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Automobiles sales in the Philippines registered a double-digit annual growth in August but saw a month-on-month sales decline amid elevated inflation.

A joint report by the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA) showed new vehicle sales rose by 21.6% to 36,714 units in August from 30,185 units in the same month a year ago.

“Consumer demand drives the auto sales further… from an already considered pre-pandemic performance a year prior amidst the above inflation target recorded anew in the same period,” CAMPI President Rommel R. Gutierrez said in a statement.

However, vehicle sales slipped by 1% from 37,086 units that were sold in July, reflecting the impact of rising prices.

Headline inflation unexpectedly picked up to 5.3% in August from 4.7% in July amid rising costs of fuel and food.

CAMPI-TMA data showed commercial vehicles accounted for the bulk of the August sales. Sales of commercial vehicles rose by 13.5% to 26,620 units in August from 23,452 in the same month in 2022.

Month on month, commercial vehicle sales declined by 3.5% from 27,577 units in July.

In particular, light commercial vehicles (LCV) climbed by 16.8% to 20,991 during the month. Month on month, sales of LCVs fell by 2.9%.

Sales of Asian utility vehicles (AUV) dipped by 0.3% year on year to 4,576 in August. AUV sales slumped by 8.3% month on month.

Sales of light trucks increased by an annual 29.5% to 597 in August, while heavy truck sales surged by 50.6% to 128. However, sales of medium trucks went down by 4.7% to 328 units.

Meanwhile, passenger car sales accelerated by an annual 49.9% to 10,094 units in August from 6,733 units a year ago. Month on month, sales of passenger cars rose by 6.15% from 9,509 units in July.

For the first eight months of the year, CAMPI-TMA members sold 276,215 units, increasing by 29.8% from 212,872 a year ago.

“The 276,215 units year-to-date sales of CAMPI-TMA, up by 30% from the same period a year ago — equivalent to 70% of the 395,000 sales forecast is certainly giving optimism of a sustained and even stronger post-pandemic recovery for the auto industry,” Mr. Gutierrez said.

Commercial vehicles, which accounted for 75% of the total industry sales, reported a 28% increase in sales to 205,764 units in the January-to-August period.

Passenger car sales jumped by 35.3% to 70,451 in the eight-month period.

“The auto industry is mindful of the challenges brought by high inflation and its effect on the overall consumer confidence particularly for big-ticket items — not welcome news to the consumers and industry alike if it will persist,” Mr. Gutierrez said.

For the eight-month period, inflation averaged 6.6%. The Philippine central bank is projecting inflation to average 5.6% this year.

Toyota Motor Philippines Corp. (TMP) remained the market leader with a 45.9% share as eight-month sales rose by 16.6% to 126,795.

Mitsubishi Motors Philippines Corp. came in second spot with a 67% surge in sales to 50,439 in the January-to-August period.

In third spot is Ford Motor Company Phils., Inc. as its sales jumped by 47.6% to 19,700 units in the period ending in August.

Rounding out the top five are Nissan Philippines, Inc., which saw a 23.4% increase in sales to 17,873 units, and Suzuki Phils., Inc. whose sales dropped by 7.9% to 11,821 units.

In 2022, CAMPI-TMA members sold a total of 352,596 units. — Justine Irish D. Tabile

The Philippines central bank is looking to formalize the removal of fees for electronic fund transfers on small-value transactions to encourage more Filipinos to use digital payments, its chief said.

BSP Governor Eli M. Remolona, Jr. said three big banks have already removed fees on small fund transfers.

“(Fund transfers of) up to PHP 1,000 I think are free for these three major banks and we’re trying to shame the other major banks into following the same policy,” he said on the sidelines of the 2023 Alliance for Financial Inclusion (AFI) Global Policy Forum in Pasay City.

Bank of the Philippine Islands (BPI), Metropolitan Bank & Trust Co. (Metrobank), and Union Bank of the Philippines (UnionBank) are currently the only banks that have temporarily waived charges for InstaPay transactions. 

For BPI customers, Instapay transfers of up to PHP 1,000 made using the mobile app will be free until September 30. Customers of UnionBank and Metrobank will be able to make similar transfers for free until November 11 and December 31, respectively.

