Bank loans from BSP up 75%
MANILA, Philippines–Loans secured by banks from the Bangko Sentral ng Pilipinas surged in the first two months of the year, as the historic-low interest rates encouraged borrowing activities.
Banks are expected to use the additional liquidity to serve the growing demand for credit from both corporate and individual borrowers.
Official data showed that peso-denominated loans extended to banks through the rediscounting facility of the BSP had reached P8.1 billion in January to February, up by 75 percent from P4.63 billion in the same months last year.
Dollar-denominated loans extended under the same facility reached $34.3 million, up by 72 percent from P19.9 million.
The rediscounting facility of the BSP is intended to support lending operations of banks. The amount extended to a borrowing bank is the discounted value of collectibles that serve as collateral.
The interest rates on the peso- and dollar-denominated loans stood at record lows of 3.5 percent and 0.2 percent, respectively.
The former was set equal to the BSP’s key policy rate, which hit an all-time low last year following a series of rate reductions by the central bank’s Monetary Board.
The rate cuts were meant to make loans cheaper, thus encourage consumers and enterprises to borrow. Policymakers said boosting domestic consumption and investments, which were aided by loans, would partly shield the Philippine economy from the adverse effects of global economic problems.
Officials said the banking sector would continue to support economic growth through lending. The BSP and industry players expect bank lending to post double-digit growth this year.
Officials said the substantial increase in loans tapped by banks from the BSP signaled the banks’ intention to further boost their lending businesses. They said appetite for lending among banks remained significant given the favorable outlook on the economy.
