PSEi falls to 6,300 level as BoP deficit widens

Philippine stocks slid further on Tuesday, with the main index falling to the 6,300 level, following weak data on the country’s external position and amid heightened cautiousness after Moody’s cut the United States’ credit rating.

The bellwether Philippine Stock Exchange index (PSEi) fell by 1.85% or 119.51 points to close at 6,335.33, while the broader all shares index dropped by 1.19% or 45.09 points to 3,720.57.

This was the PSEi’s lowest close in three weeks or since its 6,252.19 finish on April 29. The index has now ended in the red for five consecutive sessions.

“The local market plunged as investors dealt with the further widening of the Philippines’ balance of payments (BoP) deficit last April, which hit USD 5.52 billion,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. “Investors also digested the 10% drop in new vehicle sales in the Philippines, taking it as a sign of challenged consumption in the country.”

The Bangko Sentral ng Pilipinas said on Monday that the country’s BoP deficit widened to USD 2.56 billion in April from the USD 639-million gap in the same period last year and the USD 1.97-billion shortfall in March as the government paid back its external debt.

For the first four months, the country’s external position was at a USD 5.52-billion deficit, wider than the USD 401-million gap last year.

“Philippine shares extended their decline as investors grew more wary, opting to scale back their holdings after initial optimism waned following Moody’s US downgrade,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

On Friday, Moody’s lowered the US sovereign credit rating to “Aa1” from “Aaa” amid concerns over the country’s growing USD 36-trillion outstanding debt.

Asian stocks rose on Tuesday as investors took stock of the debt load of the world’s biggest economy and awaited trade deals, Reuters reported. MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.33% higher, hovering near the seven-month high touched last week.

All sectoral indices closed lower on Tuesday. Services sank by 2.2% or 47.54 points to 2,107.80; financials went down by 1.98% or 47.66 points to 2,350.33; holding firms declined by 1.83% or 100.21 points to 5,375.35; mining and oil shed 1.64% or 151.05 points to end at 9,033.68; property retreated by 0.98% or 22.41 points to 2,249.85; and industrials decreased by 0.47% or 43.54 points to 9,037.10.

“LT Group, Inc. was the day’s index leader, climbing 1.14% to PHP 12.46. International Container Terminal Services, Inc. was the day’s worst index performer, dropping 3.85% to PHp 400,” Mr. Tantiangco said.

Value turnover went up to PHP 7.32 billion on Tuesday with 1.35 billion shares traded from the PHP 6.19 billion with 755.08 million issues exchanged on Monday.

Decliners overwhelmed advancers, 126 versus 62, while 55 names closed unchanged.

Net foreign selling grew to PHP 886.21 million on Tuesday from PHP 223.77 million on Monday. — Revin Mikhael D. Ochave

BoP deficit widens to USD 2.56B in April

The Philippines’ balance of payments (BoP) deficit widened further in April as the government paid back its external debt, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The BSP on Monday said the BoP deficit stood at USD 2.56 billion in April, wider than the USD 639-million gap a year ago and the USD 1.97-billion shortfall in March.

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

“The BoP deficit reflected the National Government’s (NG) drawdowns on its foreign currency deposits with the BSP to meet its external debt obligations and pay for its various expenditures, and the BSP’s net foreign exchange operations,” the central bank said.

Latest data from the BSP showed the Philippines’ outstanding external debt rose by an annual 9.8% to USD 137.63 billion as of end-December 2024.

This brought the external debt-to-gross domestic product (GDP) ratio to 29.8% at the end of 2024 from 28.7% in the previous year.

The country’s BoP position stood at a USD 5.52-billion deficit in the first four months of 2025, ballooning from the USD 401-million gap a year ago.

“Based on preliminary data, this year-to-date BoP deficit reflected mainly the widening trade in goods deficit,” the central bank said.

The country’s trade balance in goods stood at a USD 4.13-billion deficit in March, 23% higher than a year ago. This brought the first-quarter trade deficit to USD 12.71 billion, also widening by 12.8% year on year.

“This decline was partly muted, however, by the continued net inflows from personal remittances from overseas Filipinos and foreign borrowings by the NG,” it added.

