PSEi ends higher on Fed, BSP policy easing hopes

The main index rose on Thursday as both the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP) said they expect to resume their monetary easing cycles this year despite uncertainty stemming from the Trump administration’s trade policies.

The bellwether Philippine Stock Exchange index (PSEi) rose by 0.15% or 10.01 points to close at 6,323.13 on Thursday, while the broader all shares index slipped by 0.10% or 4.03 points to 3,745.32.

“The local market rose further on the back of the positive cues from Wall Street. This came as the Fed maintained its outlook of two policy rate cuts for this year,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. “Hopes that the Bangko Sentral ng Pilipinas will cut their policy rates at their April meeting also gave the market a boost.”

“Philippine shares made modest gains ahead of the FTSE rebalancing and after the Fed reaffirmed its outlook for two rate cuts in 2025, keeping rates at 4.25% to 4.5% despite expectations of higher inflation and slower growth. Fed Chair Jerome H. Powell downplayed the inflationary impact of tariffs, calling it transitory,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Asia shares edged up on Thursday after a Wall Street rally as investor sentiment was lifted by the prospect that the Federal Reserve could still deliver two rate cuts this year, Reuters reported.

The Fed on Wednesday left rates unchanged in a widely expected decision, but maintained its projection for two quarter-percentage-point rate cuts by the year-end.

Meanwhile, BSP Governor Eli M. Remolona, Jr. told Bloomberg News on Wednesday that the Monetary Board could resume its easing cycle at their April 10 meeting following the surprise pause at their February review.

Mr. Remolona added that the BSP could deliver 50 basis points (bps) in cuts this year.

The Philippine central bank has brought down benchmark borrowing costs by a cumulative 75 bps since it began its easing cycle in August last year.

Most sectoral indices closed higher on Thursday. Mining and oil surged by 6.06% or 546.34 points to 9,548.32; property increased by 0.98% or 21.97 points to 2,261.97; industrials went up by 0.49% or 43.59 points to 8,832.88; services rose by 0.17% or 3.58 points to 2,057.36; and holding firms climbed by 0.13% or 7.04 points to 5,228.74.

Meanwhile, financials went down by 0.42% or 10.40 points to 2,440.62.

Value turnover went down to PHP 5.6 billion on Thursday with 1.06 billion shares exchanged from the PHP 7.84 billion with 966.38 million issues traded on Wednesday.

Advancers beat decliners, 103 against 98, while 44 names were unchanged.

Net foreign buying dropped to PHP 166.83 million on Thursday from PHP 392.22 million on Wednesday. — R.M.D. Ochave with Reuters

BSP rate cut likely in April — Recto

Further monetary easing will be necessary to support economic growth, Finance Secretary Ralph G. Recto said, adding that there is a high likelihood the central bank will cut rates next month.

“Equally important, I suppose, is the reduction of interest rates. It would appear that, because inflation has been controlled in the Philippines… there is room for a rate cut in our next (meeting),” Mr. Recto, who is also a Monetary Board member, told Bloomberg in a televised interview on Wednesday.

“It’s a high probability that we could do a rate cut also for our next meeting,” he added.

The Monetary Board is set to have its next rate-setting meeting on April 10.

The central bank paused its easing cycle last month as it unexpectedly kept the key rate steady at 5.75%.

This after it reduced rates for three straight meetings late last year, for a total of 75 basis points (bps) worth of rate cuts.

Mr. Recto said there is room for up to 75 bps worth of rate reductions for this year.

“Hopefully, at the minimum 50 bps and probably 75 bps (cuts), for the year that will help propel growth, consumption and investments moving forward,” he added.

Reducing borrowing costs could add at least 0.5% growth to gross domestic product (GDP), he said.

“If we could reduce it in the next two years by 150 bps, (it would probably be) even higher. Now, during the last decade, we were growing at an average of 6.4% when rates were roughly at about 3.4% to 3.9%. (Our) policy rate is 5.75%,” the Finance chief said.

