Rural banks increase agriculture lending

MANILA, Philippines – The Rural Bankers Association of the Philippines (RBAP) will help sustain the development of the countryside this year despite the effects of the worldwide economic crunch.

“The farmers can count on us to give them more loans this year. We are committed to help sustain the growth of the countryside, most especially now, with the effects of the global downturn,” Tomas Gomez IV, RBAP president, said.

The RBAP is the only trade organization representing the country’s rural banking sector.

Some P35.2 billion have been invested in the agriculture sector as of end-September 2008, industry figures show. That represents 32 percent of the rural banks’ loan portfolios.

“Our loans (to the agriculture sector) have been consistently exceeding 30 percent of the total rural bank loans in the past three years,” according to Gomez.

Industry data show that loans to the agri-agra sector have steadily surpassed the mandatory 25 percent allocation for the sector, with 50 percent of the total rural bank loans going to the sector.

From the period 2002 - 2008, rural banks consistently exceeded the mandatory credit allocation, with an average of 46 percent of the total loanable funds extended to the agri-agra sector.

From the period 2002 - 2007, rural banks have the lowest percentage of using alternative compliance to agri-agra mandatory credit allocation. The rural banking sector used alternative compliance methods at an average of only 10 percent of their total loans to agri-agra.

In 2007, commercial banks reportedly had an alternative compliance measure ratio of 46 percent, while thrift bank’s lending to agriculture sector through the alternative compliance measures was 68 percent.

Assets of the sector grew by 15.72 percent to P161.08 billion in the first semester of 2008, compared to the P139.21 billion in the same period last year. In the same period, commercial banks reported a 4.2-percent growth in terms of assets while the thrift banking system recorded negative growth.

Loans expanded by 9.66 percent to P102.67 billion while deposits grew by 7.76 percent to P116.5 billion.

Key to the overall growth was the emphasis placed on the microfinance and agriculture sectors, enhanced by strategic alliances with financial and non-financial entities.