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Welcome to the Business Outlook. I'm Ron Cruz.

And I'm Salve Duplito.

The Headlines.

U.S. futures and European markets are up with the London FTSE 100 hitting fresh record highs.

ABS-CBN bringing back TV Patrol and its other iconic shows to all TVs channel.

And we speak with BPI President and CEO T.G. Luke Kauko on how the bank plans to sustain its record performance this year.

A check on European markets. London's FTSE 100 is hitting record highs as global markets build on yesterday's gains.

Also boosting sentiment, a series of business activity surveys that show Germany returned to growth in April after months of contraction.

While activity in the broader Eurozone expanded.

At its fastest pace in nearly a year.

As for Wall Street, futures are also pointing to a positive open ahead of earnings from mega-cap tech stocks.

Tesla will be firing the opening salvo after the bell Tuesday.

Here are some stocks to watch out for.

We're monitoring shares of Novartis after the company rates its full-year guidance following better-than-expected first-quarter results.

Shares of the Swiss drugmaker climbed 4% in midday trading.

Also in focus, associated British Foods which raised its outlook and interim dividend amid easing inflationary pressures.

Its stock last traded higher by 9%.

We're also keeping a close watch on shares of Hibbit and JD Sports.

The British sports fashion retail company announced plans to acquire Hibbit for over $1 billion.

That sent the stock of the American athletic fashion retailer soaring 19% in the pre-market.

While JD Sports shares are also up.

By 6%.

Meanwhile, Asian markets ended Tuesday trade mostly higher as Wall Street's rally overnight boosted tech stocks in the region.

The Hong Kong Hang Seng jumped nearly 2%.

While upbeat factory data added cheer to Japan and Australia's markets.

Here at home, Philippine shares joined the rally with main index climbing back above the 6,500 level.

If you'll notice, the rallies are quite shallow.

And there's a lack of volume.

So I wouldn't say that this rally is convincing at all.

So it's still a bit iffy right now whether this rally is going to continue or not.

I mean, of course, all of us are hoping that the market could do a significant rally and maybe climb back up to 6,700 or maybe even 6,800.

But I'm actually not too optimistic.

I'm not too optimistic about it.

I'm like maybe just I'm 50-50 about the situation right now.

There's also that threat that, you know, prices might just be consolidating right now before we continue to move lower.

A notable stock movements in the region.

Hong Kong's biggest IPO this year proved to be a bust as Chinese bubble team maker Chabai Dao plunged as much as 38% in its trading debut.

AMBS and ABS-CBN Inc. a deal to bring some of ABS-CBN's iconic shows as well as its evening newscast TV patrol to the free-to-air channel All TV.

Jackie Pascual has the details.

Advanced Media Broadcasting System or AMBS and ABS-CBN have formally signed a partnership that will bring iconic Filipino entertainment programs to more audiences via the free-to-air channel All TV.

Advanced Media Broadcasting System or AMBS and ABS-CBN have formally signed a partnership that will bring iconic Filipino entertainment programs to more audiences via the free-to-air channel All TV.

Nostalgic Kapamilya shows under Jeepney TV will now be aired on All TV.

Included in the partnership is the airing of TV Patrol, the flagship news program of ABS-CBN on All TV.

Very proud and honored to be celebrating today the start of what we hope is going to be a long, fruitful and good partnership between ABS and ABS-CBN.

Very proud and honored to be celebrating today the start of what we hope is going to be a long, fruitful and good partnership between ABS and ABS-CBN on All TV.

Very proud and honored to be celebrating today the start of what we hope is going to be a long, fruitful and good partnership between ABS and ABS-CBN on All TV.

Proud and honored to be celebrating today the start of what we hope is going to be a long, fruitful, and good partnership between AMBS and All TV as well as ABS-CBN.

We are very excited to bring the ABS-CBN brand of storytelling to the audiences of All TV.

It's a bit of a sentimental note for us today because we're bringing one of our longest running programs, TV Patrol, back to Channel 2.

I know there are some who feel some pain over our return to our former channel, a home that was once ours.

But in all humility, let's try and put all of the past behind us and embrace instead our mission to serve the Filipino, wherever they may be.

ABS-CBN President and CEO Carlo Catigbak, COO Cory Vidanes, Group CFO Rick Tan, AMBS President Maribel Torrentino,

and CFO Cecil Bernal.

Bernardo signed the deal.

Also present were ABS-CBN Chairman Mark Lopez and Chief Partnership Officer Bobby Barrero.

The Villar Group, meanwhile, was represented by Chairman Manny Villar, Senator Mark Villar, Vista Land and Livescapes, Inc. President and CEO Paolo Villar,

and All Value Holdings Corp. President and CEO Camille Villar.

