Total peso-denominated loans secured by banks from the rediscounting facility of the Bangko Sentral ng Pilipinas surged in 2012 from the previous year as record time low interest rate encouraged heavier borrowings.
Officials said the rise in loans tapped by banks partly fueled their own lending activities last year, thus benefiting consumers and enterprises.
Data from the BSP showed that peso-denominated loans obtained by banks through the rediscounting facility reached P46.5 billion in 2012, up by nearly 70 percent from P27.37 billion registered the previous year.
Banks tap the BSP’s rediscounting facility to support their own credit operations. The facility also allows banks to borrow dollars. Proceeds are normally used by the borrowing banks to extend credit to their clients that import goods, such as exporters that buy imported raw materials.
Unlike the peso-denominated loans, the dollar-denominated ones fell as exporters posted lower-than-expected sales last year.
The BSP extended $172.5 million in dollar-denominated loans under its rediscounting facility, down by 16.6 percent from $206.9 million in the same period last year.
The increase in peso-denominated loans obtained by banks from the BSP came as the interest rate charged under the rediscounting facility fell last year to a record low of 3.5 percent.
The rediscounting rate is pegged to the central bank’s overnight borrowing rate. The latter dropped to a historic low of 3.5 percent following four cuts made by the BSP last year, each time by 25 basis points.
The objective of the rate cut was to make credit affordable and encourage the public to secure loans. Officials expected the resulting increase in loans to boost overall consumption and investments in the country.
The BSP said low interest rates had caused bank lending to grow and helped the economy expand by a healthy pace.
Latest lending data from the BSP showed that outstanding loans from universal and commercial banks amounted to P3.08 trillion as of the end of October, up by 15.8 percent from P2.79 trillion in the same period in 2011.
Partly aided by credit growth, the economy grew by 6.5 percent in the first three quarters of 2012 from a year ago. The growth rate was one of the fastest in Asia during the period. Michelle V. Remo