Rediscounting loans of banks plunge 84% to P6.5B in first quarter

MANILA, Philippines -  Total rediscounting loan availments by banking institutions plumetted by 84 percent in the first quarter of the year from P40.38 billion in the same period last year to P6.53 billion, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Rediscounting is a standing credit facility provided by the BSP to help banks meet temporary liquidity needs by refinancing the loans they extend to their clients.

About 71 percent of the total rediscounting loans in the first quarter of the year availed of by commercial, thrift, and rural banks went to commercial credits while 7.7 percent went to agriculture and industrial clients. The data showed that 9.6 percent went to capital expenditures, 7.1 percent to other services, 3.1 percent to permanent working capital, 1.5 percent to housing, and 0.1 percent to microfinance.

Under the Exporters’ Dollar and Yen Rediscounting Facility, aggregate availments under the US dollar facility jumped 38.7 percent to $48 million in the first three months of the year from $34.6 million in the same period last year.

The BSP said there was no availment under the yen facility during the period.

Monetary authorities use rediscounting loans as a monetary tool to regulate liquidity.

As early as January last year, the BSP has lifted several liquidity-enhancing measures introduced starting November of 2008 in light of the strong economic recovery. In all, the BSP raised the rate on a short-term lending facility to four percent from 3.5 percent and reduced the peso rediscounting budget from P60 billion to P40 billion and further to P20 billion.

The central bank also restored the loan value of all eligible rediscounting papers to 80 percent from 90 percent of the borrowing bank’s credit instrument and at the same time revived the non-performing loan (NPL) ratio requirement of two percentage points from 10 percentage points above the latest available industry average NPL for banks wishing to avail of the rediscounting facility.

The BSP raised its peso rediscount rate at 4.25 percent per annum under its peso rediscount facility for all maturities effective March 28. It has also pegged the rates for the month of April at 0.24345 percent per annum under the EDYRF and 0.15000 percent per annum for its yen facility.

Last year, total rediscounting loan availments by banking institutions plunged 88.3 percent to P49.76 billion from P182.46 billion in 2009.

The country’s banking sector remained stable and resilient as its total resources posted a double-digit growth of 11 percent last year with Filipinos saving more while major players continued to mobilize deposits to fund new loans.

In its Report on Economic and Financial Developments for the fourth quarter 2010, the BSP said total assets of the banking industry reached P7.23 trillion last year or P720 billion higher than the P6.51 trillion worth of resources booked in 2009.

“The increase could be traced to the growth in currency and deposits, indicative of the public’s continued trust in the banking sector,” the BSP stressed.

Data showed that resources of universal and commercial banks expanded by 11 percent to P6.42 trillion last year from P5.78 trillion in 2009 and accounted for about 89 percent of the industry’s total assets.