Mr. Recto said further rate cuts, coupled with support investments, could drive Philippine growth up to 7% “or even higher later on.”

For this year, Mr. Recto said the Philippines will be able to meet its growth targets.

“We’re pretty confident that we would hit at least 6% growth. The World Bank, the IMF (International Monetary Fund), and many other institutions are saying that we’re on track to 6%,” he said, citing the country’s strong macroeconomic fundamentals, low unemployment and continued investment in infrastructure.

“We have elections also right now and during elections, there’s more spending, so we’re pretty confident we hit at the very least 6% this year,” Mr. Recto added.

The government is targeting 6-8% growth from this year until 2028.

The Philippines’ GDP grew by a slower-than-expected 5.2% in the fourth quarter, bringing the full-year growth to 5.6%. This was short of the government’s revised 6-6.5% full-year target.

Despite headwinds arising from slowing global growth, Mr. Recto said the Philippine economy is mostly driven by consumption.

“So far, our BPO industry is growing. Our overseas Filipino worker remittances continue to grow. We hope that’s not affected by these headwinds as well. Tourism is improving,” he said.

The recent arrest of former President Rodrigo R. Duterte is also unlikely to dampen investor sentiment.

Asked about the chance of political unrest after his arrest, Mr. Recto replied: “We don’t see that happening. Zero.”

“That’s nothing to do with our macroeconomic fundamentals. To begin with, there was a slight reduction in the stock exchange, but very subdued, but the peso appreciated on the day that he was arrested,” he said.

“It could also mean that the international community is looking at how important the rule of law is to us, and it’s a part of governance as well.”

Mr. Duterte, who led the Philippines from 2016 to 2022, was arrested on an International Criminal Court (ICC) warrant on charges of crimes against humanity.

Fiscal policy

Meanwhile, the Finance chief said the government is on track with fiscal consolidation efforts.

“We’re on the path. We surpass our revenue targets. Last year, we had the highest revenue-to-GDP ratio in the last 27 years. That’s very good.”

Latest data from the Treasury showed the National Government (NG) posted a PHP 68.4-billion budget surplus in January, 22.27% lower than the PHP 88-billion surfeit a year prior.

As of end-2024, the deficit as a share of GDP settled at 5.7%, lower than 6.2% at end-2023. The NG is looking to bring the deficit-to-GDP ratio to 5.3% this year and further to 3.7% by 2028.

The Finance department will also continue to privatize idle state assets, such as the Caliraya-Botocan-Kalayaan hydroelectric power plant.

“We’re opening up also for retail investors, because there are many government assets that are nonperforming, and it costs the government to maintain them so might as well privatize that.”

“Even small properties that are bought by the private sector or even individuals, that could create more value for the economy.”

These privatization efforts are expected to generate around PHP 100-billion revenues. — Luisa Maria Jacinta C. Jocson

BoP swings to USD 3.1-billion surplus in Feb.

The Philippines’ balance of payments (BoP) position swung to a surplus in February, the Bangko Sentral ng Pilipinas (BSP) said on Wednesday.

Data from the BSP showed the BoP registered a surplus of USD 3.1 billion in February, a turnaround from the USD 4.1-billion deficit in January and USD 196-million gap in the same month a year ago.

This was also the first surplus in five months or since the USD 3.53-billion surfeit posted in September.

The BoP measures the country’s transactions with the rest of the world. A surplus shows that more money entered the Philippines, while a deficit means more funds left.

“The BoP surplus reflected the National Government’s (NG) net foreign currency deposits with the BSP which include proceeds from Republic of the Philippine global bonds, and net income from the BSP’s foreign investments,” the central bank said.

At its end-February position, the BoP reflected a final gross international reserve (GIR) level of USD 107.4 billion, higher than USD 103.3 billion as of end-January.

The dollar reserves were enough to cover 3.8 times the country’s short-term external debt based on residual maturity.

It was also equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income.

