Citi remains bullish on Phl
Global banking giant Citi continues to be bullish on the Philippines amid the challenges brought about by soaring inflation and tightening financing conditions around the world, the food crisis, as well as the uncertainties brought about by Russia’s invasion of Ukraine.
“Realistically speaking, we are in for several years of extreme volatility of markets opening up and closing because of big global events,” Citi managing director Jan Metzger told The STAR.
Metzger, who is also head of Asia-Pacific banking, capital markets, and advisory at Citi, said the big global events include the RussiaUkraine war, the geopolitics with China, rising inflation around the world, recession, as well as the food crisis in Africa and some of the poor nations in Asia.
“There are many things to be nervous about. Now in an environment like that, what is actually interesting for us as a bank, we become more important than ever to our clients because navigating complex markets is much more difficult than navigating a very clear bull market,” Metzger said.
With a global network that spans 160 markets, Metzger said Citi is well positioned to support clients in a complex operating environment.
Metzger said the tightening financial conditions as central banks around the world raise interest rates to check rising inflation have multiple effects on capital markets.
Just like in other countries, inflation in the Philippines quickened to 6.1 percent in June from 5.4 percent in May, bringing the average to 4.4 percent in the first semester and exceeding the two to four percent target of the Bangko Sentral ng Pilipinas (BSP).
This prompted the Monetary Board to lift rates by 125 basis points, including the huge 75-basis-point hike during a surprise off-cycle rate setting meeting last July 14, to 3.25 percent from an all-time low of two percent.
“If you don’t control inflation in the Philippines or any country in the world for that matter, that has a disastrous impact on the capital markets. And so in the long term it’s clearly good because it is prudent financial management, it is always going to be negative for capital markets in the short term,” Metzger said.
Metzger said the Philippines is a very important market for the global bank.
“The Philippines is really, really crucial to us. We’ve been in the Philippines for 120 years. For our big global multinational clients, the Philippines is an incredibly important location as well because it has a young population. It actually has a very internet and media savvy population, and it is a very consumer focused economy,” Metzger said.
Metzger said 70 percent of the Philippine economy is consumption driven.
According to Metzger, both the multinational and Filipino clients of Citi care deeply about the Philippines.
“And as a result, with our local clients we’re growing massively right now, which is really quite phenomenal,” Metzger said.
For one, the Citi official cited the success of the robust business process outsourcing (BPO) sector in the country.
As recession hits the rest of the world, Metzger said the Philippines would be a very good solution for large global corporations facing greater cost pressure on operations.
“The Philippines will be a very, very good solution for them to get cost effective, world-class operations support. And actually in the Philippines and the BPO sector in particular, we also see the product mix becoming much more high-end,” Metzger said.
The BPO sector is seeing a reduction in pure call center work and an increase in actually complex, multi-faceted operations works.
In Asia-Pacific, the Philippines serves as a regional hub, offering diverse valueadded services through the Citi Solutions Center, composed of the Regional Operating Headquarters (ROHQ) and Citigroup Business Process Solutions (CBPS). ROHQ delivers a wide array of financial, technology, and training services among others to Citi affiliates, subsidiaries, and branches to over 90 countries. CBPS provides voice services, including customer service, credit, collections, and sales services to North America, the United Kingdom and Singapore.
Aside from the BPO sector, the New York-based bank is also excited about other sectors in the Philippines, including the consumer sector, healthcare, technology and infrastructure.“Healthcare, technology, consumer, and infrastructure are all important sectors as well,” Metzger said.