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Business

Little improvement seen in bank lending

- Ted P. Torres -

Bank lending is not likely to grow substantially in the first three months this year, Socioeconomic Planning Secretary Felipe M. Medalla said yesterday.

"It will not be enough to attain the original two to three percent growth target (in bank loans) for the first six months of the year," Felipe M. Medalla told newsmen in a briefing.

Medalla said the demand for new loans still depends on the willingness of commercial banks to extend credit despite a downward trend in Treasury bill (T-bill) rates. T-bills are used as the benchmark for rate setting in the country's financial system.

The planning secretary pointed out that there have been minimal improvements in the commercial banks' loan growth. He said financial institutions especially commercial banks have been implementing strict guidelines on prospective borrowers.

The 91-day T-bills have softened by 5.5 basis points to 8.689 percent in last Monday's auction from the previous week's 8.744 percent.

Non-performing loans (NPLs) and accumulated assets moved up to 14.53 percent as of February.

Commercial banks likewise have been cautious in disposing their accumulated non-performing loans and assets (NPAs). And this had been aggravated by the December deadline for increased capitalization.

Expanded commercial or universal banks are required to put up a minimum capital of P5.5 billion while commercial banks must raise it to P3.5-billion. Thrift banks in Metro Manila must raise it to P400-million, while the banks' capital outside of Metro Manila will go up to P64-million in the year 2000.

ACCUMULATED

ASSETS

BANKS

COMMERCIAL

FELIPE M

LOANS

MEDALLA

METRO MANILA

SOCIOECONOMIC PLANNING SECRETARY FELIPE M

YEAR

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