BIZ BUZZ: PLDT’s moment of truth

Today, PLDT Inc. is set to hold a briefing to discuss its 2022 performance amid a great deal of challenges that have left investors wondering about its financial standing.

The telco giant run by tycoon Manuel V. Pangilinan, popularly known as MVP, has been in hot water since it revealed a P48-billion budget overrun back in December due to “over orders” of 5G technology.

During its initial probe, PLDT shared that no fraudulent activities had been detected that resulted in the overspending. It has not since provided additional information about the investigation.

The telco player is also facing multiple class action suits in the United States as disgruntled investors seek compensation from losses incurred following the announcement that had sent PLDT’s securities spiraling down. PLDT said it’s aware of the legal cases but had yet to be served with the papers.

The office of PLDT wireless unit Smart was also shut down by the Makati government last month allegedly due to unpaid taxes. The closure order was lifted after the submission of required documents but the issue remains pending.

The briefing, hopefully, can shed light on the pressing matters for the benefit of the curious investors.

Now the question is: Will MVP address all the queries related to these issues to put investors at ease? Let’s see!

—Tyrone Jasper C. Piad

Strong banks in PH

With various developments concerning the global financial industry these days, it’s no surprise to see analysts commenting on its impact on our local banking system.

Recently, Fitch unit CreditSights opined that “first tier” banks—including BDO Unibank, Bank of the Philippine Islands and Metropolitan Bank and Trust Co.—are expected to perform better due to factors such as more established franchises, bigger loan books and a perceived ability to protect growth in their net interest margins.

Meanwhile, it said that “second tier” banks—including Security Bank Corp., Union Bank of the Philippines and Philippine National Bank—are expected to be less profitable due to higher funding cost.

Of course, nothing raises the hackles of a company, much less a bank, more than being called “second tier.” So it’s no surprise that one such bank felt the need to point out the vulnerabilities of the report of the Fitch Ratings unit.

Biz Buzz has been told that, in fact, Fitch Ratings has not published a rating on Security Bank since 2016, and neither has the credit watcher reached out to them for comments on their current outlook.

While it’s understood that CreditSights may have done their research, due diligence would necessitate that both sides are heard to give the public the correct information, the indignant folks at Security Bank pointed out.

“This is especially crucial given crises may be sparked by unnecessary worries, misimpression and irresponsible declarations,” one of them said.

CreditSight’s report is also in stark contrast to that of Moody’s and Japan Credit Rating Agency, two agencies that have given investment-grade credit ratings to Security Bank, meaning bond investors should be assured that Security Bank can pay back the debt it owes.

As for Security Bank, Biz Buzz has learned that the bank is directly refuting the CreditSights outlook. Security Bank has noted that its capital and liquidity are well above regulatory requirements and compare favorably with peers.

The public should be critical when reviewing agency outlooks (or any kind of information nowadays, truth be told).

Indeed, a quick look at Security Bank’s 2022 performance shows that on a year-over-year basis, its net income grew by 53 percent to P10.6 billion and its balance sheet continues to be healthy, with net loans growing by 12 percent to P503 billion and total deposits growing by 16 percent to P606 billion. Those look like good numbers, to be honest.

—Daxim L. Lucas