An ample level of foreign exchange buffers safeguards an economy from market volatility and is an assurance of the country’s capability to pay debts in the event of an economic downturn.

“It’s quite impressive to see such a significant turnaround in the BoP position,” Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message.

This indicates a “substantial improvement in the country’s economic activities,” he added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the surplus in February can be largely attributed to the NG’s first global bond offering of the year.

In January, the NG raised USD 3.3 billion from the sale of 10-year and 25-year fixed-rate global bonds and seven-year euro sustainability bonds.

Mr. Ricafort also noted the continued gains in gold holdings as gold prices hit new highs. Foreign investments also showed gains amid higher prices of US Treasury bonds, he added.

Meanwhile, Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said the pause in the central bank’s easing cycle also supported the BoP surplus.

“We think it helped that the BSP did not cut rates last February. This likely attracted foreign flows into both the local bond and equity markets last month helping, in turn, mitigate the persistent deficits in the current account,” he added.

The Monetary Board last month opted to keep the key rate steady at 5.75% after three straight rate cuts last year.

Meanwhile, the country’s BoP position stood at a USD 992-million deficit in the first two months, slightly higher than the USD 936-million gap in the comparable year-ago period.

“Based on preliminary data, the year-to-date deficit reflected mainly the widening trade in goods deficit and net outflows from foreign portfolio investments but was partially offset by net receipts from foreign borrowings by the NG and personal remittances,” the BSP said.

Latest data from the local statistics authority showed the trade deficit widened to USD 5.09 billion in January from the USD 4.14-billion deficit in December, its widest gap in three months.

“The cumulative deficit for the first two months of the year suggests that there are still underlying challenges that need to be addressed,” Mr. Ravelas said.

“This mixed result highlights the importance of maintaining a balanced approach to economic policies to sustain positive trends while mitigating deficits,” he added.

This year, the BSP expects the country’s BoP position to end at a USD 2.1-billion surplus, equivalent to 0.4% of gross domestic product. – Luisa Maria Jacinta C. Jocson, Reporter

Auto sales rise despite a drop in demand for cars

New vehicle sales jumped by an annual 2.9% in February, the slowest growth in five months amid a decline in passenger car sales, according to a joint report by the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA).

The industry report released on Wednesday showed vehicle sales increased to 39,164 in February from 38,072 units in the same month in 2024.

At 2.9%, this is the slowest year-on-year growth in five months or since the 2.4% sales growth in September 2024.

Month on month, vehicle sales grew by 4.1% from 37,604 units sold in January.

In a statement, CAMPI President Rommel R. Gutierrez attributed the higher sales in February to “supply-chain stability, growing demand for electric and autonomous vehicles, and global economic conditions.”

“There has been a notable consumers’ preference for connected and personalized driving experiences, alongside a shift towards sustainability and environmental concerns,” Mr. Gutierrez said.

“Technological advancements in artificial intelligence, sensors, and infotainment systems, among others, are showing potential to transform the industry over time. These factors will contribute to the overall positive sales trends in 2025,” he added.

CAMPI set a sales target of 500,000 units in 2025. If realized, this would represent a 7% year-on-year increase from the record-high 467,252 units sold in 2024.

Data from CAMPI-TMA showed passenger car sales fell by 15.4% to 8,154 units in February from 9,638 units a year ago.

Month on month, sales of passenger cars went up by 5.5% from 7,729 units in January.

Meanwhile, commercial vehicle sales climbed by 9.1% to 31,010 units from 28,434 in the same month a year ago. This accounted for 79.18% of the industry’s total sales.

Month on month, sales of commercial vehicles went up by 3.8%.

Broken down, light commercial vehicle sales rose by 10.2% to 23,404, while Asian utility vehicle (AUV) sales rose by 5% to 6,681.

Sales of light-duty trucks and buses grew by 7.4% to 554 units in February from 516 units in the same month last year, while sales of medium-duty trucks and buses went up by 9.6% to 286 from 261 last year.

In February, sales of heavy-duty trucks and buses surged by 39.3% to 85 units from 61 units sold last year.

