The bulk of our funds continues to be invested in inter-bank loans. Aside for a certain amount which is invested primarily for liquidity considerations, the rest were placed in interbank loans, pending the availability of direct loans and/or government securities. The drop in inter-bank rates by a total of 225-basis points during the second semester certainly took its toll on our earning potentials.

Total Resources of the Bank reached P966.2M at year’s end, a growth of 3.9% over the previous year’s level of P929.3M. This again marked the highest level that the Bank has achieved in its ten years of operation as a Savings Bank. Deposits reached P338.5M by year-end, an increase of 10.6% against the previous year’s P306.1M. Direct Loans increased to P89.5M (7.3% from P83.4M); Held-to-Maturity Placements dropped 45.05% from P266.4M to P144.0M, while Interbank Loans jumped to P594.3M (26.4%) from 470.3M.

The Monetary Board and the Bangko Sentral ng Pilipinas continue to issue new circulars which will cover stricter bank regulations to prevent bank failures. In July, the more stringent capital requirements of Basel II were implemented. Although only thrift banks which are subsidiaries of universal or commercial banks are covered by Basel II, the others will be covered by new regulations based on an enhanced version of the existing Basel I-type regulations. The BSP was now allowing thrift banks to engage in the traditional trust business, but limiting the services to estate trust arrangements. In addition, it also liberalized bank branching which includes the liberation of non branch units for banks.

2007’s spectacular economic growth rate of 7.3% is unlikely to be repeated this year. By the end of March, 2008, the inflation rate almost doubled, accelerating to 6.4% in March--the fastest in the last twenty months due to rising commodity prices. On the other hand, the peso fell 3.2% to P41.76 against the dollar--the biggest since June, 2001. By mid-April of 2008, oil prices touched a high of $112.48 a barrel, up 17% from the start of the year; rice surged toward a record $21.60 per 100 pounds (from $13.865 at 2007 year end); and the peso further dipped to $41.845.

 

For 2008, the government is still maintaining its growth target of 6.3-7.0 per cent and an inflation rate of 3-5 per cent amidst an expected global economic slowdown caused by a possible U.S. recession and continuing rise in oil prices. In addition, the country's economic growth will also be affected by political turmoils facing the Arroyo administration, regarding the aborted national broadband network deal which led to a number of corruption charges against senior government officials.

Under this economic and political background, 2008 will become once more another challenging year for the bank as it will continue to exert prudent management of its assets.

On a happy note, we are pleased to announce that, since our conversion to a savings bank in 1997, the bank’s main office had been located at the Sterling Center along De la Rosa Street in Legaspi Village in Makati City. However, at the start of the fourth of 2007, the bank transferred its head office to a new location at the Glass Tower along C. Palanca Street, also in Legaspi Village.

Again we would like to thank our Board of Directors, our Stockholders, Officers and Employees and Clients for their continuing support.

 

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