Cash remittances rose by 2.6% in March to USD 2.81 billion, though this was the slowest growth in nine months.

The NG’s gross borrowings declined by 7.15% to P192.45 billion in March as gross external debt fell by 31.89%.

Meanwhile, the BoP reflected a final gross international reserve (GIR) level of USD 105.3 billion at its end-April position, lower than USD 106.7 billion as of end-March.

“This latest GIR level provides a robust external liquidity buffer,” the central bank said.

The dollar reserves were enough to cover 3.7 times the country’s short-term external debt based on residual maturity.

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

The GIR was also equivalent to 7.3 months’ worth of imports of goods and payments of services and primary income.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the wider BoP deficit was due to the continued trade gap and repayment of foreign currency debts and other foreign obligations.

However, he also noted the decline in foreign investments amid volatilities in financial markets due to the United States’ tariff policies.

For the coming months, Mr. Ricafort said the BoP position could improve due to proceeds from the NG’s foreign-currency debt that could add to the GIR.

He also cited “continued growth in OFW remittances, BPO revenues, exports, foreign tourism receipts, and other structural US dollar inflows of the country.”

“Going forward, any improvement in BoP data and in GIR data for the coming months could still help provide greater cushion for the peso exchange,” Mr. Ricafort said.

This year, the BSP expects the country’s BoP position to end at a USD 4-billion deficit, equivalent to -0.8% of gross domestic product.

The BoP position stood at a surplus of USD 609 million in 2024, plunging by 83.4% from the USD 3.672-billion surplus as of end-2023. – Luisa Maria Jacinta C. Jocson, Senior Reporter

Auto sales drop 10% in April

Philippine automotive sales slid by 10% in April, the biggest annual decline in more than three years, amid a double-digit decline in passenger car sales, an industry report showed.

A joint report by the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA) showed new vehicle sales fell by 10% to 33,580 units in April from 37,314 units in the same month a year ago.

April saw the biggest annual decline since the 11.2% drop in January 2022. It was also the first time that sales fell since the 7.3% decline in February 2022.

Month on month, car sales also slumped by 16.7% from 40,306 units sold in March.

“While the overall market trajectory remains positive, the recent slowdown may be attributed to seasonal factors, economic conditions, or evolving consumer demands,” said CAMPI President Rommel R. Gutierrez in a statement on Monday.

“Industry leaders continue to monitor market trends and expect further developments in the months ahead,” he added.

Data from CAMPI-TMA showed passenger car sales plunged by 35.5% in April to 6,498 from 10,069 a year prior. Passenger cars made up 19.35% of the total industry sales in April.

Month on month, sales of passenger cars slid by 23.1% from 8,449 cars sold in March.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said the slump in passenger car sales reflects “ongoing price sensitivity in the mass market.”

“The decline in April car sales was driven by fewer selling days due to holidays, high base effects from last year’s strong performance, and lingering consumer caution amid tight loan conditions,” he said in a Viber message.

On the other hand, commercial vehicle sales, which accounted for 80.65% of the total, dipped by 0.6% to 27,082 in April from 27,245 a year ago.

Month on month, commercial vehicle sales declined by 15% from 31,857 in March.

Broken down, light commercial vehicle sales rose by 3.2% year on year to 20,185, while Asian utility vehicle (AUV) sales declined by 12.1% to 5,992.

Sales of light-duty trucks and buses inched up by 1.6% to 499 in April, while sales of medium-duty trucks and buses dropped 18% to 291.

In April, sales of heavy-duty trucks and buses surged 134.7% to 115 units.

For the first four months of the year, vehicle sales inched up by 2.5% year on year to 150,654 units from 146,920 in the same period in 2024.

Commercial vehicle sales increased by 10.3% to 119,824, while passenger car sales dropped by 19.5% to 30,830 in the January-to-April period.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the Trump administration’s recent tariff policies may have hurt consumer confidence, affecting car sales.