For the first two months of the year, vehicle sales went up by 6.4% year on year to 76,768 units from 72,132 in the same period last year.

Commercial vehicle sales rose by 12.6% to 60,885, while passenger car sales dropped by 12.2% to 15,883 in the January-to-February period.

As of end-February, Toyota Motor Philippines Corp. remained the market leader with a 47.68% share as its sales rose by 10.7% to 36,606 units.

Mitsubishi Motors Philippines Corp. came in second with a 17.2% increase in sales to 15,548 units in the January-to-February period. It accounted for a 20.25% market share.

In third spot is Nissan Philippines, Inc. which saw a 13.7% drop in sales to 4,442 units in the first two months.

Rounding out the top five were Suzuki Phils., Inc., which saw a 20.6% increase in sales to 3,558 units, and Ford Motor Co. Phils., Inc. which posted a 35.6% drop in sales to 3,334 units.

Sought for comment, Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said that “economic recovery” remains the key driver for the demand for cars.

“However, the slowdown last month was due to seasonal demand, and the economic uncertainty arising from Trump’s ‘DisTRUMPTion,’ which is keeping consumers cautious,” he added.

Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said that the lower passenger car sales can be attributed to consumers’ preference for larger models.

“It may have to do with the preference for sport utility vehicles (SUVs), AUVs, and pickups, especially with more lower-priced versions to choose from the biggest automakers… and large or extended families in the country,” said Mr. Ricafort in a Viber message.

“The unusually higher number of typhoons, storms, floods, and shear lines may also have triggered demand for these types of vehicles,” he added.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said that the sales growth in February was driven by strong demand for commercial vehicles, “particularly SUVs, pickups, and fleet units, as businesses expanded operations.”

“Consumer preference has shifted away from passenger cars, leading to a decline in sedan sales as buyers opt for more versatile and fuel-efficient options,” said Mr. Limlingan in a Viber message.

“The increasing adoption of hybrid and electric vehicles reflects government incentives and a growing interest in sustainability,” he added.

The CAMPI-TMA report showed that 1,816 electrified vehicles (EVs) were sold in February, bringing two-month sales to 3,416 units.

While the outlook for car sales remains positive, Mr. Limlingan said “higher interest rates, inflationary pressures, and supply challenges, could impact affordability and inventory levels.”

RCBC’s Mr. Ricafort also noted the growth in automotive sales is starting to normalize “closer to gross domestic product growth of about 6% for 2025.” – Justine Irish D. Tabile, Reporter

Philippine stocks rise as market expects April BSP cut

Philippine stocks rose on Wednesday on expectations of a rate cut from the Bangko Sentral ng Pilipinas (BSP) next month and as players picked up bargains.

The benchmark Philippine Stock Exchange index (PSEi) increased by 0.45% or 28.44 points to end at 6,313.12, while the broader all shares index climbed by 0.70% or 26.26 points to close at 3,749.35.

“The PSEi resumed gains after the latest dovish signals from local monetary officials…,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

There is a “high probability” that the BSP will deliver a rate cut at its April 10 meeting, Finance Secretary Ralph G. Recto, who is also a Monetary Board member, told Bloomberg TV on Wednesday.

Mr. Recto added that the BSP could reduce benchmark borrowing costs by 50-75 basis points (bp) this year, which could boost economic growth and investments.

BSP Governor Eli M. Remolona, Jr. last week also said that a rate cut is “on the table” at the Monetary Board’s review next month.

Mr. Remolona said the Philippine central bank’s rate-cut cycle remains underway, signaling up to 50 bps of reductions for the year.

The BSP unexpectedly paused its easing cycle last month, keeping its policy rate at 5.75% after cutting rates by 25 bps for three straight meetings last year.

“The local market bounced back as investors hunted for bargains supported by appreciation for corporate fundamentals,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

He added that foreign buying supported the market’s climb. Net foreign buying went up to PHP 392.22 million on Wednesday from PHP 337.16 million on Tuesday.

