LENDERS tapped the central bank’s rediscount window in October for liquidity amid increased loan demand and higher interest rates.
Peso rediscount loans stood at P3.7 billion in October, data released by the Bangko Sentral ng Pilipinas (BSP) on Monday showed. This followed availments worth P7.52 billion in June and P4.08 billion in April.
For the year so far, total peso rediscount borrowings hit P15.3 billion, higher than the P6.12 million in availments made in the same period in 2021. Last year, lenders only tapped the facility in June, July, and September.
Meanwhile, the Exporters’ Dollar and Yen Rediscount Facility (EDYRF) remained untapped in October. The last time an availment was made under the EDYRF was for a dollar rediscounting loan in 2016.
The BSP’s rediscount window gives banks access to additional money supply by posting their collectibles from clients as collateral.
Lenders can use the cash — whether in peso, dollar or yen — to disburse more loans for corporate or retail clients and service unexpected withdrawals.
Banks took out rediscount loans last month as credit demand increased, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
“The reduced excess liquidity from the financial system and higher interest rates, both due to the need to better manage inflation and inflation expectations also led to some banks tapping the BSP rediscounting facilities,” Mr. Ricafort said.
Loan growth picked up to its quickest pace in 27 months in September as the economy continued to rebound, central bank data showed.
Outstanding loans by big lenders, net of reverse repurchase placements with the central bank, grew by 13.4% year on year in September to P10.494 trillion.
The September pace was the fastest in 27 months or since the 11.2% expansion recorded in May 2020.
As lending growth continued to rise, the broadest measure of liquidity in an economy or M3, expanded by 5% to P15.35 trillion in September.
The BSP’s Monetary Board has raised a cumulative 225 basis points (bps) since May. The central bank is widely expected to deliver its second 75-bp rate increase on Nov. 17 in an effort to curb inflation and slow down peso depreciation.
Inflation surged to a near 14-year high in October, accelerating to 7.7% last month from 6.9% in September and 4% in October 2021. It marked the seventh straight month that inflation breached the BSP’s 2-4% target.
“However, banks nonetheless have other alternatives to funding other than tapping the BSP Rediscounting Facilities such as through the interbank market, capital markets (bonds/fixed-income markets, stock market), among others,” Mr. Ricafort said.
For November, the applicable rate for peso rediscount loans will be at 5.6701% for 90 loan maturity days, and at 6.5902% for 91-180 days.
Meanwhile, dollar borrowings will be priced at 7.38039% (1-90 days), 8.30049% (91-180 days), 10.14069% (181-360 days).
Yen-dominated borrowings will be priced at 2.88777% (1-90 days), 3.80787% (91-180 days), 5.64807% (181-360 days). — Keisha B. Ta-asan