ANZ confident PH growth to continue
Australia and New Zealand banking group ANZ is confident economic growth is sustainable beyond 2016 and its momentum will not be derailed with a change of government.
ANZ Research (“ANZ Economic Insight Report”) said that even before 2010, when President Aquino stepped into power, the economy is already showing strength based on fundamentals.
“As the end of President Aquino’s administration draws near, many are concerned whether the outperformance of the Philippine economy will come to an end as well, (but) the economic fundamentals which led to the country’s increased GDP growth and relative stability, especially over the last five years, have been firmly entrenched in the country’s institutions,” said ANZ. It noted that “the wheels of improvement” in economic fundamentals were evident before June, 2010.
“We believe that most of the structural changes in the Philippines needed for economic advancement were already in place before President Aquino assumed power in 2010. While an improvement in local sentiment had also supported growth during the Aquino administration, we see little risk of a reversal in the country’s growth momentum even after President Aquino steps down in June, 2016,” said ANZ.
The research note identified the following as the background for the sustainable progress and most of these came before 2010: the rising GDP growth trend; the business process outsourcing sector which started in the early 200s; investment growth, though volatile, had been rising since 2001; government debt had been declining since 2004; and the overall budget deficit was and will likely “remain narrow.”
“Regardless of who wins the presidential elections in May, 2016, we believe the Philippines is well-positioned to maintain its growth momentum and outperform its regional peers, even amid fears of China’s slowdown,” said ANZ.
Meanwhile, Asia-focused ANZ Bank on Thursday said annual net profit increased three percent to Aus$7.5 billion (US$5.3 billion) but growth slowed from the previous year, underscoring the headwinds facing the sector.
Cash profit, which strips out noncore items and is favored by analysts, was up just one percent to Aus$7.22 billion in the 12 months to September 30. This compared to a 10 percent rise in the previous corresponding period.
Annual net profit for the year to September 30 2014 was up 15 percent.
British-born chief executive Mike Smith, who has overseen a big push into Asia and is standing down in January, said it was a challenging operating environment.
''We are continuing to evolve our strategy and accelerate its execution to maximise value for our customers and for our shareholders,'' he said.
''There are significant opportunities for ANZ, however lower economic growth, intense competition, the growing cost of regulation and market volatility present headwinds for all banks.''
The comments highlight the challenges facing incoming chief executive Shayne Elliott, amid a focus on boosting Asian returns that have dragged on the lender's domestic units. (With AFP report)