“Trump’s announcement of reciprocal tariffs somewhat weighed on sentiment by consumers, businesses, and other institutions, as higher US import tariffs could slow down global trade, investments, employment, and overall economic growth worldwide,” he said in a Viber message.

“Possible slowdown in sales, incomes, employment, and other economic activities led to a more cautious attitude for some buyers of big-ticket items such as vehicles until the uncertainties settle regarding the Trump risk factor,” he added.

Mr. Ricafort said the ban on some government spending, including purchases of vehicles, ahead of the midterm election may have also affected overall industry sales.

“We expect a gradual recovery in the latter half of the year as demand picks up, inflation stabilizes, and hybrid and electric vehicle (EV) adoption grows. However, the outlook remains tempered by broader economic headwinds and cautious spending behavior,” Mr. Limlingan said.

Year to date, Toyota Motor Philippines Corp. remained the market leader with a 47.74% share as sales rose by 6.4% to 71,927 units.

Mitsubishi Motors Philippines Corp. came in second with a 7% increase in sales to 29,770 units in the January-to-April period. It accounted for 19.76% market share.

In third spot is Nissan Philippines, Inc. which saw a 12.7% drop in sales to 8,182 units in the first four months.

Rounding out the top five were Suzuki Phils., Inc., which saw a 14.5% increase in sales to 7,002 units, and Ford Motor Co. Phils., Inc. which posted a 30.6% drop in sales to 6,728 units.

The CAMPI-TMA report showed that 1,509 EVs were sold in April, bringing four-month sales to 6,820 units. This represented a 5.69% market share.

However, month-on-month EV sales dropped 20.4% from 1,895 units sold in March.

Broken down, hybrid EVs accounted for 5,744 units sold in the first four months. There were 978 battery EVs and 98 plug-in hybrid EVs sold as of end-April.

Toyota Motor sold the most hybrid EVs so far this year with 4,942, followed by Honda Cars Philippines with 442.

Nissan Philippines posted the highest sales of battery EVs with 409, followed by Tesla Motors Philippines with 396 units. – Justine Irish D. Tabile, Reporter

Agencies’ budget proposals reach PHP 11T for 2026

Government agencies’ budget proposals for the 2026 national budget have surged to PHP 11 trillion, up from the P9.2 trillion in funding requests made for the 2025 budget, according to the Department of Budget and Management (DBM).

“It is not finished yet and only three bureaus were finalized. But based on the submissions, because there are a lot of them, there’s a 200-300% increase in agency submissions. So, they’re looking at approximately PHP 11 trillion,” DBM Undersecretary Goddes Hope O. Libiran told reporters on the sidelines of the 2025 Open Government Week on Monday.

This is 20% higher than the P9.2 trillion in funding requests from government agencies last year.

“There are a lot of agencies that want to do a lot and maybe, like, for example, the Armed Forces of the Philippines raised their request for a modernization program,” she added.

The DBM’s estimate also accounted for both Tier 1 and Tier 2 proposals.

The government employs a two-tier budget process; ongoing spending is considered in Tier 1 and proposals for new and expanded spending are evaluated in Tier 2.

The P11-trillion proposals will be later reviewed under the Preliminary Executive Review Board.

Once they finalize it, they will defend it to the Executive Review Board, which includes Budget Secretary Amenah [F. Pangandaman] and the senior officials like us,” she said.

The final budget will be based on available fiscal space.

“The work of DBM is to determine which ones are really aligned with our Medium-Term Fiscal Framework to the Philippine Development Plan to the priorities of the administration and which are implementation-ready,” she said.

“If we put their proposal in the National Expenditure Program, won’t the budget be wasted? Will they be able to implement that? We’re in the process of that,” Ms. Libiran said.

In 2026, the overall National Expenditure Program will hit a record PHP 6.793 trillion, up 7.38% from the PHP 6.326-trillion national budget signed in 2025.

At the same event, Ms. Pangandaman expressed optimism that the Freedom of Information (FOI) bill will be passed by the incoming Congress.

“We conducted a series of roundtable discussions with the government, CSOs (civil society organizations), academic, and private sector to advance the passage of Freedom of Information bill in the 20^th Congress,” she said. “With the support of President Ferdinand R. Marcos, Jr., I am confident that we will soon pass our very own FOI.”

