MANILA, Philippines – The Trust Officers Organization of the Philippines (TOAP) is optimistic that the assets under management (AUM) will continue to grow by double digits or roughly the same rate of 15.44 percent realized in the first three months of 2009.
The first quarter volume of AUMs, held by 37 domestic and foreign banks with trust licenses, amounted to P1.545 trillion or 15.44 percent higher from the P1.338 trillion in end December 2008.
“We see that rate will be sustained into the second quarter, and there are strong indications that it can be carried well into the entire 2009,” Marvin V. Fausto, TOAP president, said.
Fausto is also the senior vice president and chief investment officer, trust and investment group of the Banco de Oro Unibank Inc. (BDO).
The growth rate of 15.44 percent is reportedly the highest rate in recent history, and the total volume registered by March this year is a new record.
The volume hit the trillion-peso ceiling in 2006 amounting to P1.009 trillion. It continued to march forward to P1.153 trillion in 2007, and proved it was no fluke by expanding further to P1.222 trillion end 2008.
Likewise, there are strong indications that the special deposit accounts (SDAs) and corporate floats managed by the trust licensees are likewise at record levels. The SDAs alone is said to value up to a whopping P500 billion.
Likewise, the unit trust investment funds (UITFs) have recovered despite the poor performance of some funds.
From a high of P300 billion in 2006, it plummeted to P142 billion the following year. UITFs continued to slide to P85 billion last year, but started rebounding to P95 billion end March this year.
Trust officers said that there are more mature individual investors today.
Fausto said that there is definitely a lot of liquidity, and the initial feedback for the months of April and May indicate the same amount of growth as in the first quarter of the eyar.
“A lot of individual and corporate investors held back, thus parking their money in various instruments with the domestic capital markets,” the TOAP president said.
Individual and corporate investors have been extremely cautious in their choice of investments in the past months.
A number of individual investors were forced to withdraw from the overseas investment arena, and parked what was left of their wealth in the domestic market. Most of this “cautious” money have found its ways to “safe” domestic investment instrument like fixed income and money market investments.
Others have parked their money in the SDAs, which are guaranteed by the Bangko Sentral ng Pilipinas (BSP).
The more daring have invested considerable amounts in the equity market.
A number of major corporates tapped the debt market for capital, including San Miguel Corp., the Philippine Long Distance Telephone Co. (PLDT), Robina Farms, Ayala Land Corp., and recently, Globe Telecommunications.
“There is stronger optimism with the domestic capital markets,” the TOAP president added.
Deposits and loans are up with the banking sector, and non-banking financial institutions are reporting strong gains. Commercial bank lending grew by 13.4 percent in April, or 19 percent minus the reverse repurchase agreements (RRPs).
Domestic liquidity or M3 rose by 13.7 percent in April
“Strong loan growth is a precedent to a strong economic upturn,” the BDO senior officer pointed out.
The 2010 elections is likewise expected to act as an economic stimulus albeit not necessarily in productive endeavors.
Meanwhile, Fausto said that the positive growth of remittances in the past five months, continue to fuel private consumption as well as savings and investments.
As of March this year, remittances coursed through the banking system reached $4.1 billion, or a 2.7 percent annual growth. In March alone, remittances amounted to $1.5 billion, or a 3.1 percent year-on-year growth.
The first quarter performance of remittances has so far shamed detractors that it would register negative growth in 2009.
The BSP, which had originally estimated that remittances in 2009 would register flat to two percent growth, is now rethinking its forecast upwards.