AMBS and ABS-CBN hope the partnership will bring more enjoyable, enriching, and informative content to Filipino.

We're very excited to welcome TV Patrol, which as you know is the longest running news show in the Philippines.

We're very honored to have them in All TV, as well as the rest of the content.

There's been a persistent clamor for Patrol's credible news and information to reach the audience it once had.

I hope that by working together with All TV, we are once again able to deliver this service to all our Kababayans.

All TV is available on FreeTV.

FreeTV, cable and satellite TV nationwide.

Jackie Pascual, ABS-CBN News.

In other corporate news, the Philippine Competition Commission begins an in-depth review of Ayala Pharma Ventures' proposed acquisition of St. Joseph Drugstore.

The PCC says its initial review pointed to potential competition concerns in relevant markets in the Ilocos and Cordillera regions.

Ayala Pharma Ventures, which operates Generica Drugstore,

is seeking a 49% stake in St. Joseph Drug.

And San Miguel is offering 20 billion pesos in bonds due 2034.

The bonds have a base offer of 15 billion pesos with an oversubscription of up to 5 billion.

These will be sourced from SMC's 50 billion peso denominated shelf-registered bonds.

The Philippine Securities and Exchange Commission asking Google and Apple to remove the Binance application from their Philippine app market.

The SEC chairperson says the public's continued access to Binance poses a threat to the fund security of investing Filipinos.

Binance was banned from operating in the country last March after the SEC found it was unauthorized to trade in securities in the Philippines.

Binance is touted as the largest cryptocurrency website in the world with an average daily trading volume of 65 billion dollars,

covering more than 400 cryptocurrencies.

And we're taking a quick break.

Up next, BPI President and CEO T.G. Limcauco joins us in the studio to talk about the bank's record first quarter performance.

Welcome back.

BPI sustains its record earnings streak into the first quarter of the year as it posts a 25% jump in its first quarter bottom line.

The Ayala Group.

The bank is confident it can stay at peak performance for the rest of the year.

BPI's President and CEO T.G. Limcauco joins us tonight to discuss how they plan to maintain this momentum.

T.G., welcome finally to the studio.

Thank you. Thank you, Sal.

Hello, sir.

I was watching your event this morning with the stockholders and I was thinking, T.G. is giving his sona.

Soba.

Soba. State of the banking.

It was a very good year last year and it was a great first quarter for us.

And to me, what it tells us is that the bank is firing on all cylinders, but so is the economy.

I think what we're seeing is that the Filipino consumer is resilient and is confident.

Despite the high prices, despite the inflationary issues that we faced last year, the Filipino consumer is very confident.

And we saw that.

I guess our record earnings are a result of the expansion of our loan book primarily towards the consumer sector.

We were able to shift our book to be more consumer-focused than ever before.

And obviously, the consumer product has a higher yield than the typical top corporate.

Some of the other banks are up as well, but not as much as you guys.

And you work in the same landscape with the same problems.

Yeah.

And you're able to pull that off.

I think it's our digitalization strategy.

We've always said that we're very focused on digitalization because what it does is it allows us to capture more customers more efficiently, basically cheaper.

We're able to service our customers better and at a lower cost.

And I think that's what's driving.

When you take a look at the way our revenues are growing and the way our expenses are growing, there's a 5 percentage point difference between the two.

And that matters a lot.

Especially when rates...

As they were last year and remaining high this year.

So, it's really panned out well for the bank.

And we're seeing everything work.

Even our fee income, we're getting more people investing in our, let's say, our UITFs and our mutual funds.

Our insurance business is doing really well.

Our private wealth business is doing excellent.

And we've started a new, I guess what we call a new channel called Agency Banking.

Where now we're trying to expand their customer base.

By attracting more and more customers.

And we're not asking them to come to the branches.

We're telling them to come to us through our app.

Or wherever we are.

We actually have a slogan called May BPI Dito.

And you can actually learn about our products at many of our, what we call our retail partners.

Ayala Malls, the Robinson's Retail Stores, Uncle John's, C.O.L. Gas, even Lazada.

We're on Lazada.

You can learn and you can onboard our products through these different areas.

At the risk of revealing who is your favorite general in the bank, which one of these are you most excited about?

I think all across, I think we're very excited about the consumer sector.

And we, our consumer business, I guess, is along several lines.

The cards business is very strong.

While we look at the traditional mortgage and auto, auto has picked up significantly.

We are also looking at what we call our higher.

Segments, private wealth, preferred gold.

That's also been doing really well by us presenting a different way of marketing our products.

For example, in private wealth, we don't talk about investments and just typical banking.

We talk about a whole experience that banking is not just for the very wealthy.

It's not just about investing.

It's about living a life.

Follow-up question.

How do you explain?

Because the economy shows that inflation is very high.

People are crazy with their budgets.

