Alerts

   John Martin Luciano, CFA

Bank lending growth picked up for the third consecutive month in January. Loans of universal and commercial banks grew by 11.6% y/y in January, faster than the 10.9% y/y growth in the previous month. The faster growth was mainly driven by loans for household consumption which expanded by 40.1% y/y (from 27.5% y/y in December) due to faster growth in credit card and motor vehicle loans. On the other hand, loans for production activities expanded 8.8% y/y, slower than the reported growth in December at 9.1% y/y. Overall, the growth in production loans was driven primarily by lending to the following sectors: real estate activities (+20.5% y/y); financial and insurance activities (+16.2% y/y); electricity, gas, steam and air conditioning supply (+8.2% y/y); information and communication (+18.6% y/y); and construction (+15.5% y/y).

   Justin Richmond Cheng, CFA

Fine-tuning estimates, maintain BUY rating Factoring in the slightly weaker-than-expected FY19 results, we are reducing our revenue and income forecast by 2% and 2.5% for both 2020 and 2021, respectively. Note that our new 2020 EBIT forecast of Php16.4Bil, implies a 9% growth y/y. Following the lower revenue and earnings estimate, we slightly cut our FV estimate to Php 175/sh from previously Php177/sh. Meanwhile, we are maintaining our buy rating on URC as we believe its prospects remain brighter this 2020 coming from an inflection point in 2019. Note that profits in 2019 have started to grow arresting the decline over the last three years. Furthermore, the recovery of the coffee business looks promising. This increases our confidence that URC can revitalize its other businesses under the leadership of the new management team.

   Richard Lañeda, CFA

   Richard Lañeda, CFA

   Richard Lañeda, CFA

   Richard Lañeda, CFA

   Richard Lañeda, CFA

   Richard Lañeda, CFA

   Richard Lañeda, CFA

   John Martin Luciano, CFA

Fitch Solutions trimmed its 2020 GDP growth forecast for the country from 6.3% to 6%. The revised outlook represents a slight increase from the 5.9% growth last year. Fitch said that real GDP growth in the Philippines is set to rebound more modestly than initially anticipated owing to the impact of the COVID-19 outbreak. Specifically, the exports sector and tourism were likely to see intense headwinds from the outbreak, while infrastructure projects could face delays. In addition, Fitch noted that households were likely to receive weaker remittance inflows.