Mr. Remolona said the BSP is currently using moral suasion to persuade the Bankers Association of the Philippines (BAP) to remove or lower the transfer charges for small-value transactions.

“(Moral suasion) works to a large extent, but we’re formalizing it into a whole payments framework,” he said. “So, we’re talking to the BAP on Friday about payments in general. We have some discussions and out of that we expect something more formal to come out.” 

Aside from the BAP, the central bank is also in discussions with digital payment providers GCash and Maya Bank to reduce fund transfer fees.

Sought for comment, the BAP was unable to send a statement as of press time.

Earlier this year, then-BSP governor Felipe M. Medalla proposed to remove the transaction fees for small-value online transfers among banks and other financial institutions.

Based on BSP data as of end-July, some banks and non-lenders offer free InstaPay service while others charge a rate of P8 to PHP 25 per transaction.

There are currently 82 BSP-supervised financial institutions that participate in InstaPay. This includes 22 big banks, 19 thrift banks, 17 rural banks, and five digital banks.

There are also 19 e-money issuers in InstaPay.

As of July, the value of transactions done through InstaPay surged by 40.8% year on year to PHP 2.69 trillion from PHP 1.91 trillion a year prior, separate data from the BSP showed. 

The volume of InstaPay transactions rose by 41.6% to 425.07 million as of end-July from 300.18 million a year ago.

InstaPay is a real-time, low-value electronic fund transfer facility for transactions up to PHP 50,000 and is currently being handled by BancNet, Inc.

PESONet and InstaPay are automated clearing houses launched under the BSP’s National Retail Payment System that was rolled out in December 2015 to promote a safe, efficient, affordable, inclusive and reliable retail payment system.

Meanwhile, Mr. Remolona said the Philippine central bank is pushing for more transparency in the country’s payment system.

“In general, when it comes to payments, you want to make sure that the poor don’t subsidize the rich. If you have a credit card and if you’re a big spender using credit cards you get rewards, right? Who pays for those rewards? The small guys who only charge a small amount,” he said.

“We also want the system to be transparent. If you’re going to be charged for something, you want to know what you are being charged for,” he added. — Keisha B. Ta-asan

Companies registering their shares with the Securities and Exchange Commission (SEC) are required to submit two comparative periods for the past three fiscal years to show changes in their financial condition, the regulator said.

The commission issued the clarification amid mixed interpretations of a specific provision under the Securities Regulations Code (SRC).

In Memorandum Circular No. 13 signed by SEC Chairperson Emilio B. Aquino on Sept. 12, the securities regulator clarified Part III, paragraph A, subparagraph 2 (a) of Annex C of the SRC regarding the comparative periods required in the management’s discussion and analysis in a company’s prospectus. 

Annex C of Rule 12 contains details for the non-financial disclosure requirements in the registration statements that should be filed with the SEC.

The circular clarified that a registrant should provide the following disclosure comprising two comparative periods for the last three fiscal years in the management’s discussion and analysis portion of its prospectus.

“The foregoing portion of Annex C gave rise to conflicting views and varying interpretations as to the number of fiscal years required to be disclosed in the management’s discussion and analysis portion of the prospectus,” the circular said.

The SEC’s markets and securities regulation department sought guidance from the commission en banc on the interpretation of the phrase “for each of the last three fiscal years” as provided in Annex C, which was subsequently clarified during an en banc meeting on Sept. 5.

According to the circular, the interpretation will apply prospectively to registrants required to file registration statements and other reportorial documents, which include disclosure of a management’s discussion and analysis.

Sought for further comment, SEC Commissioner Kelvin Lester K. Lee said the circular aims to allow easier ways to raise capital. 

“The rationale is to make it easier to file registration statements and as a result make it easier to raise capital.  This covers registration statements and/or other reportorial documents, which include a disclosure of a management’s discussion and analysis,” Mr. Lee told BusinessWorld in a Viber message.

“This is for those that intend to file registration statements,” he added.

The SEC said the interpretation under the circular would take effect 15 days from its publication. — Revin Mikhael D. Ochave

CREDIT GROWTH slowed for a fourth straight month in July, as high interest rates took their toll, Bangko Sentral ng Pilipinas (BSP) data showed.

Data from the BSP showed outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the central bank, rose by 7.7% to PHP 11 trillion in July, from P10.21 trillion a year earlier.

