Banks borrowing less from BSP

MANILA, Philippines — Loans extended by the Bangko Sentral ng Pilipinas (BSP) to banks declined by nearly 100 percent to P242.6 million in 2023 from a year ago amid sufficient liquidity in the banking system.

In the central bank’s annual report for 2023, the BSP also said total principal collections likewise dropped by 99.9 percent to P247.2 million in 2023.

“This may be attributed to sufficient liquidity in the banking system, as reflected by banks’ non-availment of rediscounting loans and the national government’s non-renewal of the P300-billion provisional advances it secured to address the adverse impact of COVID-19 in 2022,” it said.

The BSP has also recorded zero new past due loans  since 2014, while existing PDLs went down by 0.3 percent to P4.51 billion as of end-2023 from P4.53 billion as of end-2022.

“This was on account of recoveries through cash collections, foreclosure proceedings or dacion of real properties by the Philippine Deposit Insurance Corp. of P4.4 million and the writeoff of P10.5 million,” the central bank said.

The BSP’s total outstanding loan portfolio stood at P85.83 billion as of end-2023, slightly lower than the P85.84 billion outstanding loans as of end-2022.

Banks also maintained rediscounting lines with the BSP as an alternative source of funding should there be a need for temporary liquidity.

As of end-2023, 45 banks had active rediscounting lines with the central bank. These were composed of 24 rural banks, 14 big banks and seven thrift banks, with a total value of P323.2 billion

“The BSP remains steadfast in refining its credit facilities to ensure their effectiveness and adaptability to the evolving financial and digital environment. This commitment is integral to the central bank’s thrust toward a sustainable and inclusive financial system,” it said.

In 2023, the BSP established reforms in its credit facilities to influence the volume of credit, consistent with its mandate of maintaining price and financial stability.

Among the credit reforms implemented during the year were changes in the computation of the peso rediscount rate as well as the dollar and Japanese yen rediscount rates.

The central bank also terminated the overdraft credit loan facility due to reforms in check clearing and settlement, which now prohibit banks from incurring overdrafts.

“This makes the intraday settlement facility the sole central bank-operated funding facility to prevent gridlocks due to timing mismatches in the settlement of payments at the Philippine Payment and Settlement System plus,” the BSP said.

The BSP also adopted an investment policy statement to govern the operations and procedures in the investment of certain managed funds intended to cover the payment of loans extended by the BSP, the then Central Bank of the Philippines or other government agencies.