BANKS left the rediscount facility of the central bank untouched in July as there was ample liquidity in the financial system.
The Bangko Sentral ng Pilipinas (BSP) said in a statement on Monday that its peso rediscount window was untapped anew last month following the P7.52-billion loan taken out by a universal bank in June that put borrowings for the first six months at P11.6 billion.
The Exporters’ Dollar and Yen Rediscount Facility (EDYRF) was also untouched in July. The last time an availment was made under the EDYRF was a dollar rediscounting loan in 2016.
In 2021, banks only borrowed from the facility in June, July, and September. These peso rediscount loans amounted to P6.12 million.
The BSP’s rediscount window gives banks access to additional money supply by posting their collectibles from clients as collateral. In turn, banks may use the cash — denominated in peso, dollar or yen — to extend more loans to their corporate or retail clients and service unexpected withdrawals.
“Excess liquidity in the financial system picked up in July 2022 and continued, thereby reducing the need for banks to tap the BSP rediscounting facility,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“Banks also have other options to get funding, such as through the interbank market as well as through the capital markets, instead of BSP rediscounting facilities,” Mr. Ricafort said.
M3, which is considered as the broadest measure of liquidity in an economy, grew by 6.9% to P15.4 trillion in June year on year.
Meanwhile, preliminary data from central bank showed outstanding loans of big banks expanded by 12% to P9.9 trillion in June from P8.8 trillion in the same month of 2021.
This was the fastest loan growth seen in more than three years or since the 12.4% in April 2019.
The easing of nonperforming loans (NPL) of banks also reduced the need for lenders to tap the BSP rediscounting facility, Mr. Ricafort added.
“The FIST (Financial Institutions Strategic Transfer) Law also gives banks greater flexibility to dispose nonperforming loans and nonperforming assets (NPAs) that also lessens the demand for BSP rediscounting,” he said.
The banking industry’s gross NPL ratio went down to 3.75% of their total loan portfolio in May from 4.49% a year ago. It is also lower than the 3.93% seen in April. The May NPL ratio is the lowest since 3.72% in January 2021.
AUGUST RATES
For August, the applicable rate for peso rediscount loans will be at 4.1469% for those maturing in 90 days and at 4.5438% for those falling due in 91-180 days.
Meanwhile, dollar borrowings will be priced at 5.18519% (1-90 days), 5.58209% (91-180 days) and 6.37589% (181-360 days).
Yen-dominated borrowings will have an interest rate of 2.3845% (1-90 days), 2.7814% (91-180 days) and 3.5752% (181-360 days). — Keisha B. Ta-asan