Real estate, banking and consumer sectors to support recovery in second half – analysts

Analysts said the REAL ESTATE, banking and consumer sectors should support the recovery from the impact of the public health crisis in the second half of the year, as they benefit from the continued reopening of the economy.

“Recovery from the pandemic is expected in the real estate sector after being significantly affected by the restrictions imposed. We expect its rebound to continue in the second half of the year,” Philstocks research analyst Claire T. Alviar said in the financial firm’s recently released 2022 mid-year review.

“The consumer sector in the Philippines is already continuously showing signs of recovery from the pandemic,” said Mikhail Philippe Plopenio, head of research and engagement at Philstocks.

Meanwhile, Philstocks senior research analyst Japhet Louis O. Tantiangco said if confidence in the economy is maintained, lending will continue to grow and support local bank profitability.

“Bank borrowing or lending strengthened amid growing confidence in the outlook for the economy. This despite tighter monetary policies,” Tantiangco noted.

According to the review, real estate stocks in the main index in the first half recorded a year-on-year profit growth of 16.23%.

Ms Alviar said if the economy continues to reopen, the real estate sector will gain, especially the mall and hotel segments.

However, rising interest rates could dampen growth in the sector, especially those with income from the residential segment, as the Philstocks review sees mortgages being negatively affected by rate hikes.

“Higher rates may tend to discourage home buyers,” Ms. Alviar added.

Plopenio said consumer confidence was already improving, as shown by the second quarter consumer confidence survey from Bangko Sentral ng Pilipinas (BSP).

“This is due to expectations that more jobs will be created and the easing of restrictions related to COVID-19,” Plopenio added.

Consumer sentiment in the country was less pessimistic in the second quarter, with the overall confidence index improving to -5.2% from -15.1% in the first quarter, according to BSP data.

“Consumer sentiment for the next quarter and next year also showed positive results, indicating that investors have enormous confidence in the future of the industry,” Plopenio said.

According to the review, consumer stocks are the best performing sector after Semirara Mining and Power Corp. and International Container Terminal Services, Inc., who are the sole representatives of their respective industries.

Said segment’s net income rose 42.31% year-on-year despite inflation risks, which Philstocks said was led by changes in the profitability of Monde Nissin Corp. and the 351.70% growth in net income of Jollibee Foods Corp.

Mr Plopenio said the consumer sector still faced downside risks, such as shortages of several raw materials amid the ongoing Russian-Ukrainian war and rising prices, which could slow the economy. ‘Offer and demand.

“We can look into consumer staples and essentials retail businesses because there is always a demand for their products regardless of the economic situation, which makes their business attractive,” a- he noted.

According to the review, bank lending has already increased for 12 consecutive months, with growth showing an upward trend year-on-year.

In July, loans at universal and commercial banks grew by 12%, the fastest since 12.7% in April 2020.

“It’s also above the 9.8% compound annual growth rate of the past five years,” Tantiangco said.

Meanwhile, the loan-to-deposit ratio of universal and commercial banks in the Philippines in June was 70.61%, up from 69.33% in June last year, which Mr. Tantiangco said implies a use highest loanable funds in the industry.

Philstocks reported that June gross non-performing loans (NPLs) fell 10.2% to 356.75 billion pesos, which Mr. Tantiangco said reflects “the better asset quality of our universal banks and commercial”.

“Rising interest rates caused by the BSP’s monetary tightening should also boost banks’ interest income,” Tantiangco said.

He noted that a further accumulation of headwinds to our local economy – inflation and global challenges – can weaken confidence and bank lending. — Justine Irish D. Tabile

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