6 percent or P230 billion.

Thrift banks accounted for the balance of 40.4 percent or P155.8 billion.

In terms of loan quality, the ratio of nonperforming consumer loans to total consumer loans climbed to 9 percent from last quarter’s 8.6 percent and year ago of 8.1 percent ratio.

The quarter-on-quarter increase in the ratio occurred as the growth in nonperforming CLs outmatched the 1.5 percent expansion in total CLs.

Nonperforming consumer loans stood at P34.9 billion, up by 7.1 percent from previous quarter.

By industry, the ratio of nonperforming CLs to total CLs of TBs at 8.5 percent was better than the 9.4 percent ratio posted by universal and regular commercial banks.

The nonperforming consumer loans to total nonperforming loans ratio stood at 26.2 percent (up from 25.3 percent last quarter and 20.4 percent a year ago), whereas nonperforming CLs to TLP ratio settled at 1.4 percent (up from 1.3 percent last quarter and 1.2 percent a year ago), the BSP said.

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