Central bank OKs DBP loan for green projects
By Doris Dumlao
Philippine Daily Inquirer
First Posted 04:01:00 08/23/2008
Filed Under: Central Banks, Loan Markets, Banking
MANILA, Philippines—State-owned Development Bank of the Philippines (DBP) has received central bank approval for availing itself of a P10.1-billion soft loan from Japan Bank for International Cooperation to fund environment-related projects.
The loan is part of the DBP’s P35-billion pipeline for water and other “green” projects, which will be channeled to sub-borrowers.
Sources in the central bank, Bangko Sentral ng Pilipinas (BSP) said the BSP policymaking body Monetary Board approved the DBP loan last Thursday.
The Monetary Board screens all borrowings made by the public and private sectors. The money used to repay the loans will be sourced from the local banking system.
A loan agreement with JBIC is expected to be finalized in two months, sources in DBP said.
The loan is part of the 27th yen loan package from Japan. Part of the funds will be granted to borrowers who are out to promote clean energy resources and support industrial pollution control.
Also, the DBP has finalized with JBIC another P10-billion loan for “clear mechanism development” projects, which shall likewise support new and renewable energy projects.
Meanwhile, DBP reported a 27-percent drop in first-semester net income. given the industry-wide decline in treasury earnings amid turbulent local and global financial markets.
The bank’s net income during the six-month period amounted to P1.51 billion from about P2 billion a year ago.
In an interview, DBP president Reynaldo David said the bank’s assets were rapidly growing, funded by deposits. But income from foreign exchange and trading of bonds had weighed down overall earnings.
He noted that treasury activities accounted for half of the bank’s total business.
Interest income was up by 76 percent to P2 billion, as an 18-percent expansion in interest on retail loans compensated for the 35-percent decline in earnings from wholesale loans.
On the treasury side, foreign exchange profits dropped 53 percent. The bank also took a harder hit on trading of securities, where losses increased 125 percent.
One area that showed a strong performance, however, was the trust business, where the bank’s net earnings jumped by 42 percent from a year ago.
Meanwhile, operating expenses expanded at a modest pace of five percent year-on-year.
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