Rediscount loans up 4-fold to record P118.7 billion

MANILA, Philippines — Banks continued to further beef up their lending portfolios by taking out more loans from the rediscount window of the Bangko Sentral ng Pilipinas (BSP) in the first nine months of the year.

Data released by the central bank showed disbursements remained steady at P118.67 billion from January to September, almost four times the P30.62 billion released in the same period last year.

 Rediscounting is a privilege of a qualified bank to obtain loans or advances from the BSP using the eligible papers of its borrowers as collaterals. It is a standing credit facility provided by the central bank to help banks liquefy their position by refinancing the loans they extend to their clients.

Out of the total amount disbursed, the bulk or 64.1 percent went to other credits or special credit instruments such as but not limited to microfinance, housing loans, services, agricultural loans with long gestation period, and medium and long-term loans.

Data showed loans for capital expenditures cornered 39.9 percent, while loans to other services accounted for 20.2 percent, and loans for permanent working capital with a four percent share.

Commercial credits resulting from the importation, exportation, purchase, sale, local transportation or storage of non-perishable and insured goods or products in Monetary Board-approved storage facilities cornered 35.9 percent of the total rediscounting loans.

About 25.7 percent comprised import loans, while 10.2 percent went to trading loans.

There was no availment under the exporters dollar and rediscount facility (EDYRF) during the period.

The BSP currently pegged the rediscount rates for loans under the peso rediscount facility at 4.5625 percent for loans with maturity of up to 90 days 4.6250 percent for loans with maturity of up to 180 days.

The Monetary Board has so far slashed interest rates by 75 basis points --25 basis points last May 9, 25 basis points on Aug. 8, and another 25 basis points last Sept. 26 due to easing inflation and the slower-than-expected gross domestic product growth.

Inflation eased to a 41-month low of 0.9 percent in September from 1.7 percent in August from 2.4 percent in July, bringing the average to 2.8 percent in the first nine months and well within the BSP’s two to four percent target.

On the other hand, the country’s GDP growth eased to its slowest level in four years at 5.5 percent in the second quarter from 5.6 percent in the first quarter primarily due to reduced government spending as a result of the delayed passage of the 2019 national budget.

Aside from the rate cuts, the central bank also resumed the reduction of the reserve requirement ratio by 100 basis points for big and mid-sized banks effective November to free up additional funds into the financial system to boost economic activity.