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Philippine OBUs Rebound, Post US$9 Million Net Income

08.30.2007

Results of operations of the 7 offshore banking units (OBUs) for the first semester of 2007 yielded a net income after tax (NIAT) of US$9 million, a complete reversal of the negative bottom line in the same period last year.  The substantial increase (132.1 percent) in operating income to US$16 million from US$7 million, coupled with the 16.3 percent reduction in operating expenses to US$6 million raised NIAT to US$9 million.  

As of end-June 2007, total assets amounted to US$3.3 billion, up by 43.6 percent from a year ago level.   
   
There was a marked shift in portfolio mix to loans from investments in bonds and other securities.  Loans surged by 245.1 percent to US$2.0 billion (from US$0.6 billion a year ago) and now comprised 58.3 percent (from 24.1 percent) of assets, gross of allowance for probable losses.  On the other hand, investments in bonds and other securities dropped by 49.8 percent to US$0.7 billion to account for only 20.9 percent of gross assets, substantially lower than the 59.4 percent share a year ago.

Resumed lending activities of OBUs translated to increased loans to residents by 23.6 percent to US$112 million from US$91 million a year ago.   The manufacturing sector benefited most with a 40.8 percent share (up from just 10.8 percent a year ago), as loans to the sector soared by 369.8 percent (or US$36 million).  The transportation, storage and communications sector also increased its share of the loan pie to 36.2 percent (from 26.2 percent) as loans to this sector expanded by 70.7 percent (or US$17 million). The electricity, gas and water sector, with reduced loan volume of US$10 million (from US$14 million), was relegated to a far third place at 9.3 percent (down from 15.1 percent) share.

Borrowings from non-residents banks remained the main source of funding at US$1.6 billion or 46.5 percent of total resources.  Other liabilities, which rose by 204.5 percent to US$1.3 billion, were the second biggest source of funds at 37.9 percent.  Net due to head office/branches-abroad, which was the second main source of funding a year ago, contributed only US$0.5 billion or 14.9 percent.

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