DBP bats for reduced remittances to government

The Development Bank of the Philippines (DBP) is asking anew the National Government to reduce to 25 percent its dividend covering the 2001 period.

Last year, DBP submitted to the National Government P520 million representing dividends covering fiscal year 2000. It registered a net income of P1.46 billion in 2000.

Payment was made in two tranches, or P233 million issued in 1999 as advanced issuance and P270 million issued last August. Another P17 million was issued also last month representing overpayments in previous years.

DBP president and chief executive officer Remedios L. Macalincag said they have already made verbal representations with the Department of Finance (DOF).

"We already relayed our request to (Finance) Secretary Jose Isidro Camacho," Macalincag said during the bank’s 55-year anniversary celebrations.

DBP reported a net income of P1.84 billion for 2001 meaning that it should be issuing a dividend of P460 million if the DOF approves its request for a 25-percent dividend, or P920 million if government strictly adheres to the law.

Macalincag strongly believes that the DOF would again recommend to the Office of the President that the dividend be reduced to 25 percent of earnings instead of the 50 percent.

The DBP fears that if it is issues a 50 -percent dividend, their lending would be restricted. A 50-percent dividend would amount to nearly P1 billion.

"That would have been a bid reduction from our resources which otherwise should have been used for lending in our development programs," the DBP president told The STAR.

The National Government requires the DBP to submit a 50-percent dividend with consideration to the bank’s loan-loss provisioning. In 1999, the GFI declared a dividend of P233 million representing only 13 percent of its net earnings in that period.

Government financial institutions (GFIs) are required to submit half of the 50-percent dividend by the end of the first quarter. That is, the first tranche of the 2001 dividend for example must be issued to the National Government by end March of 2000. The second tranche would be issued by the GFI seven days after the release by the Commission on Audit (COA) of its yearend report covering the fiscal year 2001.

DBP registered a net income of P1.84 billion in the whole of 2001, or 26 percent better than the P1.46 billion achieved in 2000. In 1999, it reported a net income of P1.03 billion.

Income before loan-loss provisioning was 44 percent higher, or from P2.5 billion in 2000 to P3.6 billion last year.

Total resources was P138.9 billion while total deposits was P28.0 billion. Total deposits reached P31.6 billion in the first six months of 2001 slightly better than P29.2 billion registered the year before.

Total assets from January to June was P175.3 billion.

However, the past due increased from 8.8 percent in the first six months of the year to 12.09 percent end December 2001.

Loan portfolio as of end November 2001 was P78.84 billion indicating a slow down in borrowings in the second half of 2001 it was already recorded at P77 billion by June of the same year.

Of the total loan portfolio, wholesale lending amounted to P42.42 billion while retail lending stood at P21.10 billion. The ratio of wholesale lending to retail thus stood at a healthy 51 to 49.

DBP officials revealed that of the total loans extended in the year, a total of P20 billion went to the small-and medium enterprises (SMEs) sector. Likewise, 80 percent of the total loan portfolio are coming from official development assistance (ODA) sources.

The real estate sector got 20 percent of the retail lending followed by the manufacturing sector accounting for 19 percent. The electricity, gas and water sector accounted for 16 percent while the transport, storage and communications group was satisfied with 11 percent.

Meanwhile, several program lending with ODA funds were successfully undertaken last year.

The DBP was able to draw the second tranche of the LGU Urban Water and Sanitation Project of the World Bank amounting to $30 million. Total amount allocated by the World Bank is $100 million of which the first tranche was $23.30 million drawn earlier.

It has a $20 million loan facility from the Nordic Investment Bank involving the procurement of goods from Nordic countries including Denmark, Finland, Iceland, Norway and Sweden.

Another 20 million marks were tapped for the industrial pollution control from the German financial institution the Kreditanstalt for Wiederaufbau Credit Line for Small and Medium Enteprises (KfW-CLSME).