The DBM and the Presidential Communications Office are set to incorporate the results from the discussions to strengthen the draft FOI bill. The draft bill will be presented to the Legislative-Executive Development Advisory Council meeting on May 26. — Aubrey Rose A. Inosante

Stocks inch lower on US credit rating downgrade

Philippine shares slipped on Monday as investors monitor the potential impact of Moody’s move to downgrade the United States’ credit rating.

The bellwether Philippine Stock Exchange index (PSEi) inched down by 0.16% or 10.69 points to close at 6,454.84, while the broader all shares index dropped by 0.09% or 3.71 points to 3,765.66.

“The PSEi ended the trading session slightly lower, reflecting the local market’s tepid reaction to Moody’s credit rating downgrade of the US,” Juan Paolo E. Colet, managing director at China Bank Capital Corp., said in a Viber message. “While the downgrade itself was not a surprise, investors are waiting to see whether the move triggers a more adverse movement in US Treasury yields that could potentially unsettle equity markets.”

“Philippine shares tracked global indices lower as investors evaluate credit risks after Moody’s downgraded the US’ credit rating,” Alfred Benjamin R. Garcia, research head at AP Securities, Inc., likewise said.

Moody’s Ratings on Friday cut the US’ long-term issuer and senior unsecured ratings to “Aa1” from “Aaa” and changed the outlook to “stable” from “negative.”

Moody’s said in a statement that the downgrade in US’ rating “reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.”

Treasury yields rose and US stock futures slipped with the dollar on Monday due to concerns about US debt and rising deficits after Moody’s downgraded its US sovereign credit rating late on Friday, Reuters reported.

The US 10-year yield rose 7 basis points to 4.51%. The 30-year yield rose above 5% for the first time since April 9, the day US President Donald J. Trump paused most of his so-called reciprocal tariffs for 90 days.

“Philippine shares kicked off the week on a muted note, as the local market continued to digest corporate earnings and monitor potential political shifts post-election,” Luis A. Limlingan, head of sales at Regina Capital Development Corp., added in a Viber message.

Sectoral indices were split on Monday. Property dropped by 1.69% or 39.27 points to 2,272.26; industrials went down by 0.99% or 91.59 points to 9,080.64; and financials declined 0.88% or 21.30 points to 2,397.99.

Meanwhile, mining and oil increased by 1.15% or 104.65 points to 9,184.73; services climbed by 1.14% or 24.45 points to 2,155.34; and holdings firms rose by 1.1% or 59.57 points to 5,475.56.

Value turnover dropped to PHP 6.19 billion on Monday with 755.08 million shares traded from the PHP 6.59 billion with 730.87 million issues exchanged on Friday.

Decliners outnumbered advancers, 109 versus 86, while 49 names were unchanged.

Net foreign selling dropped to PHP 223.77 million on Monday from PHP 406.52 million on Friday. — Sheldeen Joy Talavera with Reuters

PSE hikes capital-raising goal to PHP 170B

The Philippine Stock Exchange Inc. is increasing its capital raising target this year to PHP 170 billion from PHP 120 billion and from PHP 82.4 billion in actual capital raised last year, amid an easing trade war between the world’s two biggest economies that had fed fears of a global recession.

The new goal is based on capital-raising activities that have been applied for and does not yet take into account GCash’s planned initial public offering (IPO), PSE President and Chief Executive Officer Ramon S. Monzon told a virtual news briefing last week.

“We expect this year to be a very high capital-raising year, a very successful year for PSE,” he added.

Mr. Monzon said capital raised at the PSE had reached PHP 42.42 billion as of May 14.

Some of the big IPOs expected include those from west zone water concessionaire Maynilad Water Services, Inc. and mobile wallet operator GCash.

“I’m really looking at IPOs, follow-on offerings, stock rights offerings and private placements because after all, the exchange is the platform where companies are supposed to raise capital,” the PSE chief said.

Mr. Monzon hinted that GCash might end up proceeding with its IPO later this year but said it had not yet applied.

