Gotianun family-led Filinvest Development Corporation (FDC) posted a net income attributable to equity holders of the parent company of P2.0 billion in the first quarter of 2021, a decline of 35 percent from P3.0 billion in the same period last year, with a consolidated net income of 2.7 billion. Revenues and other income retreated by 23 percent to P16.6 billion due to the declines across the portfolio. Costs and expenses had a corresponding decline of 23 percent to P13.0 billion following cost cutting measures to optimize efficiency.
“The challenges brought about by the pandemic continue to persist and we know fully well that the path to recovery will be volatile. It is worth noting however that times of crisis are also times of opportunity for strong, forward-thinking companies. We are using this time to focus on building scale while leveraging on the strong foundation and franchise we have built across our portfolio of businesses.,” said FDC President and CEO Josephine Gotianun-Yap.
EastWest Bank delivered a net income contribution to the group of P2.0 billion, equivalent to 61 percent of FDC’s bottom line. This was followed by the property business, composed of the real estate and hospitality segments, which delivered a combined P641 million or 20 percent of total. The power subsidiary contributed P463 million in net income or 14 percent of total, while the balance of 5 percent came from other business.
The company’s balance sheet remained healthy at the end of the first quarter of 2021. Debt-to-equity stood at 0.94:1 while net debt-to-equity was at 0.41:1. FDC was able to successfully raise US$200 million from fixed-rate five-year bonds in September 2020, providing FDC with ample resources to pursue growth opportunities. At present, FDC is looking at infrastructure and sustainable solutions such as solar energy, water and wastewater projects to expand its current portfolio.
EastWest Bank delivered a net income contribution to the group of P2.0 billion in the first quarter of 2021, 12 percent lower than the P2.3 billon in the same period last year, resulting from the decline in loans and lower credit card yields.
On a standalone basis, EastWest posted a net interest income of 5.9 billion, 11 percent lower compared to the same period last year, on the back of a compressed net interest margin (NIM) of 7.5 percent from 8.1 last last year due mainly to the interest rate cap on credit cards beginning in November last year. These were partly offset by the improvement in funding costs from lower interest rates on deposits, complemented by less dependence on high-cost funds.
Securities trading gains were also lower at P878 million. Meanwhile, fees and other non-interest income were lower by 8 percent to P1.1 billion mainly from subdued business flows and higher losses from asset foreclosures. On the other hand, operating expenses, excluding provisions for losses, were lower by 7 percent to P4.2 billion while provisions for losses dropped by 70 percent to P723 million. Despite the year-on-year drop in net income, EastWest delivered a high return on equity (ROE) of 14.4 percent.
FDC’s real estate business composed of listed subsidiary, Filinvest Land, Inc. (FLI) and Filinvest Alabang, Inc. (FAI) contributed P850 million in net income to the group in the first quarter of 2021, lower by 45 percent from the same period last year as it continued to bear the negative impact of the ongoing COVID19 pandemic. The residential segment saw a 25 percent decline in revenues to P2.6 billion while rental revenues likewise declined by 17 percent to P2.0 billion. The growth in lot leasing was offset by the lower mall revenues as the restrictions continued to weaken operations.
The power subsidiary, FDC Utilities, Inc. (FDCUI), registered a net income of P463 million in the first quarter of 2021, a 9 percent decline from the same period in 2020. Revenues dropped by 10 percent to P2.0 billion due to the contraction in volume by 21 percent following the full impact of the pandemic in the January to March period this year. The lower volume was offset by the 12 percent increase in average price to P6.18 per kilowatt hour. On a quarter-on-quarter basis, revenues declined by 5 percent in the first quarter of 2021 against the fourth quarter of 2020 but this is due to the seasonality in demand. Its 405-megawatt clean coal plant located in Misamis Oriental in Mindanao services a diverse customer base composed of 14 mostly triple A distribution cooperatives and two industrial customers.
Hotel operations under Filinvest Hospitality Corporation (FHC) posted a revenue decline of 66 percent to P231 million in the first quarter of 2021 as business volume remained highly affected by the pandemic, leading to a net loss of P209 million. While the six hotels and resorts under the Filinvest group’s portfolio were all in operation during the period, revenue generation was limited due to the travel restrictions and social distancing guidelines. Occupancy rates were below pre-COVID levels except for Crimson Alabang and Quest Clark which posted higher occupancy rates of 71 percent and 77 percent, respectively. FHC’s portfolio of six managed properties has approximately 1,800 rooms under the Crimson and Quest brands.
“Prospects for 2021 remain uncertain but we are hopeful that the economy can bounce back once community quarantines are relaxed. We recognize that crucial to a robust economic recovery is renewed business and consumer confidence. We are supportive of efforts to open the economy while taking resolute steps to fast-track the vaccination rollout program and keep the COVID-19 caseload to the lowest level possible,” added Gotianun-Yap.
FDC continues to be at the forefront of the private sector’s efforts in helping the government address the challenges of the pandemic. The company is set to roll-out its free vaccination program for all employees by third quarter of this year.
