BSP: 574 percent surge in restructured loans shows pandemic relief working
MANILA, Philippines—Philippine banks have gone out of their way to help restructure loans that would have otherwise fallen into default after the outbreak of the COVID-19 pandemic last year, according to the latest data from the central bank.
At an online briefing, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno revealed that the total amount of restructured loans in the local banking system at the end of the first half of 2021 was up almost sixfold on an annual basis—proof, he said, that the regulator’s policies to promote financial relief to borrowers is working.
As of end-June 2021, the level of restructured loans of banks jumped to P328.6 billion, up by 574 percent versus the P48.7 billion posted for the same period last year. This was equivalent to 3.1 percent of total loans, up from 0.5 percent recorded a year ago.
Loans to micro-, small- and medium enterprises (MSMEs) that are used as alternative compliance with the reserve requirements have also surged since the start of the pandemic.
As of July 29, 2021, loans to MSMEs that were utilized as alternative compliance with the BSP’s reserve requirements amounted to P188.7 billion, up from the P8.7 billion recorded as of end-April 2020.
“These developments indicate banks’ continuing efforts to assist borrowers weather the challenges faced during this difficult period,” he said. “Thus, customers are encouraged to approach banks regarding adjustments to their loan terms to match their cash flows and paying capacity.”
The BSP’s COVID-19 package of relief measures—which aim to incentivize lending, promote continued access to financial services and support the continuity of delivery of banking services—remain in place during this period.
The central bank chief said that, consistent with the policy intent of these measures, banks have been active in providing financial relief to their borrowers.
Diokno assured the public of the continued access to and delivery of essential financial services amid the Enhanced Community Quarantine being imposed by government.
He said essential banking services continue to be available to the general public during the ongoing lockdown in Metro Manila and select environs around the country to combat the spread of the SARS Cov2 virusand will remain in case authorities decide to extend current mobility restrictions.
Diokno urged bank customers to make use of the central bank’s online portal to raise complaints and concerns on their financial transactions.
“The BSP will continue to closely coordinate with the banking industry to ensure the safe and efficient delivery of banking services as well as monitor the developments related to the on-going COVID-19 pandemic and take swift action, if necessary,” he said.
