Ayala Corp. managing director Rufino Manotok said that while its core companies turned in better or steady earnings during the period, the conglomerate was affected by the increase in actual financing costs due to hedging and swaps.
"While interest rates on the company’s foreign loans have gone down by an average of eight percent from last year, actual financing cost has increased due to the cost of hedging and swaps which was affected by the widening interest differentials between the US dollar and peso and the higher spot exchange rates," Manotok said.
As a precautionary measure, he said Ayala Corp. will focus on maintaining a strong liquidity and financial position with the end in view of further reducing its debts over the medium term.
"The company expects its debt-to-equity ratio to improve to 1:1 by the end of this year from 1.18:1 as of year end 2000 as loans of $170 million are paid down towards the end of this month," Manotok added.
He said as funds have been earmarked to cover loans maturing by next year, a further paring down of the debt-to-equity ratio to around 0.75:1 is targeted over the medium term.
"The funding base is also being restructured to lessen the company’s dependence on forex swaps and other more expensive sources of peso funds," Manotok said.
Among Ayala’s major companies, its financial services unit the Bank of the Philippine Islands (BPI) posted the strongest growth with a consolidated net income of P4.6 billion, up 72 percent from P2.7 billion a year earlier.
BPI’s total resources increased by nine percent to P397 billion, with deposits making up P314 billion. However, its loans contracted by three percent to P169 billion in the same period, reflective of the general economic slowdown, Manotok said.
As of end September 2001, BPI’s non-performing loan (NPL) ratio of 12.8 percent ranked as the lowest among the country’s universal banks, a reflection of its leadership in overall asset quality.
In telecommunications, Globe Telecom sustained its growth momentum with a three-fold increase in net income from P1.1 billion to P3.4 billion.
Its flagship wireless phone service, which make up 82 percent of total revenues, continued to surge as its subscriber base exceeded the four million mark, double from last year’s 2.1 million subscribers.
Manotok added the integration of Touch Mobile from the acquired company Islacom during the third quarter is further expected to boost Globe’s frequency in the cellphone business with the addition of a strong cellphone brand to cater to an unserved segment of the prepaid market.
Property unit Ayala Land Inc. (ALI), meanwhile, posted net earnings of P1.6 billion, equaling last year’s level as higher expenditures practically offset the 19 percent rise in revenues to P9.4 billion. ALI derives the bulk of its revenues from land sales and lease income from commercial centers and office buildings.