EconomyEditor's PickMetrobank expects 50-bp rate hike, launches financial education e-book

September 21, 2022

AN OFFICIAL from the Metropolitan Bank & Trust Co. (Metrobank) forecasts another 50-basis-point (bp) rate increase by the Philippine central bank in response to the US Federal Reserve’s aggressive monetary tightening this week.

In an interview with journalists on Wednesday, Metrobank Head of Financial Markets Sector Fernando Antonio A. Tansingco said the Bangko Sentral ng Pilipinas (BSP) will have to indirectly respond to the US central bank’s rate hike to support the peso.

“The high US interest rates [are] pushing the US dollar, weakening the peso, and the BSP has to react to that,” Mr. Tansingco said, adding that there could be inflationary effects due to the weakening of the local currency.

The local unit closed at P58 against the greenback on Wednesday, shedding 52 centavos from its P57.48 finish on Tuesday, Bankers Association of the Philippines data showed.

Year to date, the peso has weakened by 13.72% or P7 from its P51-per-dollar close on Dec. 31, 2021.

This is as investors have priced either another 75-bp or a 100-bp increase by the Federal Open Market Committee at its Sept. 20-21 policy meeting. The Fed has raised benchmark rates by 225 bps since March as it seeks to rein in rising prices.

“BSP is not really targeting the exchange rate. They’re doing inflation targeting. So, at a certain point, if the currency is too weak, then it will flow through inflation,” Mr. Tansingco said in a mix of English and Tagalog.

Latest data from the Philippine Statistics Authority showed the consumer price index climbed 6.3% year on year in August, from the nearly four-year high of 6.4% in July. It remained significantly higher than the 4.4% seen in August 2021.

August marked the fifth consecutive month that inflation exceeded the BSP’s 2-4% target range for the year.

“Inflation is still way higher than our overnight rates are now. So they really have to address it at this point in time,” Mr. Tansingco said.

The Philippine central bank is widely expected to fire off another 50-bp increase on Thursday as the US Federal Reserve is also expected to further tighten policy this week. The BSP Monetary Board on Aug. 18 raised benchmark interest rates by 50 bps, bringing cumulative increases so far to 175 bps since May.

“We’re more looking at the terminal rate rather than how many rate hikes. If the Fed goes at the 4% terminal rate, the BSP has to go up at least 5%,” Mr. Tansingco said.

“I think that’s one good thing about the BSP, they’re proactive and they’re willing to change policy or policy decisions according to the reality they see,” he added.

MONEYBILITYMetrobank on Wednesday introduced Moneybility, a financial education e-book that aims to make Filipinos more financially resilient.

“We strive to go beyond just providing the usual banking services and aim to be the credible and reliable partner of our customers for expert financial advice,” Metrobank Chief Marketing Officer Digs A. Dimagiba said at an event on Wednesday.

“With education as our driving force, we hope to fulfill their needs while at the same time empower them to sustain a financially resilient way of living,” Mr. Dimagiba said.

Moneybility is a collection of money management topics that gets updated as market conditions change. It also has interactive features and tools that will make financial literacy more understandable.

This new platform will be useful for individuals who want to start developing smart money habits on budgeting, dealing with debt, insurance, investing, and more, the bank said.

“This advocacy of propelling financial literacy among Filipinos wherever they may be in their financial journey is consistent with our promise of keeping people in ‘good hands,’” Mr. Dimagiba said.

“Equipped with our decades-worth of experience and wisdom on banking and finance, Metrobank hopes to be the go-to-source of financial knowledge through our slate of learning tools and initiatives, starting with our flagship financial education tool, Moneybility,” he added.

Metrobank has rolled out different financial education tools over the years. Investment platform Earnest has easy-to-understand lesson cards, financial news, and simple investing explainers. It offers Metrobank My Choice Investment funds for as low as P1,000.

Moreover, the bank also launched Tara Invest, a series of bite-sized social media video explainers on the basics of investing.

“Money management is not one-size-fits-all, so we have a slew of financial education initiatives that can provide proper guidance to every Filipino. At the end of the day, we envision all of us to be financially resilient. That means we can face any financial challenge at any point of our financial journey,” Mr. Dimagiba said.

The bank saw its net profit surge by 94.5% in the second quarter on higher fee-based income, stable operational costs, and lower loan loss provisions.

The lender booked an attributable net income of P7.6 billion in the second quarter, up from the P3.907 billion it posted in the same period last year. This brought its first-half attributable net profit to P15.586 billion, 33% higher than the P11.687 billion recorded in the same period in 2021.

The bank’s shares declined by P1.85 or 3.5% to P51.05 apiece on Wednesday. — Keisha B. Ta-asan

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