Loans secured by banks from the Bangko Sentral ng Pilipinas’ rediscounting facility grew significantly in the first four months of the year as the decline in interest rates to historic lows boosted appetite for credit.
The increase in peso-denominated loans that banks took out from the BSP reflected the rise in public demand for credit, monetary officials said. The BSP’s rediscounting facility is meant to support lending operations of Philippines banks.
Data from the BSP showed that, from January to April, discount loans secured by banks amounted to P12.028 billion—up by 50 percent from the P8.014 billion reported in the same period last year.
The BSP had slashed interest rates to spur demand for credit. This in turn will boost consumption and investment activities and help sustain the economy’s growth.
The interest rate on loans secured from the rediscount facility now stands at 4 percent.
The BSP earlier reported that, by the end of February, consumers and enterprises borrowed a total of P2.76 trillion from banks—up 18 percent from the P2.34 trillion reported in the same period last year.
Monetary officials said the robust increase in bank lending will help the economy achieve the official growth target for this year set at 5 to 6 percent, higher than last year’s 3.7 percent.
Also, the regulator said that during the same period, the amount of dollar-denominated loans banks had secured from the BSP’s rediscounting facility declined by nearly 19 percent to $52.8 million, from last year’s $65 million.