PHILIPPINE DAILY INQUIRER - January 11, 2008

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BPI sees peso at 37-39 to $1 this year

MANILA, Philippines -- The Ayala group's Bank of the Philippine Islands (BPI), the biggest banking channel for overseas Filipinos' remittances, sees the peso climbing further to 37-39 against the dollar this year.

BPI also predicted a double-digit growth in bank lending over the next three years. For this year alone, the bank's loan portfolio could expand by 12 percent, picking up from the 11-percent growth posted last year, BPI president Aurelio Montinola III said at a news briefing Thursday.

"Our theme is quality lending, quality growth for 2008," Montinola said. "We're going from three years of single-digit to double-digit lending growth."

He said BPI would like to sustain a lending growth of at least 15 percent in the years ahead, with consumer loans and small and medium-scale enterprise loans as key growth drivers, without slackening in its credit criteria.

BPI reported a strong 17-percent expansion in consumer loans and remained the biggest player in consumer lending in 2007. Market shares for housing and auto loans were maintained at 24 percent and 22 percent, respectively.

New housing and auto loans went up by 37 percent and 18 percent while its credit card business posted a 22-percent growth in billings last year.

Corporate loan portfolio likewise rose 9 percent. New term loans, which are less volatile and higher yielding, were extended for power generation, food manufacturing, business process outsourcing, semiconductors and real estate/shopping mall projects.

"More term loans are in the pipeline on increased borrowing appetite from top corporations," he said.

Montinola added that the bank was upbeat on local economic prospects even as it was continuing to monitor external developments, particularly the credit crunch in the United States.

"We are optimistic that the resilience of domestic demand, on account of the continued strength of the overseas Filipino remittances and increased public investments will help sustain GDP (gross domestic product) growth at a respectable pace for 2008," Montinola said.

"GDP will be slightly lower but still respectable," he said, noting that the country now had the chance to regain lost grain versus fast-growing peers in the Asian region.

BPI expects the same favorable trend in the costs of doing business, seen remaining manageable through rising inflation, falling interest rate and strengthening peso.

"With the peso appreciating by 6-18 percent in the last three years, we are looking at a further 5-8 percent appreciation by end-2008," he said.

The peso surged against the dollar by 18.8 percent last year, making it Asia's best performing currency. As of yesterday, the peso closed weaker at 40.74 to a dollar from Wednesday's 40.56.

BPI treasurer Antonio Paner said there was also room for the central bank, Bangko Sentral ng Pilipinas (BSP to cut benchmark interest rates this year.

"If the US Federal Reserve brings down interest rates, the BSP will have room to follow," Paner said. "Interest rates will go down but not as much as last year."

All of BPI's major businesses recorded robust growth in 2007. Its overseas remittance business, which posted the highest volume for two straight years based on BSP data, grew by 22 percent last year to nearly $3 billion.