“GCash has been talking to us,” he said. “While there has been no formal application yet, I know they are preparing to do an IPO later this year.”

“As to the actual timing, we don’t know when it will be. There are some issues that they are trying to resolve, mainly the valuation and determining what size of IPO they should have that can be absorbed by the market,” he added.

Globe Telecom, Inc., which has a 36% stake in Globe Fintech Innovations, Inc. (Mynt), which owns GCash operator G-Xchange, Inc., last month said its IPO for the e-wallet would proceed, but the timing remained uncertain due to market volatility caused by US tariffs.

The US and China last week announced a 90-day pause on most of their recent tariffs on each other, fueling hopes of a cooldown in their trade war.

The combined US duties on Chinese imports will be cut to 30% from 145%, while China’s levies on US imports will fall to 10% from 125%.

But some analysts have noted that tariffs remain far higher than before Mr. Trump regained office, suggesting that prices of many consumer goods — from cars and food to clothing — would still go up.

Maynilad is targeting a July 17 listing for its PHP 45.8-billion IPO, based on its latest prospectus dated May 14. It is required to offer at least 30% of its outstanding capital stock to the public by January 2027 under its legislative franchise.

Jarrod Leighton M. Tin, an equity research analyst at DragonFi Securities, Inc., thinks the PSE’s capital-raising target this year is attainable.

“It is achievable since Maynilad is required by law to list on the PSE,” he said in a Viber message. “The stock right offerings and follow-on offerings should be straightforward.”

“Now is a better time to conduct IPOs since the US markets have bottomed out with the de-escalation of the trade war,” he added.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., also cited better stock market conditions locally and in the US.

“It follows that more fund-raising is possible locally, as companies that will sell shares will be able to sell at a higher price and maximize the proceeds that they would be able to raise,” he said in a Viber message.

PDS Interst

Meanwhile, Mr. Monzon said the PSE is seeking to increase its stake in the Philippine Dealing System Holdings Corp. (PDS) to as much as 97% as the market operator awaits developments on three government banks that are selling their interest.

“We’re talking to three government institutions that still own shares in PDS,” he said, referring to Development Bank of the Philippines with 3%, Land Bank of the Philippines with more than 2.5% and Philippine Deposit Insurance Corp. with less than 1%.

“It’s taking a long time for us to acquire this because being government banks, they’re subject to certain rules before they can dispose of their investments,” the PSE chief said. “Right now, they’re trying to get an exemption to go into another public bidding before they can sell to PSE.”

Last week, the PSE increased its beneficial ownership stake in PDS to 91.6% after it closed accession deals for the 17,500 PDS shares held by two members of the Bankers Association of the Philippines (BAP) equivalent to a 0.28% stake.

The PDS operates the Philippine Dealing and Exchange Corp. (PDEx), Philippine Depository and Trust Corp. and Philippine Securities Settlement Corp.

After the market operator’s acquisition of PDS, Mr. Monzon said the PSE had agreed to sell part of its ownership in bond trading platform PDEx to BAP.

“After some serious negotiations, we finally reached an agreement that PSE would be willing to sell part of the PDEx ownership to BAP, but PSE would remain in control at 51%,” he said.

“It’s the banks that do a lot of the trading and generate the revenues for PDEx,” he pointed out. “You want to have them as a partner, not as an adversary.”

“Being the primary stakeholders of the fixed-income market, I think they would be very helpful in coming up with new products that they could trade and offer to their clients,” he added.

In December, the PSE reached a PHP 2.32-billion deal to acquire a 61.92% stake in PDS. The deal involved the acquisition of 3.87 million shares at PHP 600 each.

On Friday, the bellwether PSE index shed 0.02% or 1.33 points to 6,465.53, while the broader all-share index added 0.02% or 0.93 point to 3,769.37. – Revin Mikhael D. Ochave, Reporter

Election-tied spending may shield growth from tariffs

Household consumption during the election period and state expenditures once the ban on spending on certain infrastructure projects is lifted are expected to cushion the effects of higher US tariffs on Philippine economic growth.