The 7.7% bank lending growth in July was slower than 7.8% in June, and the 11.9% expansion in July 2022. It was also the weakest increase since April.

China Banking Corp. Chief Economist Domini S. Velasquez said the slower credit growth reflects the cumulative impact of the aggressive monetary policy tightening of the central bank.

The BSP hiked borrowing costs by 425 basis points from May 2022 to March 2023 to curb inflation, bringing the key policy rate to a near 16-year high of 6.25%.

“This is compounded by a slowdown of economic activities, with spending moderating from the highs of revenge spending post-pandemic,” Ms. Velasquez said.

Philippine gross domestic product (GDP) expanded by a slower-than-expected 4.3% in the second quarter, as household consumption growth slowed. For the first six months, GDP growth averaged 5.3%, still below the government’s 6-7% target this year.

Security Bank Corp. Chief Economist Robert Dan J. Roces said consumers and businesses are more cautious in borrowing as inflation remains elevated and interest rates remain high.

Inflation eased to 4.7% in July but marked the 16^th straight month that inflation exceeded the BSP’s 2-4% target band. For the first seven months, inflation averaged 6.8%.

“Additionally, anticipation of future monetary policy shifts by the BSP, with the stance of a hawkish hold, could influence borrowing decisions,” Mr. Roces said.

The BSP has kept policy rates unchanged for a third meeting in August. However, stubborn inflation has increased pressure on the central bank to maintain its hawkish stance.

BSP data showed outstanding loans to residents, net of RRPs, expanded by 7.8% to PHP 10.69 trillion in July, from PHP 9.92 trillion in the same month last year. The pace of annual expansion was a tad lower from 7.9% in June.

Borrowings for productive activities jumped by 6.2% to PHP 9.54 trillion in July from PHP 8.98 trillion a year ago. This was slower than the 6.3% growth in June.

Borrowings increased for sectors such as information and communication (10.8%); electricity, gas, steam and air-conditioning supply (10.5%); wholesale and retail trade, and repair of motor vehicles and motorcycles (9.4%); as well as real estate activities (5%).

However, annual declines were seen in loans for professional, scientific and technical activities (-12.5%); education (-7.6%); and arts, entertainment and recreation (-0.8%).

“On a positive note, consumer lending continues to hold up with growth still in the 20% rates, consistent with previous months. Consumer loans continue to buck the trend, remaining robust amidst a period of high interest rates,” Ms. Velasquez said.

Consumer credit jumped by 22.6% to PHP 1.15 trillion from PHP 934.7 billion a year ago. However, consumer loan growth was slightly slower than the 23.7% growth in June.

Double-digit increases were seen for credit card loans (29.8%) and salary-based general purpose consumption loans (24.4%), while motor vehicle loans rose by 8.7%.

Outstanding loans to nonresidents jumped by 6.2% in July, faster than 4.8% in June.

“Moving forward, if the BSP maintains its stance and inflation remains high, we might observe a continued moderation in loan growth. Elevated inflation can deter borrowing, as it erodes the real value of money and can make both consumers and businesses hesitant to take on new debt,” Mr. Roces said.

BSP Governor Eli M. Remolona, Jr. earlier said the central bank still has space for further policy tightening this year, as risks to the inflation outlook are on the upside.

Ms. Velasquez said bank lending may continue to moderate in the coming months until the BSP starts to loosen monetary policy.

“We have not yet likely felt the full effect of tightening due to the lag of monetary policy transmission (about 12 months),” she said.

Mr. Remolona earlier said a rate cut is not on the table, at least not at the Monetary Board’s Sept. 21 meeting. – Keisha B. Ta-asan, Reporter

THE BANKING INDUSTRY’S nonperforming loan (NPL) ratio remained steady in July despite high borrowing costs and elevated inflation.

Based on data from the Bangko Sentral ng Pilipinas (BSP), the Philippine banking sector’s gross NPL ratio stood at 3.43% as of end-July, unchanged from end-June. It is also lower compared with the 3.57% NPL ratio in July 2022.

The July ratio was the lowest in three months or since 3.41% in April. The NPL ratio was on the rise in the first five months of the year to 3.46% as of end-May but declined to 3.43% in June.

