The Philippine financial system saw an increase in debt issuances in the second quarter of 2021, with the private sector opting to borrow more from nonbank funders during the coronavirus pandemic, according to the Bangko Sentral ng Pilipinas (BSP).In a statement, the BSP cited data from its latest survey showing that domestic claims of so-called Other Financial Corporations grew by 5.7 percent during the April to June 2021 period to P7 trillion from P6.62 trillion in the same period last year.
“This increase was mainly attributed to the rise in the claims on the private sector and depository corporations,” the central bank said.
The survey of other financial corporations presents the comprehensive measure of the claims and liabilities of this subgroup of institutional units providing financial services other than banks, nonbanks with quasibanking functions, nonstock savings and loan associations and the BSP.
These institutional units are trust entities; private and public insurance corporations; holding companies; government financial institutions, specifically government-owned or-controlled corporations engaged in financial intermediation; nonmoney market funds covering unit investment trust funds and investment companies; and other financial intermediaries and auxiliaries consisting of offshore banking units and non-banks without quasi-banking functions.
According to the central bank, claims on the private sector grew by 10.7 percent in the second quarter of 2021 to P3.62 trillion from P3.26 trillion in the same period last year due to higher investments by other financial corporations in equity and debt securities issued by private nonfinancial corporations.
Likewise, claims on depository corporations rose by 6.3 percent from P1.69 trillion in the second quarter of 2020 to P1.8 trillion in the second quarter of this year on account of the other financial corporations’ higher holdings of bank-issued debt securities and increased deposits in banks.
The expansion in domestic claims, however, was moderated by the decrease in net claims on the central government by 5.1 percent from P1.64 trillion in the second quarter of last year to P1.56 trillion in the second quarter of this year.
“This decline was due in part to the sector’s lower holdings of debt securities issued by the national government,” the central bank said.
Meanwhile, the net foreign assets of nonbank lenders rose by 77.4 percent to P186.1 billion in the second quarter of this year from P104.9 billion in the same quarter last year.
“The growth was brought about by the increase in the other financial corporations’ claims on nonresidents, which were mostly in the form of investments in debt and equity securities,” the central bank added.
The increase in other financial corporations’ assets was funded mainly by the sector’s issuances of shares and other equity. The upturn in equity issuances and insurance technical reserves, led to a 6.8 percent rise in the other liabilities of these nonbank lenders, amounting to P7.19 trillion in the second quarter of 2021 from the P6.73 trillion in the same period last year. INQ