Bank loans under rediscount facility down 94% in Sept

MANILA, Philippines - Fewer banks borrowed from the rediscount facilities of the Bangko Sentral ng Pilipinas in the first nine months of the year, indicating lenders have adequate liquidity to cover funding needs.

In a report, the BSP said loan availments under the peso rediscount facility plunged 94.1 percent to P1.017 billion as of September from P17.32 billion in the same period last year.

The bulk or 77 percent of the availments went to commercial credits, while 17 percent went to permanent working capital, capital expenditure, other services, and housing.

Rediscount facilities allow banks to borrow from the central bank to meet their short-term liquidity needs. To use the facility, banks use their clients’ promissory notes as collateral.

Availments under the dollar rediscount facility also fell 92.7 percent to $6.9 million in the nine months to September from $95 million a year ago.

Meanwhile, the yen rediscount facility remained untapped as of September.

The decreasing volume of availments made under the rediscount facility indicate banks’ liquidity conditions remain adequate and that they have enough to guard against external shocks.

Latest BSP data showed banks’ resources — made up of deposits, profits, and retained earnings — climbed to a new record high as of June at P10.606 trillion, 18.8 percent higher than the level seen in the same period last year.

Resources of universal and commercial banks rose 19.4 percent to P9.546 trillion as of June from P7.996 trillion, while thrift banks grew their resources by 15 percent to P851.1 billion from P739.9 billion.

Rural banks also increased their resources by 6.9 percent to P209.4 billion as of June from P196 billion in the same period last year.

The continued increase in the banks’ resources reflects the strength of the sector, partly due to the reforms implemented by the central bank. 

Banks made up 81.4 percent of the Philippine financial system’s total resources as of June.

The whole financial system grew its resources by 15.4 percent to P13.034 trillion as of June from P11.291 trillion in the same period last year. This was driven by a sustained rise in the banks’ resources as well as an expansion in those held by non-banks.