Aurelio “Gigi” Montinola III is the president of the Bank of the Philippine Islands, and one of the most respected bankers in the Philippines. He wrote the following messages, which I find as the most sober and forthright thoughts in this financial crisis.
Attached please find a piece that I was supposed to write for an outside publication – unfortunately, I cannot submit it as the ending is perpetually changing.
What I thought to be a gathering storm to hit in the first quarter of 2009 has hit our beaches yesterday – the Philippine Stock Exchange had its highest (12. 27 %) drop in history a single day, and the Peso Dollar exchange rate is creeping back from around P 41: $ 1 to almost P 50 : $1. Like other markets in the region, the PSEI has dropped 50% ytd, and people are getting nervous.
It has now become a Fundamentals versus Emotion issue – Philippine economic fundamentals relative to the world and even Asia are good, and the banking system is stable, but Bloomberg 24×7 Television, local media reports, and cocktail party talk make people fear the worst, and then expect the worst.
We know however from experience that Filipinos are resilient and have survived the economic crises of the foreign debt moratorium in the 1980s and the Asian Crisis in the 1990s.
BPI remains well capitalized, strong, and prudent – and both our customers and the market analysts appreciate this. 2008 will show lower earnings than our banner year in 2007, and we must now worry about what 2009 will bring.
As in the past, this negative cycle will eventually pass, but in the meantime, we will have to prepare for the typhoon.
Let us all work together to take care of our customers, and in the process, keep BPI strong and our employees safe and secure in their jobs.
All the best,
His message follows: