00:38.7
saw its biggest jump in over a year in March.
00:41.9
The London FTSE 100, meanwhile, returned from the holiday with a bang
00:45.4
as it continues its record rally.
00:48.2
As for Wall Street, futures are pointing to a mixed open
00:50.8
with the Dow Jones possibly extending its winning streak to a fifth day.
00:55.3
Investors also assessing Disney's earnings,
00:57.8
which beat expectations.
00:59.3
After a surprise profit in its streaming unit.
01:04.7
Here are some stocks to watch out for.
01:06.7
We're monitoring shares of UBS, which has swung back to profit
01:10.1
after two quarterly losses following its takeover of Credit Suisse.
01:14.4
Shares of the Swiss bank popped 10% after it smashed first quarter expectations.
01:19.7
Also in focus, shares of Italy's second largest bank, Unicredit,
01:23.4
after it hiked shareholder payout guidance.
01:26.4
Unicredit shares are up 3% in their highest line.
01:29.3
This is the highest level in 13 years.
01:31.3
We're also keeping a close watch on shares of BP after the energy giant posted lower than expected
01:37.0
underlying profit due to a slide in oil and gas prices.
01:41.2
BP shares are down two-tenths of a percent.
01:45.8
Meanwhile, Asian markets ended Tuesday trade on a mixed note.
01:49.0
Japan's Nikkei 225 rose 1.5% as it returned from a holiday.
01:54.3
The ASX 200 saw a similar close after the Reserve Bank of Australia kept its
01:59.3
interest rates unchanged as expected.
02:02.5
As for decliners, the Hong Kong-Hang Seng Index fell 0.5%,
02:06.6
snapping a 10-day winning streak.
02:10.4
Philippine shares also in the red,
02:12.0
even as the country's April inflation print came in line with expectations.
02:17.9
The market is still on the sideline,
02:21.2
waiting for more guidance as to the direction of the economy,
02:25.0
besides just inflation.
02:26.4
At least with inflation out,
02:29.3
we know where monetary policy is headed.
02:31.4
I think we want to see sustained double-digit growth in corporate earnings.
02:37.7
So far, the banks have reported very strong numbers.
02:41.5
Overall, it's been positive so far,
02:44.2
but we're not yet halfway in terms of the earnings reporting season.
02:49.8
So the earnings would be the main driver outside of inflationary GPs.
02:57.7
More on the April inflation print.
02:59.1
More on the April inflation print.
02:59.3
The Philippines Consumer Price Index quickened to 3.8% in April,
03:04.0
slightly up from March's 3.7%.
03:06.7
While it's right within the central bank's forecast,
03:09.4
it continues to hover near the upper end of government's 2-4% target range.
03:14.6
The main drivers of acceleration for April,
03:17.0
faster increases in the prices of food,
03:20.0
particularly vegetables,
03:21.5
largely due to the ongoing El Nino phenomenon.
03:24.9
Higher oil prices also contributed to the uptick.
03:29.3
The Philippine Central Bank warns inflation may remain at the upper end of the government's 2-4% target range for the rest of the year.
03:38.6
That's due to higher prices of transportation and commodities as well as the economic impact of minimum wage adjustments.
03:46.7
The BSP cites the effects of adverse weather conditions on agricultural output.
03:51.6
As for the National Economic and Development Authority,
03:54.4
it vows to mitigate the effects of El Nino and the looming La Nina phenomenon
03:58.4
It vows to mitigate the effects of El Nino and the looming La Nina phenomenon to take control of the economy.
03:59.3
It vows to mitigate the effects of El Nino and the looming La Nina phenomenon to take control of the economy.
04:02.5
rice inflation was lower in April after the staple grain saw its steepest increase since February 2009.
04:11.5
Economist Michael Ricafort says,
04:13.7
while inflation saw an uptick,
04:15.4
it was still a pleasant surprise.
04:20.1
Pleasant surprise.
04:21.5
If you look at corn inflation also,
04:23.7
it continued to decelerate year on year at 3.2%.
04:27.7
That's already the slowest.
04:29.3
in nearly two years since uh june of 2022 so that's for inflation that excludes the more
04:36.5
volatile food and energy prices so it goes to show that uh at least in the inflation is uh
04:46.4
manageable and uh well despite the challenges posed by the linear drought at least we have
04:52.0
seen some month-on-month declining food prices still it is still within the uh the inflation
04:58.7
target for the fifth straight month which is uh well that's the welcome development
05:04.8
and that would still put the average for the year it's still possible to maintain it
05:11.6
below the two to four percent inflation target
05:19.2
other news the philippine justice secretary wants prosecutors to exhaust
05:23.3
all means in punishing abra mining and industrial corporation over allegedly fraudulent
05:28.6
trading of shares key respondents in the criminal complaint include ar president james belloy
05:34.8
and corporate secretary emalia belloy the securities and exchange commission earlier
05:39.7
snapped a 560 million fine on the company for illegally issuing 169 billion shares
05:47.3
covering over 400 stock certificates the sec is urging justice prosecutors to institute
05:53.8
civil and criminal forfeiture against a mining firm the pse meanwhile
05:58.6
has initiated the listing procedures against abra whose shares have been suspended in 2021
06:04.2
due to that controversy
06:08.9
in other local corporate headlines pldt reportedly and talks to sell nearly
06:13.4
half of its data center business to japan's nippon telegraph and telephone
06:18.1
pldt chairman manuel pangilinan told reuters of the deal tuesday however the telco giant
06:23.6
did not comment on claims the deal could value the data center unit at 700 million
06:28.6
NTT is Japan's largest phone company and is valued at nearly $100 billion.
06:36.4
The stock market, the listing of Premium Leisure Corporation, moves forward.
06:41.5
Its parent firm, Bell Corporation, now owns 99.55% of PLC after a tender offer that saw it taking almost all of PLC's total outstanding capital stock.
06:53.2
The move reduces PLC's public float to just 0.45%.
06:58.9
Bell Corporation shares jumped 9% in Tuesday trade.
07:04.4
And we're taking a quick break.
07:06.2
Up next, a discussion on the impact of GoTime's acquisition of the Philippines' largest fintech salary lender.
07:23.2
We'll be right back.
07:58.9
Just today, Tuesday, GoTime announced its acquisition of the Philippines' biggest salary lender, Savvy.
08:05.1
The Gokongways Digital Bank says the acquisition will help it sell more payroll-enabled loan products and boost its path to profitability.
08:14.6
To tell us more about this deal and its impact on GoTime, the local salary loan market, we have GoTime Bank President and CEO Nate Clark.
08:23.2
And Savvy, founder and CEO, Liam Grealish.
08:26.5
Welcome to the show, gentlemen.
08:28.0
Thank you very much.
08:28.8
Thanks for having me.
08:29.2
So what a great day, right?
08:31.4
You have a huge announcement.
08:33.0
You told me this was coming up, and you said, wait.
08:37.1
I'm ready to say it.
08:38.1
I made you wait a little bit longer.
08:39.7
I said he was going to come back here to make the announcement.
08:42.1
So that's about how this deal came through.
08:44.5
What are your targets?
08:46.2
And let's talk numbers.
08:49.0
Yeah, so I think taking a step back, I think as I shared before, GoTime,
08:53.2
GoTime Bank's ambition is to become the largest consumer retail bank in the country.
08:57.9
And I think if you really want to be effective in that space, you have to get into payroll relationships.
09:02.8
And I think what makes that a bit trickier than most markets around the world is that in the Philippines,
09:08.0
99% of employees don't actually choose their payroll account, right?
09:11.7
The corporate dictates it.