Majority of sectoral indices closed in the green on Wednesday. Financials climbed by 1.34% or 32.60 points to 2,451.02; industrials went up by 0.99% or 86.64 points to 8,789.29; property increased by 0.41% or 9.21 points to 2,240; and holding firms inched up by 0.01% or 0.54 point to 5,221.70.

Meanwhile, mining and oil slumped by 1.26% or 114.92 points to 9,001.98 and services declined by 0.80% or 16.76 points to 2,053.78.

“Globe Telecom, Inc. was the day’s index leader, jumping 4.76% to PHP 2,200. Alliance Global Group, Inc. was the day’s main index laggard, falling 2.95% to PHP 5.93,” Mr. Tantiangco said.

Value turnover dropped to PHP 7.84 billion on Wednesday with 966.38 million shares traded from the PHP 8.47 billion with 1.30 billion issues that changed hands on Tuesday.

Advancers bested decliners, 93 versus 88, while 63 names were unchanged.

Mr. Ricafort put the market’s support at 6,000 and minor resistance at 6,400-6,530. — Revin Mikhael D. Ochave

SEC open to lower public float for large IPOs

Companies planning to list on the Philippine Stock Exchange, Inc. (PSE) with an initial public offering (IPO) exceeding P5 billion may seek relief to offer less than the required 20% public float, as the Securities and Exchange Commission (SEC) considers providing flexibility on the rule.

“If there are requests for exemptive relief, then that’s assessed on a case-to-case basis,” SEC Commissioner McJill Bryant T. Fernandez told reporters on the sidelines of the InvestPH 2025 forum on Wednesday.

“Ultimately, the idea is we are firm with the 20%, [but] it gives you some relief and there’s a period you should comply with the 20%,” he also said.

So far this year, no new company has joined the stock market, but mobile wallet provider GCash, water utility Maynilad Water Services, Inc., and Cebu-based fuel retailer Top Line Business Development Corp. might do so soon.

Globe Telecom, Inc. recently said it would seek regulatory relief from the 20% minimum public ownership (MPO) rule for the planned GCash IPO.

“There is a 20% minimum requirement for IPOs, but we have been able to get an approval from the SEC,” PSE President Ramon S. Monzon told reporters separately.

Companies can offer 15% initially, provided they commit to conducting a follow-on offering or private placement within the next two to three years to comply with the 20% minimum public float requirement, Mr. Monzon said.

He said this measure aims to encourage undecided companies to proceed with their listing.

Mr. Monzon said GCash qualifies for this exemption, as the only criterion is that the IPO must exceed P5 billion.

Further, he said this is not a permanent policy and that the PSE will reassess its effectiveness in the coming years. “We have a two-year window, then if that’s not working, we will extend it for another two years.”

Globe President and Chief Executive Officer Ernest L. Cu recently said the GCash IPO could target an USD 8-billion valuation and might happen by yearend.

Bloomberg previously reported that GCash’s IPO could raise up to USD 1.5 billion.

Sought for comment, BDO Capital & Investment Corp. President Eduardo V. Francisco said the regulator’s move could drive strong demand despite market uncertainties.

“The new rule granting public float flexibility for large IPOs may factor into the decision-making of certain IPO candidates, particularly companies that find it challenging to meet the 20% threshold,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

He said this may help persuade GCash to list this year.

“However, it’s important to keep in mind that the public float requirement is not the only consideration for companies planning an IPO,” he added.

“They also look at investor sentiment, market liquidity, listing costs, and regulatory obligations, which are in turn tied to other factors. So, there is still a lot more that can be done to reinvigorate our stock market,” Mr. Colet said. – Ashley Erika O. Jose, Reporter

Treasury fully awards reissued bonds at higher rate

The government made a full award of the Treasury bonds (T-bonds) it offered on Tuesday at a higher average rate amid increasing global yields due to uncertainties in developed markets.

