PhilGuarantee: Credit guarantees up in 2021 as bank lending growth resumed

From philguarantee.gov.ph

MANILA, Philippines—Credit guarantees extended by the state-run Philippine Guarantee Corp. (PhilGuarantee) to private financial institutions and their borrowers rose last year as bank lending picked up following the recession-induced economic slowdown.

Citing a report from PhilGuarantee president and chief executive Alberto Pascual, the Department of Finance (DOF) said that the total outstanding guarantee portfolio stood at P182.9 billion as of end-2021. The DOF said that state-backed guarantees in 2015, before the Duterte administration took over in 2016, were 44-percent lower, at P130.8 billion.

It was President Rodrigo Duterte, upon the recommendation of Finance Secretary Carlos Dominguez III, who merged all of the government’s credit guarantees under one body, resulting in PhilGuarantee which was formed in 2018.

Pascual reported to Dominguez recently that the number of beneficiary-borrowers covered by PhilGuarantee rose 6.5 percent to 202,269 in 2021 across the micro, small and medium enterprise (MSME), housing, and agriculture (farmers and fisherfolk) sectors.

“PhilGuarantee also partnered with an aggregate 128 banks and other financial institutions for the various credit guarantee facilities” last year, Pascual said.

Pascual earlier said that PhilGuarantee anticipates a further increase in guarantee volumes in 2022 after bank loans picked up starting in August 2021, reversing the year-on-year declines in prior months due to weaker credit-risk appetite of partner-lenders as well as borrowers amid the prolonged COVID-19 pandemic.

In preparation for more economic activities expected to pick up after the pandemic, Pascual had said that PhilGuarantee plans to provide banks with credit guarantees for energy-efficiency and renewable energy projects, commercial-sized agricultural projects, value-chain financing, and fintech.

Pascual told Dominguez that PhilGuarantee’s income generated from loan guarantees declined by 2 percent to P1.59 billion last year from P1.62 billion in 2020. On the flip side, its non-guarantee income coming from investments and other sources jumped 176 percent to P2.32 billion in 2021 from 2020’s P839.6 million.

In all, PhilGuarantee’s net income rose 182 percent to P1.37 billion in 2021 from P487 million in 2020. “The nearly two-fold increase in the corporation’s net income was the result of improving cost-to-income outcomes from P1.16 billion in 2020 to P850 million in 2021,” the DOF quoted Pascual as saying.

“The corporation’s income before taxes, after deducting provisions for losses and operating expenses, was P1.85 billion in 2021 and P716.6 million in 2020. In terms of comprehensive income, PhilGuarantee achieved P1.13 billion in 2021, up by 111 percent from P537 million in 2020,” Pascual said.

“[PhilGuarantee’s] assets grew 6 percent from P57.41 billion in 2020 to P60.88 billion last year, and liabilities declined by 9 percent from P37.83 billion in 2020 to P34.32 billion in 2021,” he said.

“The firm’s total equity increased by 36 percent, from P19.57 billion in 2020 to P26.56 billion last year,” Pascual added.

To raise an additional P7.3 billion in non-guarantee revenues, Pascual said PhilGuarantee was currently selling big-ticket assets in Manila, Mandaluyong, and Quezon City.

TSB