“We project that the impact of US tariffs can be offset by election spending activities and lifting of the ban on certain public works after the elections,” Budget Secretary Amenah F. Pangandaman told BusinessWorld in a Viber Message last week.

Ms. Pangandaman, who heads the Development Budget Coordination Committee (DBCC), said government capital spending is likely to accelerate in the coming quarters.

The Commission on Elections’ 45-day ban on public works spending started on March 28 and ended with the May 12 elections.

The Philippine economy grew slower than expected in the first quarter at 5.4% from 5.9% a year earlier. It was below the government’s 6-8% target for the year.

The slowdown was partly attributed to heightened uncertainty from US President Donald J. Trump’s reciprocal tariffs announced in April. The higher duties, including a 17% tariff on Philippine exports, were suspended for 90 days pending negotiations.

Ms. Pangandaman expects election-related spending to lift economic growth after the 18.7% increase in state expenditures as agencies front-loaded ahead of the election ban.

Department of Economy, Planning, and Development Undersecretary Rosemarie G. Edillon said state spending could moderate in the second quarter since it was covered by the ban in April and parts of May.

Ms. Pangandaman said disbursements are expected to pick up toward the latter part of May to June after the election ban is lifted.

However, analysts warned the boost could be short-lived.

Election-related spending could only provide a “short-term” boost, said John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies.

“This may partially offset the drag from external headwinds like the US tariffs, especially if government agencies frontload infrastructure projects and political campaigns sustain high levels of economic activity,” he said in a Viber Message on Sunday.

He said the momentum from election spending might not be enough to sustain growth beyond the second quarter if export-facing sectors suffer losses or investment slows.

The benefits are “transitory,” while higher tariffs could have longer-term structural effects such as reduced export competitiveness, supply-chain shifts and investor uncertainty, he added.

Philippine export growth slowed to 6.2% in the last quarter from 8.1% a year earlier as companies remained cautious about trade.

Reinielle Matt M. Erece, an economist at Oikonomia Research and Advisory, Inc., said relying on government spending to drive growth is unsustainable and could exhaust the state budget and trigger more borrowings.

He urged the government to pursue trade deals and improve the investment climate instead.

Trade Secretary Maria Cristina A. Roque, Special Assistant to the President for Investment and Economic Affairs Frederick D. Go and Philippine Ambassador to the US Jose Manuel D. Romualdez met with US Trade Representative (USTR) Jamieson Greer in Washington on May 2 to discuss tariffs.

Ms. Roque earlier said the meeting “went very well,” adding that they expect more meetings.

Ms. Pangandaman said they would continue to monitor agencies’ budget use rates, while catch-up plans for delayed programs would be prioritized post-election. — Aubrey Rose A. Inosante

Philippine banks’ March bad loan ratio softens

Philippine banks’ bad loan ratio eased to a three-month low in March as total loans increased, according to data from the Bangko Sentral ng Pilipinas (BSP).

The industry’s gross bad loan ratio dipped to 3.3% from 3.38% in February and 3.39% a year earlier.

Bad loans inched up 0.5% to PHP 516.12 billion at end-March from a month earlier and climbed 11.1% from a year ago.

Loans are considered nonperforming once they remain unpaid for at least 90 days after the due date. They are risky assets because borrowers are unlikely to pay.

The loan portfolio of the Philippine banking system rose 3% to PHP 15.63 trillion as of end-March from a month earlier and by 14.2% from a year earlier.

Past due loans were up by 1.3% to PHP 646.37 billion as of March from a month earlier and 9.8% more than a year ago. This brought the past due loan ratio to 4.14% from 4.2% in February and 4.3% a year earlier.

Restructured loans edged up 0.1% to PHP 311.48 billion in March from February and by 5.7% year on year.

Restructured loans accounted for 1.99% of the industry’s total loans from 2.05% a month earlier and 2.15% a year ago.

Banks’ loan loss reserve hit PHP 490.56 billion in March, up 0.2% month on month and 4.9% year on year. This brought the loan loss reserve ratio to 3.14% from 3.23% at end-February and 3.42% in March 2024.

