Metrobank expects 50 basis point rate hike, launches financial education e-book


A Metropolitan Bank & Trust Co. (Metrobank) OFFICIAL expects another 50 basis point (bp) rate hike by the central bank of the Philippines in response to aggressive monetary tightening by the US Federal Reserve this week.

In an interview with reporters on Wednesday, the head of Metrobank’s financial markets sector, Fernando Antonio A. Tansingco, said that the Bangko Sentral ng Pilipinas (BSP) will have to react indirectly to the US central bank’s rate hike to support the peso.

“High interest rates in the United States [are] push the US dollar, weaken the peso, and the BSP has to react to that,” 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, losing 52 centavos from its P57.48 finish on Tuesday, according to data from the Philippine Bankers Association.

Year-to-date, the peso has weakened 13.72% or P7 from its close of 51P per dollar on December 31, 2021.

Indeed, investors were priced for another 75 basis point or 100 basis point hike by the Federal Open Market Committee at its September 20-21 policy meeting. The Fed has raised key rates by 225 basis points since March as it seeks to rein in rising prices.

“BSP doesn’t really target the exchange rate. They target inflation. So at some point if the currency is too weak it will go through inflation,” Mr Tansingco said in a mixture of English and Tagalog.

The latest data from the Philippine Statistics Authority showed the consumer price index rose 6.3% year-on-year in August, from a nearly four-year high of 6.4% in July. It remained well above the 4.4% observed in August 2021.

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

“Inflation is still much higher than our overnight rates are now. So they really need to address that at this point,” Tansingco said.

The Philippine central bank is expected to trigger another 50 basis point hike on Thursday as the US Federal Reserve is also expected to tighten policy further this week. On August 18, the BSP Monetary Council raised benchmark interest rates by 50 basis points, bringing the cumulative increases so far to 175 basis points since May.

“We look more at the terminal rate rather than the number of rate increases. If the Fed adopts the 4% terminal rate, the BSP must rise by at least 5%,” Tansingco said.

“I think it’s a good thing about BSP, they are proactive and they are ready to change policy or policy decisions based on the reality they see,” he added.

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

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

“With education as the driving force, we hope to meet their needs while empowering them to maintain a financially resilient lifestyle,” Dimagiba said.

Moneybility is a collection of money management topics that is 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 people who want to start developing smart financial habits in budgeting, debt management, insurance, investing, etc., the bank said.

“This advocacy to propel financial literacy among Filipinos wherever they are in their financial journey is in line with our promise to keep people in ‘good hands,'” Mr. Dimagiba said.

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

Metrobank has rolled out different financial education tools over the years. The Earnest Investing Platform offers easy-to-understand price charts, financial news, and straightforward investing explanations. It offers Metrobank My Choice investment funds for as little as P1,000.

Additionally, the bank has also launched Tara Invest, a series of small explainer videos on social media about the basics of investing.

“Money management is not a one-size-fits-all solution, so we have a host of financial education initiatives that can provide appropriate guidance to every Filipino. Ultimately, we envision all of us to be financially resilient. This means that we can face any financial challenge at any point in our financial journey,” Mr. Dimagiba said.

The bank saw its net profit jump 94.5% in the second quarter on the back of higher commission-based revenue, stable operating costs and lower provisions for loan losses.

The lender posted attributable net income of 7.6 billion pesos in the second quarter, up from 3.907 billion pesos it posted in the same period last year. This brought its net profit attributable to the first half to 15.586 billion pesos, 33% more than the 11.687 billion pesos recorded during the same period in 2021.

Shares of the bank fell P1.85 or 3.5% to P51.05 apiece on Wednesday. — Keisha B. Ta-asan

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