Bad loans rose by 4.5% to PHP 439.328 billion as of July from PHP 420.255 billion a year earlier. It also inched up by 0.68% from PHP 436.371 billion seen as of end-June.

Meanwhile, banks’ total loan portfolio increased by 8.8% to PHP 12.81 trillion as of end-July from PHP 11.77 trillion a year ago. It was also up by 0.6% from PHP 12.73 trillion at end-June.

Loans are considered nonperforming once they remain unpaid for at least 90 days after the due date. They are deemed as risk assets given borrowers are unlikely to settle such loans.

“We’re pleased to see that despite slower economic growth in the second quarter, still elevated inflation, and sustained rapid expansion in consumer credit growth, that overall industry bad loan ratios continue to be muted,” Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said.

The Philippines’ gross domestic product (GDP) expanded by 4.3% in the second quarter, weaker than 6.4% in the first quarter and 7.5% in the second quarter a year ago. In the first half, GDP growth averaged 5.3%, still below the government’s 6-7% target for 2023.

Headline inflation averaged 6.8% in the first seven months of the year. While inflation eased to 4.7% in July, this still marked the 16^th consecutive month that it surpassed the BSP’s 2-4% target range.

To tame inflation, the BSP has raised rates by 425 basis points from May 2022 to March 2023, bringing the benchmark interest rate to a near 16-year high of 6.25%.

Based on BSP data, banks’ past due loans increased by 7.5% to PHP 528.404 billion as of end-July from PHP 491.289 billion a year ago. This brought the past due loans’ share in total loans to 4.12% as of July, from 4.17% a year ago.

Restructured loans fell by 11.1% to PHP 304.175 billion from PHP 341.972 billion in the same month in 2022. These accounted for 2.37% of the banking system’s loan portfolio.

Meanwhile, banks continued to boost their loan loss reserves to PHP 449.748 billion in July from PHP 416.733 billion a year ago. This brought the loan loss reserves to the total loan portfolio ratio to 3.51% from 3.54% a year earlier.

The industry’s NPL coverage ratio also improved to 102.37% from 99.16% the year before.

Separate BSP data showed outstanding loans of universal and commercial banks rose by 7.7% to PHP 11 trillion in July, slower than the 7.8% growth a month prior.

Consumer credit jumped by 22.6% to PHP 1.15 trillion in July from PHP 934.7 billion a year ago.

“We’re hoping that sustained improvements in Philippine employment metrics combined with the public sector’s commitment to step up on the execution of their spending programs that in the second half, NPL ratios will continue to remain subdued,” Mr. Neri said.

The government has ordered departments to come up with catch-up spending plans to address underspending in the first half. — Keisha B. Ta-asan

A REGIONAL wage board has approved a PHP 33 hike in the daily minimum wages of private sector workers in Central Visayas, the Department of Labor and Employment (DoLE) said on Wednesday.

The Regional Tripartite Wages and Productivity Board (RTWPB) in Region VII issued a wage order on Sept. 5 that will provide a 7.6% to 8.6% increase in the region’s daily minimum wages. The pay hike will take effect in the Central Visayas Region on Oct. 1.

DoLE said in a statement that around 346,946 minimum wage workers will directly benefit from the wage increase, while 399,572 employees earning above minimum wage will also benefit as companies are expected to correct the wage distortion.

Nonagriculture workers in Class A areas will see their minimum wage increase to PHP 468 from the current PHP 435, while those in Class B will see wages go up to PHP 430 from PHP 397. Workers in Class C areas will receive a minimum wage of PHP 420 from PHP 387.

Meanwhile, workers in agriculture and nonagriculture establishments with less than 10 workers living in Class A areas will receive a daily wage of PHP 458 from the current PHP 425. Workers in Class B areas will get a daily wage of PHP 425 from PHP 392, while those in Class C will receive a minimum wage of PHP 415 from PHP 382.

Class A covers the cities of Carcar, Cebu, Danao, Lapu-Lapu, Mandaue, Naga; including municipalities of Compostela, Consolacion, Cordova, Lilo-an, Minglanilla and San Fernando. 

Class B areas include the cities of Bais, Bayawan, Bogo, Canlaon, Dumaguete, Guihulngan, Tagbiliran, Talisay, Tanjay and Toledo.

Class C is composed of the rest of the region’s municipalities not clustered under the previous two classifications.