Lenders’ bad loan coverage ratio, which gauges the allowance for potential losses due to bad loans, slipped to 95.05% in March from 95.36% in February and 100.66% a year ago.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., attributed the lower nonperforming loan (NPL) ratio to faster bank lending growth.

“As the NPL ratio is simply dividing the NPL amount to total loan growth, faster lending growth may reduce the ratio,” he said in a Viber message.

Outstanding loans of universal and commercial banks rose 11.8% to PHP 13.19 trillion from a year ago, the central bank earlier said.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the double-digit growth in bank loans “effectively expanded the denominator, thereby mathematically reducing the NPL ratio.”

Earlier BSP data showed bank lending rose 11.8% year on year to PHP 13.19 trillion in March.

Mr. Ricafort said rate cuts by the central bank reduced financing costs and improved borrowers’ ability to pay back their loans.

“Possible further rate cuts by the BSP, especially additional rate cuts of 75 basis points (bps) for the rest of 2025 would further reduce borrowing costs,” he said. “That would help improve the payment of loans and debts, thereby helping the easing trend of banks’ NPL ratio.”

BSP Governor Eli M. Remolona, Jr. has said they are open to cutting rates by 75 bps more this year amid easing inflation.

The Monetary Board last month resumed its rate-cutting cycle with a 25-bp cut, bringing the benchmark to 5.5%. The BSP has reduced rates by 100 bps since it kicked off its easing cycle in August last year.

“It is still important to note that despite 2025 posting faster growth in lending compared with 2024, it is starting to lose momentum compared with its fastest growth in January,” Mr. Erece said.

“This is where monetary policy easing may help in boosting lending as well as economic activity,” he added. — Luisa Maria Jacinta C. Jocson

Remittance growth hits 9-month low

Money sent home by migrant Filipinos rose 2.6% in March from a year earlier, the Bangko Sentral ng Pilipinas (BSP) said on Thursday, though this was the slowest growth in nine months.

Cash remittances from overseas Filipino workers (OFW) coursed through banks hit USD 2.81 billion (PHP 156.8 billion) from USD 2.74 billion a year ago.

Remittances from land-based workers increased 3.1% to USD 2.22 billion, while money sent home by sea-based workers inched up 1% to USD 595 million.

In the first quarter, cash remittances rose 2.7% to USD 8.44 billion from a year earlier. Money sent home by land-based workers jumped by 3.2% to USD 6.74 billion, while sea-based workers’ remittances went up 1% to USD 1.7 billion.

“The growth in cash remittances from the United States, Singapore, Saudi Arabia and the United Arab Emirates (UAE) was the main driver of the overall increase in remittances for January to March,” the BSP said.

The US was the top remittance source in the first quarter, accounting for 40.7% of the total. It was followed by Singapore (7.6%), Saudi Arabia (6.2%), Japan (4.9%), the UAE (4.6%), UK (4.4%), Canada (3.1%), Qatar (2.8%), Taiwan (2.8%) and Hong Kong (2.7%).

“Cash remittances rose in March and the first quarter largely due to sustained demand for Filipino labor abroad, particularly in healthcare, engineering and domestic services,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said in a Viber message.

He also cited seasonal factors such as the Lenten break and school-related expenses, which might have driven remittances during the quarter.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the continued single-digit growth in remittances is a “bright spot for the overall economy, as an important growth driver, especially in terms of consumer spending.”

BSP data showed personal remittances, which include inflows in kind, increased 2.6% to USD 3.13 billion in March from a year ago.

Personal remittances from workers with contracts of a year or more climbed 3% to USD 2.4 billion during the month, while those from workers with contracts of less than a year went up 1.4% to USD 660 million.

Personal remittances for the last quarter rose 2.7% to USD 9.4 billion from a year ago.

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said remittances this year would likely grow 2.5% to 3% despite external headwinds. “We see remittances as resilient and still expect robust growth.”

The central bank expects cash remittances to grow 2.8% this year.

“Despite global uncertainties, remittances continue to show resilience, serving as a critical support for household consumption and a buffer for the country’s external accounts,” Mr. Rivera said.