They're trying to reduce cost.

And yet, on the consumer side, it's all going up.

Well, I think one of it is last year was driven a lot by revenge spending.

So that will moderate.

But when we think about inflation being high, I think you need to ask yourself, really?

Really?

I think food has been a little issue.

And I think I've always told my friends and the team.

We need to watch rice.

Rice is very key to the Filipino psyche.

And rice prices have been on the rise for the last year.

I think it's up 24%.

And it's a psyche, right?

When you see rice prices go up, you think everything's going up.

But when you look at the whole inflation basket, we're really only up 3.7%.

It might go a little higher, over 4% in the second quarter because of base effect.

But in general, it's the confidence that people have in the future.

And I think Filipino consumers,

are still confident.

We're seeing record billings in credit cards.

And while you might think, oh, credit cards, you need to be careful.

You need to see what kind of customers there are.

In credit cards, you've got three kinds of customers.

You've got the transactors, the people who buy and then just pay.

Those are the people that are not very profitable for the bank.

It's me.

But they're the most responsible.

That's strong.

You have what they call the revolvers, the people who never pay it in full.

And just keep on paying maybe a minimum or more than the minimum.

Okay, now you're talking about me.

But they're not defaulting.

But they're not defaulting.

And then you need to watch what they're using it for.

I think you begin to worry if people are revolving on their groceries.

What are they using it for?

It's travel.

Travel, maybe appliances.

So those are what I consider investments.

Whether it's an investment for your future because it's an appliance that you need to have a better life.

Or it's an experience that you want to pay over time.

Now, if you begin.

If you begin revolving your groceries, I think you have a problem there.

So you need to watch out what people are buying.

And when we track that, we don't have an issue yet.

Aside from inflation and maybe those things that you're closely monitoring right now,

are there any challenges you're foreseeing for at least for the rest of the year?

I think you need to be very careful about some of the geopolitical issues.

That one might catch.

I don't want to catch you by surprise, but I'm hopeful, reasonability, reason prevails.

When you look at your loan book, you need to be not so aggressive because you need to realize that a bank is a business of trust.

And as I was telling Salve earlier, when a bank fails, it's the customers who get hurt.

And the owner gets hurt the least.

Whereas in any other business, the customers just walk away.

It's the owner who gets hurt.

So as a bank, you need to be very conservative.

And I think that's why you need to watch the kind of loans you give, the kind of policies you have.

And BPI's credit culture has kept a toll for a century and a half over.

And I think we will maintain that.

I think one of the conversations we've had is that covering the banking sector in the 1997 crisis,

and while looking now at the capital adequacy ratios and the provisions for loan losses,

they're so far from the 97 levels.

Absolutely.

And you're saying, are they overdoing this?

But I guess that's your fortress balance sheet.

Kudos, kudos to our Banco Central from the 90s and onwards that's kept a very steady policy of we want strong capitalized banks.

We want well-run banks.

The level of supervision that the BSP gives us, maybe some bank presidents, including me, sometimes feel like, oh, it's overbearing.

But there is a reason for it.

And I think I cannot find...

A better professional force than the people at the BSP who know what they're doing.

And there will always be...

We will always have arguments and reason prevails.

But you need to understand their role as the BSP to safeguard the banking industry.

And strong capital, you can never, never fault that.

One more.

That's why I was asking you earlier, everybody's talking about Jamie Dimon saying there's going to be a big crash,

a huge recession in the U.S. and winter is coming.

Ray Dalio saying all of these things.

And I was asking you, do you think that there's something that will spark that there and will affect the Philippines also?

It's got to be geopolitical tension, something that's out of the blue.

Because when you look at the way the economy of the U.S. is going, it's fairly strong.

It's very resilient.

In fact, that's the reason why rates aren't coming off.

Because the demand is still there in the U.S. and they need to be very careful about that.

I think every central banker worth his salt.

It's got to be strict about his mandate for price stability.

And I think that's what they're doing at the Fed.

That's what they're doing here at the BSP.

And you have a very strong economy.

No reason to cut rates yet.

And you want to keep inflation at bay.

So I don't see a winter coming.

You mentioned about the app a while ago.

You've stuck it out with your app.

And also your online services through the web.

How do you view the process?

I think it's very important that we have the presence of digital banks in the country.

They haven't been profitable.

Two out of six.

When we talk to the BSP, only two out of the six banks have been profitable.

They may not be a threat right now, but there has been around 9 million new accounts from these six digital banks.

Do you see them giving you a run for your money maybe in the future?

Not in the near future, to be honest.

And I think let's be very clear.

When you say a digital bank, you really mean a virtual bank.

It's a digital only.

Yeah, a digital only bank because I'd be the first to say BPI is a digital bank.

And I'm sure my colleagues, Union Bank, BDO, they're digital banks because you can access the services digitally.