The Bureau of the Treasury (BTr) raised PHP 30 billion as planned via the reissued 10-year bonds it auctioned off on Tuesday as total bids reached PHP 58.947 billion or almost twice as much as the amount on offer.

This brought the total outstanding volume for the bond series to PHP 366.9 billion, the Treasury said in a statement.

The bonds, which have a remaining life of eight years and 10 months, were awarded at an average rate of 6.207%. Accepted bid yields ranged from 6.195% to 6.222%.

The average rate of the reissued papers was 8.9 basis points (bps) higher than the 6.118% fetched for the series’ last award on Feb. 18, but 4.3 bps lower than the 6.25% coupon for the issue.

This was also 3.78 bps below the 6.096% quoted for the 10-year bond but 1.45 bps above the 6.1925% seen for the same bond series at the secondary market before Tuesday’s auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the BTr.

The government made a full award of its offer as it saw “fairly decent” demand, a trader said in a text message.

“This was partly because of duration and anticipation of more debt supply at the belly to the long end of the curve moving forward as the BTr is expected to prefer to lengthen its maturity profile,” the trader said.

The BTr fully awarded the T-bonds it auctioned off as rates remained close to comparable secondary market levels, even as the average yield rose from the prior issuance amid the recent increase in global yields, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Euro zone bond yields rose sharply on Friday after Germany’s chancellor-in-waiting Friedrich Merz thrashed out a deal with the Green and Social Democrat parties to overhaul the country’s debt rules and massively boost state spending, Reuters reported.

Germany’s 10-year bond yield, the benchmark for the euro zone bloc, rose to 2.936%.

Mr. Merz reached an agreement with the Greens just days before a parliamentary vote on reforming the borrowing rules, a source close to the negotiations told Reuters. A debt deal compromise is now being examined by finance ministry officials, parliamentary sources said.

Yields soared earlier this month as investors learnt of the plans, which would mean much more borrowing via bond markets.

Germany’s 30-year bond yield on Friday surged to its highest since October 2023 at 3.253% and was within touching distance of its highest since 2011.

The spread between US 10-year Treasuries and German Bund yields ended at 142 bps.

US bond yields rose on Friday on concerns over the potentially inflationary impact of tariffs as trade wars between the US and its trading partners escalate.

Meanwhile, dovish signals from Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. helped cap the increase in T-bond yields, Mr. Ricafort added.

Mr. Remolona last week said the BSP remains on easing mode despite its unexpected decision to keep rates steady last month amid global uncertainties.

He added that a rate cut is “on the table” at the Monetary Board’s next rate-setting meeting on April 10.

The BTr is looking to raise P147 billion from the domestic market this month, or P22 billion from Treasury bills and P125 billion from T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.54 trillion or 5.3% of gross domestic product this year. — A.M.C. Sy with Reuters

Philippine financial system’s resources grow to PHP 34T as of Jan.

The total resources of the Philippine financial system rose by 7.9% as of January, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

The resources of banks and nonbank financial institutions increased to PHP 33.66 trillion as of January from PHP 31.18 trillion in the same period a year ago. Month on month, however, this slipped by 0.9% from PHP 33.96 trillion as of December.

Financial institutions’ resources include funds and assets such as deposits, capital, as well as bonds or debt securities.

Broken down, the banking system’s resources jumped by 9.1% to PHP 27.95 trillion as of January from PHP 25.62 trillion in the same period in 2024, BSP data showed.

Universal and commercial banks accounted for the bulk or 77.7% of total resources, rising by 8.9% year on year to PHP 26.14 trillion from PHP 24 trillion a year prior.

Resources held by thrift banks amounted to PHP 1.16 trillion, up by 7.4% from PHP 1.08 trillion in the year-ago period.

Digital banks’ resources surged by 44% to P133.3 billion as of January from PHP 92.6 billion in the previous year. The BSP began consolidating data from digital banks starting March 2023.

Lastly, total resources of rural and cooperative banks stood at PHP 527.1 billion, climbing by 18.1% from PHP 446.5 billion.

Meanwhile, nonbanks’ resources went up by 2.6% to PHP 5.7 trillion as of end-June 2024 from PHP 5.56 trillion a year prior, based on the latest available data.

Nonbanks include investment houses, finance companies, security dealers, pawnshops and lending companies.

Institutions such as nonstock savings and loan associations, credit card companies, private insurance firms, the Social Security System and the Government Service Insurance System are also considered nonbank financial institutions.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the growth in the financial system’s total resources was mainly driven by increased lending.

“This largely reflects the faster growth in bank loans amid the total BSP rate cuts since August,” Mr. Ricafort said in a Viber message.

Bank lending jumped by 12.8% to PHP 13.02 trillion in January, its fastest pace in over two years, earlier central bank data showed.

This was also in line with the cut in banks’ reserve requirements, Mr. Ricafort said.

The BSP in October began lowering banks’ reserve requirement ratios (RRR).

Big banks’ RRR was reduced by 250 basis points (bps). Rural and cooperative banks’ RRR was also slashed by 100 bps to 0%.

This “reduced intermediation costs, thereby increasing the demand for loans and allowed banks to use more funding for lending activities.”

“Faster loan demand enabled banks to sustain continued growth in deposits as part of the intermediation business that led to interest income,” Mr. Ricafort said.

“As a result, banks have become one of the most profitable industries that further boosted capital, on top of capital infusion from strategic foreign and local investors in recent years, thereby contributing also to banks’ faster asset growth.”

The net profit of the country’s banking industry rose by 9.76% year on year to PHP 391.28 billion in 2024.

For the coming months, the BSP’s latest RRR cut could also boost the financial system’s total resources, Mr. Ricafort said.

By March 28, the RRR of universal and commercial banks and nonbank financial institutions with quasi-banking functions will be reduced further by 200 bps to 5% from the current 7%.

The RRR for digital banks will also be lowered by 150 bps to 2.5%, while the ratio for thrift lenders will be cut by 100 bps to 0%. – Luisa Maria Jacinta C. Jocson, Reporter

PSEi halts three-day rally on trade war concerns

The Philippine stock index dropped on Tuesday, ending a three-day rally, as trade war concerns weighed on the market.

The Philippine Stock Exchange index (PSEi) fell by 0.34% or 21.51 points to end at 6,284.68 on Tuesday. Meanwhile, the broader all shares index inched up by 0.27 point to 3,723.09.

“Philippine shares gave up some gains after trading in the green recently driven by tariff uncertainties and weak consumer confidence, with retail sales in the United States rising 0.2%, below forecasts,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“Markets remain volatile amid US President Donald J. Trump’s shifting trade policies and Elon Musk’s cost-cutting moves, while officials brace for economic turbulence to push reforms,” he added.

US retail sales rebounded marginally in February, but fell short of expectations, reflecting the increasing uncertainty over tariffs and large-scale firing of federal government employees, Reuters reported.

Mr. Trump’s tariff hikes will drag down growth in Canada, Mexico and the United States while driving up inflation, the Organization for Economic Cooperation and Development forecast on Monday.

Global growth is on course to slow slightly from 3.2% in 2024 to 3.1% in 2025 and 3% in 2026, the Paris-based policy forum said, cutting its projections from 3.3% for both this year and next in its previous economic outlook, issued in December.

Mr. Trump, speaking aboard Air Force One on route to Washington, also repeated he had no plans to create exemptions for the 25% steel and aluminum tariffs that went into effect last week.

“The PSEi corrected slightly lower, considered a healthy correction after gaining for three straight trading days… after recent reports of upcoming share sales that could increase supply of stocks and could also cause some fund shifts from existing stocks towards these new stock offerings,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Majority of sectoral indices closed lower on Tuesday. Services dropped by 0.68% or 14.22 points to 2,070.54; financials went down by 0.41% or 10.04 points to 2,418.42; industrials declined by 0.22% or 19.82 points to 8,702.65; and holding firms inched down by 0.21% or 10.98 points to 5,221.16.

