Money placed in central bank SDA up 78%

Money placed by banks in the special deposit account (SDA) facility of the Bangko Sentral ng Pilipinas continued to rise, hitting a new high as of the end of September.

Data from the BSP showed that the banks’ SDA deposits hit P1.62 trillion as of end of September, up by some 78 percent from P911 billion a year ago.

Regulators said the rising SDA placements indicated the growing liquidity in the local banking system. SDA pays an interest of 4.5 percent for all maturities.

The BSP said bank resources had been rising on account of growing deposits from individual and corporate clients.

Economists said the money in the SDA should be tapped to fund productive activities. Banks are being urged to use more of their money to increase lending activities and help boost economic growth, which slowed in the first semester.

The economy, measured in terms of gross domestic product (GDP), grew by 4 percent in the first six months of the year, slowing from the over 8 percent a year ago.

In response, industry players said the banking sector had sufficient appetite for lending as shown by the unusually high pace of credit growth. Industry data showed that the combined loan portfolio of banks in the country grew by 19.8 percent from a year ago, the fastest pace in more than two years.

According to the BSP, there is still some scope for banks to further accelerate lending. This is indicated partly by the considerable amount of money in the SDA facility.

Outstanding loans extended by banks stand at more or less 65 percent of the system’s total deposits. Analysts said increasing the loans-to-deposit ratio to 80 or even 90 percent would still be comfortable.