Rediscount window untapped in December

BANKS did not tap the central bank’s rediscount facility in December 2022, likely amid easing bad loans and ample liquidity in the financial system, an analyst said.

The Bangko Sentral ng Pilipinas (BSP) said in a statement late Tuesday that its peso rediscount window was left untouched last month.

Total peso rediscount loans hit PHP 15.3 billion in 2022, including availments worth PHP 3.7 billion in October, PHP 7.52 billion in June, and PHP 4.08 billion in April.

There were also no availments under the Exporters’ Dollar and Yen Rediscount Facility (EDYRF) last month. The last time the EDYRF was tapped was for a dollar rediscounting loan in 2016.

The central bank’s rediscount window gives banks access to additional money supply by posting their collectibles from clients as collateral.

Banks may then use the cash — in peso, dollar or yen denominations — to grant loans to corporate or retail clients and service unexpected withdrawals.

Banks did not borrow from the rediscounting facilities in December amid better asset and loan quality, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“Banks have other alternative sources of funding/borrowings such as through interbank loans (overnight or term borrowings), bond markets, money markets, share sales/equities, deposits from the banking public,” Mr. Ricafort said.

He added that tapping the rediscounting facilities of the central bank is one of the last options to be considered by lenders.

According to latest data from the BSP, the banking industry’s bad loans fell for the eighth straight month in October 2022, bringing the nonperforming loan (NPL) ratio to its lowest in 26 months.

Banks’ gross NPL ratio dropped to 3.41% in October, from 4.42% a year ago and 3.42% in September, BSP data showed. This was the lowest ratio in more than two years or since 2.84% in August 2020. 

Soured loans declined 14.9% to PHP 411.632 billion in October, from PHP 483.98 billion a year earlier. This was also 0.7% lower than PHP 414.606 billion in September.

Meanwhile, outstanding loans extended by universal and commercial banks climbed by 13.7% year on year to PHP 10.64 trillion in November, preliminary data from the BSP showed.

Credit for production activities jumped by 12.4% to P9.302 trillion while consumer loans to residents increased by 24.1% to P1.01 trillion.

In the same month, domestic liquidity rose by an annual 5.4% to PHP 15.6 trillion.

JANUARY RATES

For January, the applicable rate for peso rediscount loans will be at 7.1888% for 90 loan maturity days, and at 7.8776% for 91-180 days.

Meanwhile, dollar borrowings will be priced at 6.76729% (1-90 days), 7.45609% (91-180 days), 8.83369% (181-360 days).

Yen-dominated borrowings will be priced at 1.97383% (1-90 days), 2.66263% (91-180 days), 4.04023% (181-360 days). — Keisha B. Ta-asan