The Central Visayas Region is considered a major transportation hub as it is home to the Mactan Cebu International Airport, the country’s second-busiest airport next to the Ninoy Aquino International Airport.

Cebu City-based labor groups earlier sought a more substantial across-the-board increase of PHP 292.50 to the region’s daily minimum wages.

Last year, the Central Visayas wage board implemented a PHP 31 increase for all private sector workers, which took effect on June 14, 2022. Wage boards can only act on wage petitions a year after a region’s last wage order.

On Sept. 5, the wage board in Region IV-A (Calabarzon) approved increases, ranging from PHP 35 to PHP 50, to the daily minimum wages of workers in the Cavite, Laguna, Batangas, Rizal, and Quezon (Calabarzon) provinces.

The higher daily minimum wage will take effect in Calabarzon on Sept. 24, DoLE said.

In March, the Worker’s Initiative for Wage Increase (Win for Win) filed a petition asking the Calabarzon wage board to increase the region’s daily minimum wage to PHP 750 to help workers cope with the soaring prices of basic goods. 

The National Capital Region Tripartite Wages and Productivity Board on June 29 approved a PHP 40 increase in the daily minimum wage, bringing the daily minimum wage to PHP 610 a day from PHP 570 for those in nonagriculture sectors.

This is much lower than what the Unity for Wage Increase Now’s petition sought for, a PHP 570 increase that would bring Metro Manila’s daily minimum wage to PHP 1,100.

Labor Undersecretary Benedicto Ernesto R. Bitonio in July said the regional wage boards of Central Luzon and Western Visayas are also likely to decide on pending wage petitions this month.

The Central Luzon Workers for Wage Increase in June asked the Central Luzon RTWPB for a PHP 640 increase to the current PHP 460 daily minimum pay.

In March, Iloilo City trade unions sought a PHP 100 increase in the daily minimum pay for private workers in Western Visayas.

Under the Labor Code, wage boards must consider the demand for a living wage, wage adjustment in the consumer price index, the changes in the cost of living in the region, and the needs of workers and their families among others.

Labor groups have called for legislated wage increases and for lawmakers to review the existing regional setting system, saying the meager wage increases will not help workers.

In March, Senate President Juan Miguel “Migz” F. Zubiri filed a bill that seeks to increase wages of all workers by PHP 150.

The Employers Confederation of the Philippines has said a legislated wage hike should also consider workers in less formal employment, noting that private sector workers only make up 16% of the labor force. — John Victor D. Ordoñez

DUBAI — The Philippines’ finance minister on Tuesday expressed optimism that President Ferdinand Marcos Jr. will approve a proposal to cut tariffs on imported rice and that the measure could be implemented as soon as next month.

The finance and economic planning departments are proposing a tariff reduction to between zero and 10%, from the current 35% level, for rice imports as the government seeks to ease pressure on inflation. The country is one of the world’s biggest buyers of the grain.

Retail prices of rice further climbed in August, pushing up Philippine inflation, which accelerated for the first time in seven months to 5.3% year-on-year.

Asked if he thinks the tariff cut proposal will be approved, Finance Secretary Benjamin Diokno said: “I think so.”

Mr. Diokno was speaking to Reuters in an interview in Dubai, where he together with other Philippine economic officials held a briefing on the country’s economic growth prospects.

The briefing, organized by a group of local and global banks including HSBC, was part of the Philippine delegation’s broader aim to gauge investor interest from the United Arab Emirates in infrastructure and other opportunities in the Southeast Asian nation.

According to Mr. Diokno, Marcos can cut tariffs only when Congress, which is scheduled to adjourn by the end of this month, is not in session.

“I think in a week or two Congress will be out of session so that will be the perfect time (to cut tariffs),” he said.

National Economic and Development Authority Secretary Arsenio Balisacan, during the briefing, said inflation was the government’s “most immediate concern”, and efforts were being undertaken to bring it down.

The Philippine economy grew 4.3% in the second quarter from a year earlier, its slowest expansion pace in nearly 12 years, as high inflation and interest rates hurt consumer demand. That brought first-half growth to 5.3%, below the government’s 6.0%-7.0% target for the year.

Mr. Balisacan, however, said the government remained confident of hitting “at least the lower point of that range”. — Reuters