Ayala companies lead in corporate governance

BY ATTY. IGNACIO R. BUNYE

I first heard about it last WIN a recent award ceremony, the Securities and Exchange Commission (SEC) and the Institute of Corporate Directors (ICD) lauded four Ayala companies for leading the way in terms of corporate governance in the country.

Ayala Land Inc. (ALI) and Globe Telecom made it to the top three Philippine publicly listed companies (PLCs) while Ayala Corp. and Bank of the Philippine Islands (BPI) were among companies who made it to the ASEAN Asset Class.

The occasion was the recognition of the awardees of the 2019 ASEAN Corporate Governance Scorecard (ACGS) Philippines Awards.

By way of background, SEC Chairman Emilio Aquino explained that the ASEAN Capital Markets Forum (ACMF), in partnership with the Asian Development Bank (ADB), developed the ASEAN Scorecard as part of its efforts to promote regional integration in the ASEAN region.

The vision of the ACMF is for the ASEAN economic community “to be highly cohesive, competitive, innovative, and dynamic with enhanced connectivity, sectoral cooperation, and integrated with the global economy.”

The ACMF thus initiated the regular evaluation of the corporate governance performance, strengths, and areas for improvement of publicly listed companies in six participating ASEAN member countries – Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. The ACMF used an assessment tool which it called the ASEAN Corporate Governance Scorecard or ACGS.

The ACGS, Chair Aquino explained, is “an assessment based on publicly available information and benchmarked against international best practices on corporate governance. It is supported by a rigorous methodology developed by corporate governance experts across the region to assess the corporate governance standing and performance of various PLCs in the six ASEAN countries.”

“ACGS sends a strong message to the world that the ASEAN region places corporate governance at the top of its priorities,” Aquino added.

Nine years after it was launched in 2011, the ACGS has evolved to become a strong driver of corporate governance reforms among PLCs. More importantly, the ACGS is now widely used by capital market regulators, investors, fund managers, and other stakeholders as a reliable reference document to get a better picture of the governance climate in each of the participating ASEAN countries.

Awardees are chosen based on a point system which evaluates various aspects of governance, e.g., 1. Rights of shareholders 2. Equitable treatment of shareholders 3. Role of stakeholders 4. Disclosure and transparency, and 5. Responsibility of the board. The perfect score is 130 points.

PLC awardees are given Golden Arrows commensurate to total points earned. ALI and Globe scored high enough to land among the top three Philippine PLCs and earn four Golden Arrows each. Ayala Corp. and BPI easily hurdled the 97.5 points cut-off, meriting their inclusion in the ASEAN Asset Class. Ayala Corp. also received three Golden Arrows while BPI received 2 Golden Arrows.

BPI REPORTS REDUCED INCOME ON HUGE PROVISIONS

Ma. Theresa Javier, Bank of the Philippine Islands (BPI) CFO, announced recently that BPI posted a net income in 2020 of ₱21.4 billion, 25.7 percent lower than last year’s. The decline was the result of the bank booking ₱28 billion in provisions for loan losses, which was five times more than 2019. NPL ratio stood at 2.68 percent, with NPL coverage ratio at 115.2 percent.

Total revenues increased 10.5 percent to ₱101.9 billion while total loans declined 4.6 percent to only ₱1.4 trillion due to a slowdown in corporate lending. Meanwhile, total assets went up 1.3 percent to ₱2.2 trillion.

Euromoney named BPI as the best Philippine bank in 2020. Euromoney cited BPI’s multiyear digital transformation journey and the success of its investment banking division, which in 2019 generated almost three times the revenues of the prior year.

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