iRemit to venture into financial derivatives

MANILA, Philippines - I-Remit Inc., a Filipino-owned global remittance firm, will venture into financial derivative activities as a safeguard against the impact of fluctuating foreign exchange rates, a company disclosure to the Philippine Stock Exchange (PSE) said.

iRemit said its board has approved the amendment of the corporation’s primary purpose to give way to this new function.

“With the amendment, and subject to the Bangko Sentral ng Pilipinas’ regulatory approval, the corporation will no longer be limited to engaging in spot foreign currency transactions,” it said.

It added that it “will be able to engage in financial derivative activities such as foreign currency swaps, forwards, options or other similar instruments.”

It would be noted that due to the peso’s appreciation against the dollar in the first three months of the year, iRemit’s income dropped 95 percent to P1.6 million from P33 million in the same period in 2012.

As iRemit’s operation is dependent on transaction fees of foreign exchange particularly the peso, any forex gyration would greatly impact on its profit.

Due to the sharp peso appreciation, the company said its trading gains also suffered.

For the first quarter, the company’s revenues dropped 11.8 percent to P175.8 million from P199.4 million in the same period last year.

iRemit said the decline in sales was“mainly due to significant net realized foreign exchange loss as the Philippine peso continued to appreciate against the US dollar.”

Despite the income drop, total transactions jumped six percent to 772,213 in the first quarter. In dollar terms, remittance volume rose 6.5 percent to $398.6 million from $374.4 million.

Most of the transactions came from the Asia-Pacific (43 percent), followed by the Middle East (30 percent), North America (13 percent) and Europe (12 percent).

The company’s assets grew by 10.2 percent to P2.56 billion in the first three months of year from P2.32 billion in the previous year.

At present, iRemit services are offered in 25 countries and territories in Asia, North America, Europe and the Middle East.

Last year, it cornered about 6.5 percent of the $21.391 billion remittance inflows in the country.