Citi sees more upside for Philippine economy

MANILA, Philippines — Global banking giant Citi sees more upside for the Philippines as it remains optimistic on the prospects of Asia Pacific amid the expected external headwinds next year.

Kaleem Rizvi, managing director and head of Asia Pacific Corporate Bank at Citi, said in an interview with The STAR that the foreign bank is well positioned as the country continues to recover from the impact of the COVID-19 pandemic.

“We are uniquely positioned and I’m positive as economies open up [further] in Asia, we will have a strong 2023. We remain quite optimistic on the prospects of Asia Pacific as a region in 2023,” Rizvi said.

The Philippines managed to sustain its strong momentum with the gross domestic product (GDP) growth accelerating to 7.6 percent in the third quarter of the year, faster than market expectations, from 7.5 percent in the second quarter of the year.

This brought the average to 7.7 percent for the January to September period, slightly above the government’s 6.5 to 7.5 percent GDP growth target.

“The way 2022 is ending is quite different to how it started, given all the volatility across markets, in between brief periods of relative calm. Having said so, the way we are ending the year is quite positive and our clients and teams have performed really well, especially given the market backdrop,” Rizvi said.

Citi’s optimism for strong performance despite market backdrop include its globality; its ability to help clients in the environmental, societal, and governance (ESG) space; as well as its diversification due to the COVID-19 pandemic and geopolitics.

“One is our globality, we can learn from our experiences elsewhere. When markets become much more complicated, we tend to do well simply because we’ve got a broad range of products and solutions. We’ve helped our clients in terms of risk management. We continue to be actively involved in the ESG space, whether it’s raising capital or advising clients on their transition,” Rizvi added.

During his visit to the Philippines a few weeks ago, Rizvi said that there is enough activity from both local and multinational clients.

“So I think there’s still more upside in the Philippines. We’re pretty optimistic and you’ve seen the latest prints as far as GDP growth is concerned which are positive,” Rizvi said.

Back to pre-pandemic levels

For his part,  Citi Philippines corporate bank head Fernando Fleury said that most of the bank’s corporate clients are already operating at higher than pre-COVID levels across sales and turnover.

“The economy has actually fully reopened in February, March when the lockdowns and restrictions were eased.” Fleury said.

Citi sees more foreign direct investments (FDIs) flowing into the Philippines after reaching $12.41 billion last year amid the mergers and acquisitions (M&As) in the digital space as well as several conglomerates venturing into the data center space.

“We believe that there’s more upside for the Philippines in the current environment,” Fleury said.

Best Corporate Bank in Asia

Rizvi said that Citi remains the best Corporate Bank in Asia Pacific, which not only has the trust of its clients but staffed with a talented group of bankers across the region.

“Having worked in Citi for 28 years across three different continents, I know that when markets become tough, we are at our best,” Rizvi added.

According to Rizvi, global financial conditions vary as the Bangko Sentral ng Pilipinas (BSP) has raised key policy rates by 300 basis points that brought the benchmark rate to a 14-year high of five percent from an all-time low of two percent.

“Obviously there is some tailwind because of rate increases in different parts of the region,” Rizvi said.

Helping Philippine clients

With its 120-year history in the Philippines, Citi deals with over 950 multinational clients and all the leading local corporates.

“In the Philippines we’ve had one of our stronger years. It’s very much risk management driven. It’s very much energy transition driven. It’s very much around digitalization and how do we help clients digitalize and become more efficient,” Rizvi said.

Citi continues to help clients in the Philippines as they continue to diversify their operations.

“For some of the Filipino corporates that are more regional and more global, it’s how do we help them on their diversification journey from an acquisition as well as the capital markets perspective or treasury management,” he added.

Citi also serves a big bank to all the Philippine local banks.