On the other hand, Mr. Ricafort flagged the impact of US President Donald J. Trump’s tighter immigration policy on remittance flows.

“For the coming months, protectionist policies of President Trump, particularly stricter immigration rules, could weigh on some OFW remittances, especially from the US,” he added.

Mr. Trump kicked off an aggressive immigration campaign after taking office in January, declaring illegal immigration an “invasion” to boost deportations. – Luisa Maria Jacinta C. Jocson, Senior Reporter

Approved foreign investments lowest in over a year

Approved foreign investments in the Philippines slumped further by 82% in the first quarter to the lowest in one-and-a-half years, according to the local statistics agency, as US President Donald J. Trump tries to undo decades of global economic integration through his sweeping tariff increases.

Foreign investment commitments approved by the country’s investment promotion agencies plunged to PHP 27.99 billion from PHP 155.26 billion a year earlier, according to data from the Philippine Statistics Authority (PSA) posted on its website on Thursday.

This was also 51.5% lower than a quarter earlier and the lowest since the PHP 27.46 billion logged in the third quarter of 2023.

“The main reasons are the geopolitical uncertainties and trade disruptions caused by Trump’s tariffs,” Calixto V. Chikiamco, president at Manila-based Foundation for Economic Freedom, said in a Viber message.

“These factors are aggravating the already dire unfavorable climate for foreign investments, from high food inflation to lack of infrastructure and internal political divisions,” he added.

While Mr. Trump’s announcement of sweeping reciprocal tariffs on US trade partners did not come until April, he had threatened to increase duties during his campaign last year.

He later suspended these tariffs for 90 days starting April 9, imposing a 10% base tariff instead until July, pending negotiations.

South Korea was the leading source of foreign investment pledges, with commitments hitting PHP 12.36 billion or 44.2% of the total. The US followed with PHP 3.08 billion (11%) and China with PHP 2.88 billion (10.3%).

Real estate activities attracted the biggest share of foreign investments at PHP 10.79 billion (38.5%), followed by manufacturing at PHP 6.14 billion (21.9%) and administrative and support services at PHP 5.35 billion (19.1%).

The impact of lower investment pledges on Philippine economic growth would be limited, Mr. Chikiamco said, noting how the economy continues to rely on consumption and government spending rather than investment.

Economic growth in the first quarter was slower than expected at 5.4%, below the government’s 6-8% target for the year.

The Philippine Economic Zone Authority approved PHP 17.85 billion in foreign investments, accounting for 63.8% of the total. The Board of Investments (BoI) came in second with PHP 7.29 billion or 26% of the total, followed by the Bases Conversion and Development Authority with PHP 1.91 billion and the Subic Bay Metropolitan Authority with PHP 476.95 million.

Central Luzon had 53.3% of total foreign investment commitments at PHP 14.9 billion, followed by Metro Manila at PHP 6.78 billion and the Calabarzon (Cavite, Laguna, Batangas, Rizal and Quezon) Region with PHP 3.95 billion.

Foreign and local investments pledged during the quarter are expected to generate 31,848 jobs once the projects are realized.

On the other hand, investment pledges from Filipino nationals fell 8.4% to PHP 153.94 billion in the first quarter, the PSA said.

Mr. Chikiamco said the local political situation could affect foreign investment pledges in the next quarters.

Investors would want to know “whether President Ferdinand R. Marcos, Jr. has enough political capital, given the results of the midterms, to push for more economic reforms in the remaining years of his term,” he added.

He said the state should liberalize foreign investment laws, expand public-private partnerships in infrastructure and reform education to boost workforce quality to counter the foreign investment decline.

It should also boost farm output to lower food prices and ease wage pressures, modernize labor rules and pursue free trade deals with the European Union, Canada and the US while seeking membership in the Japan-led Comprehensive and Progressive Free Trade Agreement for Transpacific Partnership, he added.

PSA data on foreign investment pledges differ from actual foreign direct investments tracked by the Philippine central bank, whose data go beyond projects and include reinvested earnings and lending to Philippine units through their debt instruments. – Pierce Oel A. Montalvo, Researcher

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