09:13.3
So while we actually have a payroll offering, we've been getting some good traction early on,
09:18.5
that B2B sales cycle is very slow, right?
09:22.1
So then that's, you know, enter Savvy, who has had an incredible track record over the last seven years.
09:30.7
They've, you know, Liam and team have signed up over 170 corporates,
09:34.5
have access to over half a million salaried employees with their lending proposition.
09:39.9
So we're very excited to kind of combine the consumer banking proposition that's leading from GoTime
09:45.4
with the lending proposition and the relationships they have with those 170 corporates.
09:51.9
A feature that you just mentioned a while ago was, was it the EWA?
09:57.2
Yeah, it's Earned Wage Access.
10:00.3
How is it different from what Savvy offers?
10:03.9
Yeah, so maybe, you know, Liam can share a bit.
10:06.8
Yeah, so Earned Wage Access is really where you're able to access the salary that you've earned for the number of hours you've worked.
10:12.3
So if you've worked five days over two weeks, you're able to access that income earlier than you would on, say, the 15th or 30th of the month.
10:22.0
What Savvy really does is more what I'd say needs-based lending,
10:25.6
which is where we really help our employees and our employee pool with really big expenses that come in a few times a year,
10:33.2
whether that's school fees, which are happening right now, medical emergencies,
10:37.1
whether that's other life events or strategic purchases they may have.
10:41.4
And so we really are, rather than creating small advances,
10:44.4
what we really do is create a loan product to really help people out in a way which is very accessible,
10:51.9
and very affordable at the same time.
10:53.9
And those features don't contradict each other, they actually complement each other?
10:57.7
They complement, exactly, yes.
10:58.9
So we're going to kind of have the payroll offering that we have for corporates,
11:02.1
the end payroll account for employees, Earned Wage Access,
11:06.0
and then we have the longer, you know, as Liam mentioned, for larger purchases.
11:11.5
Nate seems to have a really long shopping list, like, you know, for go time.
11:17.0
I mean, you've been really aggressive, and what is the numbers for this?
11:21.9
What does the acquisition look like? Is it the full acquisition of the company, yes?
11:25.7
And to clarify, it's not Gotime Bank directly acquiring Savvy, it's actually Gotime Bank shareholders.
11:34.0
But the plan is to work very closely together on that.
11:37.8
But it is 100% acquisition by Time Group and the Gokongwe Group,
11:42.7
who are the majority shareholders, or the joint shareholders of Gotime Bank.
11:47.1
So Savvy is a sister company now, is the best way to put it.
11:51.9
What's the plan for world domination? How does it look?
11:56.3
When you plan to move forward with this new partnership,
12:01.2
is it going to be comprehensive growth together,
12:05.4
or Savvy is going to have its own strategies in bringing in clients to Gotime?
12:10.6
How does it work?
12:11.7
I think a bit of both.
12:12.7
I think over time, we would like to see the businesses kind of grow into more of a singular offering,
12:20.3
kind of pending regulatory.
12:21.9
You know, maybe even there's a path to consolidation later on.
12:27.4
But for now, we're going to be more complementary.
12:30.7
So be in partnership with.
12:32.6
So kind of, you know, we'll support them on funding for the lending book.
12:36.5
And really, their client base is really impressive.
12:40.2
The team's really impressive.
12:41.3
And we think the combination of that payroll banking account with the lending is going to be quite compelling.
12:47.4
And we're kind of...
12:48.9
But I think for the most part, you know, Savvy will...
12:51.9
be, you know, leading the charge in the B2B sales side.
12:55.6
And then, you know, Gotime will focus on B2C.
12:57.8
And then we'll intersect at that point.
12:59.8
Savvy's the leading loan provider in the Philippines, as you mentioned a while ago.
13:04.2
But you'd rather call yourself a financial wellness platform.
13:08.1
You have more than half a million borrowers and over 150 employees, 150 companies.
13:17.8
What do you think has driven Savvy's success here in the country?
13:22.2
So much so that Gotime wants you to be part of it.
13:27.7
Well, you know, I think we really saw an inflection point around the pandemic.
13:31.7
Because what ended up happening was I think people understood that financial crises were leading to mental health crises.
13:39.1
And that was leading to real impacts in the workplace.
13:41.2
Whether that was loss of productivity, you know, issues with dependability and all these things.
13:46.7
And I think employers recognize that being able to provide their employees with services,
13:51.9
safe, secure, affordable financial services, really great financial services,
13:56.0
trying to get, you know, whether you're on the, you know, an entry level of a BPO
14:00.6
or working at a McDonald's or on a construction site,
14:03.7
getting executive level financial services to those people
14:06.3
is actually really, really important to running a really good workplace.
14:10.4
And we saw that change.
14:11.6
And you saw a lot of employers come to us during that period
14:14.5
when a lot of people were in difficulty and in crisis.
14:18.6
But it hasn't slowed down since then.
14:20.3
Like it's a learning that people have taken.
14:21.8
And kept and really grown with over time.
14:24.4
I'm curious about the total addressable market for salary loans in the Philippines.
14:28.4
Because I know that there are many different informal sectors.
14:34.6
I'm sure you know about this.
14:36.5
If you're big in the industry, we have the ATM cards that are...
14:44.4
So how much is your business?
14:48.4
What percentage is that of the total addressable market?
14:51.8
Is there still room for growth here?
14:53.6
Look, there's really plenty of room for growth when you look at it.
14:57.4
I think there's around 40 million people in formal employment in the Philippines.
15:03.2
And then even when you look at those that work in big corporations,
15:06.7
you're still looking at many multiple from where we are today.
15:10.8
And of course, what you're seeing is these big corporations add new employees every year.
15:16.2
Big corporations tend to grow much quicker in terms of employees than smaller ones over time.
15:21.8
And so what we've seen is really 10-15% year-on-year growth in our existing companies
15:27.2
in terms of the employees that they're adding over the last few years.
15:30.3
And your client profile so far, are they mostly in Metro Manila, mid-sized to big-sized corporations?
15:36.6
I'd say mostly at the larger end of things.
15:39.9
So the average size of the company we work with is just short of 4,000 employees per company.
15:44.9
And that's really what we target and we end up working with.
15:49.5
Less so the medium and the small.
15:51.8
And that will be a path of expansion.
15:54.3
Following this, can you call it a reinvigorated partnership between the GoTime people,
16:02.1
Time Bank and the GoKongways and Savvy,
16:05.4
how do you plan to leverage GoTime's capabilities in scaling up, expanding your services?
16:12.9
What do you think are the strengths of GoTime that you can leverage?
16:17.9
Yeah, look, I mean, we were incredibly impressed by GoTime as we got to know them.
16:21.8
We worked out earlier today, we started talking about a year ago around this conversation.
16:26.3
And one of the things that struck out to me as someone who's worked in the Philippines for the last seven years
16:31.3
was they really created a fantastic bridge between digital and traditional.
16:35.5
And I really felt being operating in fintech and financial services here, that's incredibly important.
16:41.2
You know, and we've also felt, you know, you're right to say that we've really done credit over the last few years.
16:47.8
The major feedback we've got is to do other products around savings,
16:51.3
around investments.
16:51.8
Around insurance and actually around, you know, how you fix the issues with payroll accounts in the Philippines.
16:58.5
And this is what our clients have been saying to us, both our HR clients and our employees that we work with.
17:05.1
It's imagining lots of golf time with GoTime.
17:10.3
Nate loves golf, right?
17:14.9
The profitability level, what's the repayment rate so far that you have?
17:20.7
And I know that because...
17:21.8
The conversation around digital banks in the last couple of months has been about profitability, right?
17:28.6
Only two out of six.
17:30.4
I don't want to look at Nate right now.
17:35.7
And people are just speculating who those two are.
17:38.6
I'm not sure if that's on the table for discussion right now.
17:41.7
But when it comes to going bigger into the lending space, because that is what's going to drive profitability.
17:47.9
It's not about deposit taking because that's an expense, right?
17:51.8
So, I suppose this strategy is going to bring you to that profitability level that you want.
17:59.4
But what are the numbers again?
18:01.2
Yeah, look, I mean, we've been profitable for over 12 months now and really showing fantastic growth in profit as we move forward.
18:09.7
You know, obviously, because we salary deduct through the partnership with the employer, you don't see the kind of non-performing loan rates you do if you're going direct to the consumer.
18:18.4
It's actually a very, very different business.
18:21.8
It's a very good business model.
18:23.2
It's a good business model.
18:23.9
So long as they don't lose their job.
18:26.3
But it's also the case that, you know, what we try to do is be more data-driven and actually try and understand how churn works in companies, how churn works in industries, and build our credit policies off the back of that.
18:38.3
And that's been crucial to get us to profitability.
18:45.2
And we'll openly talk about it.
18:46.6
So, we're not one of the two.
18:49.4
In Time Back South Africa, we're profitable.
18:52.3
But it's still early days.
18:53.6
It's very early days.
18:54.4
So, in South Africa, it took us five years to reach profitability.
18:57.2
And the average, global average is?
18:59.3
You mentioned it was seven?
18:59.9
About seven, six to seven.
19:02.0
But we actually, you know, before this deal, we're on track by the end of next year to become profitable.
19:06.9
And that will accelerate it a bit and de-risk it as well.
19:10.8
And I think, you know, I think it's a, I think overall, the industry is impatient for profitability.
19:16.8
But if you look at the best digital bank in the world, New Bank in Brazil, took nine years to reach profitability.
19:22.1
Two years later, they had a billion dollars in profit.
19:24.4
The reasons for that are similar to our reasons here?
19:28.3
Yeah, I think the way the business model works is, it's actually from a cost to acquire a customer, cost to serve, it's one-tenth.
19:38.2
So, think about, it's like very similar to e-commerce.
19:41.2
So, and what happens is, so you have a high fixed cost because you're building a really good technology platform.
19:47.1
You're building for scale of 10 million customers.
19:49.9
It takes a while.
19:51.4
To get to that scale.
19:53.7
And then it also takes a while to build trust.
19:56.7
So, this is, you know, unlike other brands, banking takes a while.
20:00.5
So, what happens is, consumers interact with you slowly, small amounts, and then it goes up.
20:06.9
But once you reach scale, and people start to trust you, which usually takes about five to seven years for a primary bank brand,
20:13.8
then you're sitting on a cost base that's one-tenth the traditional banks.
20:17.0
So, your profitability just goes, it opens up.
20:20.3
So, this is a, I think.
20:21.4
I think it's more similar to an e-commerce business as far as like how it works, the fundamentals of it,
20:27.2
where it's, you know, low cost to acquire, low cost to serve, but you have to reach scale.
20:30.7
So, similar to Amazon taking, you know, more than a decade to reach profitability, a digital bank is very similar.
20:37.6
But I think because we've leveraged lessons from South Africa, we're running at a lower cost,
20:44.5
the GoConway group is a massive trust accelerator.
20:47.2
And then, you know, this acquisition will combine that we think we can compress.
20:51.4
That's about three years.
20:53.0
Thank you so much, Nate.
20:55.4
What do you like most about GoTime?
20:59.1
Have you tried printing your own card yet?
21:02.6
Thank you so much.
21:03.2
Thank you for being a customer.
21:05.6
That's your Mrs. Outlook.
21:07.7
And I'm Salve Duplito.
21:08.9
The world tonight comes your way at the top of the next hour.
21:11.7
Keep it here on ANC.
21:21.4
We'll be right back.