The difference with them is that they're new and therefore they don't have legacy systems.

So it's fairly easy for them to launch an app.

I think also from a governance point of view, you can be a little more aggressive.

If you've got fewer customers.

When we take our systems down for an hour, all hell breaks loose.

Social media breaks loose.

I see it.

When one of the digital banks takes their system down for a day, hardly a ripple.

But I'll give you that the digital banks have transformed the banking industry in the Philippines quite positively.

What they've done is they've made the legacy banks wake up.

They've forced the legacy banks to be more innovative.

They've forced the legacy banks to invest more in technology.

And I'm a big believer that banking is a technology business.

Banking of the old days of paper.

Banking is about moving data and keeping data.

Your money is not bills.

It's just data.

And that's what the digital banks have done.

They've raised the awareness.

They've raised financial inclusivity.

They've raised awareness of the people.

They've raised awareness of the public in terms of banking, savings, competition.

They've raised awareness in cyber security.

So all of this has taken all together quite well.

And I think I wish the digital banks well.

Because they've done a service for the country, for banking.

But it's an uphill climb.

You know, TJ, listening to you, I now see why some people I talk to say,

you are the best person to be at the helm of VBI now.

Because you're so technologically...

They're too kind.

They're too kind.

And you were in part of what made GCash what it is.

I'm a techie at heart.

Exactly.

And now that digital banks are a thing here,

how much money are you willing to put into digitalization moving forward?

Because it's still digital, right?

Well, I don't think you'll ever be 100% digital, Salve.

Because banking is a business of trust.

Because our safety is paramount.

And the good example I give is it's so easy for finance people like myself

to read on the web about a financial product and make a decision without talking to someone.

Because I'm trained in that.

But I can do the same about my health, right?

If I feel a symptom, I can go to Google, read all about it.

And then get sick the next day.

But I would never, never do it myself.

I would still go to a doctor.

So everyone out there who are not financers, you can read about everything.

But in the end, they'll want to come and talk to someone for expert.

Just that level of comfort, right?

So I think you'll always have physical presence.

You'll always need the human touch.

Especially as the services and the products get a little more complex.

At the bank, we are spending close to 14, 15 billion pesos a year on technology.

And about half a billion of that goes just into cybersecurity.

Whoa.

Yeah.

So I think we're the institution that spends the most on cybersecurity.

Because it's very key.

Robots, AI, quantum computing?

All very nice words, Salve.

I think robots will be in the branch of clean.

But AI is a big thing.

Not take deposits?

No.

Well, in a way, our cash acceptance machines are robots, right?

They're not walking.

They're not very cute.

They have to walk.

Then they're cleaning.

Okay.

But in the end, I think artificial intelligence will be a big game changer.

We're beginning to roll out some gen AI tools at the branch where we're using it so that

or we will use it.

It's in development.

It's about to launch in a couple of months where our people, our frontliners will have access to it

so that they can answer any question of the clients.

And the answer is consistent.

Because obviously, you know, the bank, we've got thousands of products.

We have so many processes, so many policies.

What we've done is we've ingested all that into a platform developed by open AI.

And it's our own little generative AI tool that anyone can ask from the branch in Cebuano, in Ilongo.

They can ask in their native tongue and it will be an answer.

And it will be available first to our frontliners.

Therefore, no more mistakes in the answer.

Consistency.

Okay.

Consistency is more important.

Okay.

And then hopefully, we make it available to all BPI employees.

This is a national ID question, I think.

Can you use the national ID when you're opening?

It should say yes.

It should say yes.

It does say yes.

I can demonstrate.

It says yes.

All right.

Oh, my gosh.

We don't have time.

I have so many more questions you have to return and answer the rest.

Happy to do so, Sal and Ron.

I was going to ask about sustainability, financial inclusion.

And the stock price is now closed at?

125 today.

125.

So far from 15 per share.

Yeah.

In 1998.

Yeah.

Well, the bank's done really well.

The leadership team there, and I've only been there for three years, so it's really

not me.

It's the whole team that's been there.

And I always say, we just build on the success of the people who came before us.

And for us, the stock price is a great reflection of our performance.

And we owe it to our shareholders who continue to deliver.

We have a very clear dividend policy where we pay out 35 to 50 percent of our earnings

in dividends.

Two years ago, our dividend was 1 peso 80 per year.

Last year, it was 3.36.

And because earnings were up 25 percent, I think people expect the cash dividend to be

higher.

All right.

More money in Ron's bank account.

Thank you so much.

Thank you.

Thank you so much.

Thank you, Ron Salve.

That's your Business Outlook.

I'm Ron Cruz.

And I'm Salve Duplito.

The world tonight comes your way at the top of the next hour.

Keep it here on ANC.

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