Meanwhile, mining and oil went up by 2.63% or 234.42 points to 9,116.90 and property climbed by 0.66% or 14.65 points to 2,230.79.

Value turnover increased to PHP 8.47 billion on Tuesday with 1.30 billion shares traded from the PHP 5.26 billion with 1.33 billion issues exchanged on Monday.

Advancers beat decliners, 100 versus 92, while 44 names were unchanged.

Net foreign buying declined to P337.16 million on Tuesday from the P357.25 million on Monday. — Revin Mikhael D. Ochave with Reuters

Cash remittances up 2.9% in January

Money sent home by migrant Filipinos rose by 2.9% year on year in January, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

Cash remittances from overseas Filipino workers (OFWs) coursed through banks increased by 2.9% to USD 2.92 billion in January from USD 2.84 billion in the same month in 2024.

The 2.9% annual growth in January was a tad slower than the 3% expansion seen in December 2024.

Month on month, remittances declined by 13.7% from USD 3.38 billion in December.

Cash remittances in January were also the lowest level in two months or since USD 2.81 billion in November.

BSP data showed remittances from land-based workers jumped by 3.4% to USD 2.33 billion in January from USD 2.25 billion a year ago.

Sea-based OFWs sent home USD 587 million during the month, inching up by 0.9% from USD 582 million in the previous year.

“The growth in cash remittances from Saudi Arabia, the United States, Singapore, and the United Arab Emirates (UAE) mainly contributed to the increase in remittances in January 2025,” the central bank said.

In January, the US remained the top source of remittances, accounting for 41.2% of the total.

This was followed by Singapore (7.5%), Saudi Arabia (6.6%), Japan (5.7%), and the United Kingdom (4.7%).

The UAE (3.5%), Canada (3.1%), Taiwan (2.8%), Qatar (2.8%), and Malaysia (2.4%) were also main sources of cash remittances.

Remittances from the top 10 countries accounted for over 80% of overall remittances during the month.

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said the 13.7% month-on-month drop in cash remittances is “not alarming” as this was a seasonal effect as the bulk of remittance flows is usually seen in the fourth quarter.

“The month-on-month slowdown of remittances is expected as the effects of the holiday season came to a close,” Reinielle Matt M. Erece, economist at Oikonomia Advisory and Research, Inc., said.

“Typically, remittances grow faster during the latter months of the year as families celebrate the holidays,” he added.

Meanwhile, central bank data showed personal remittances, which contain inflows in kind, increased by 2.9% to USD 3.24 billion in January from USD 3.15 billion in the same month in 2024.

“The increase was observed in remittances from both land-based and sea-based workers,” it added.

Remittances from workers with contracts of one year or more rose by 3% to USD 2.52 billion, while those with contracts less than one year went up by 2.5% to USD 650 million.

In the coming months, Mr. Erece said risks arising from global economic uncertainty could dampen remittance flows.

“This year, we should monitor the persistent global economic uncertainty caused by trade wars and geopolitical tensions, which may cause a bit of a slowdown in remittances as OFWs cushion the risks of higher living costs abroad,” he said.

Markets are pricing in the potential impact of US President Donald J. Trump’s barrage of tariffs on the rest of the world. Among these proposals is a reciprocal tariff that Mr. Trump has pledged to impose on all of the US’ trading partners.

“We should also monitor the exchange rate, influenced by the Fed and BSP’s respective monetary policies. A cautious Fed can cause a peso depreciation, enticing OFW remittances to take advantage of an elevated peso value of the dollar,” he added.

While the US central bank is expected to keep interest rates unchanged on Wednesday, its commentary on the impact of tariff policies on US inflation and growth will also be closely watched, Reuters reported.

Cash remittances rose by an annual 3% to USD 34.49 billion in 2024. The BSP expects remittances to grow by 3% this year. – Luisa Maria Jacinta C. Jocson, Reporter

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