Banking sector anticipates corporate lending to go up

CEBU, Philippines – The Philippine banking industry prepares for the anticipated rise in demand for corporate lending amid the current low interest rate and the increased level of confidence of investors towards the country's improving economy.

Cebu Bankers Club (CBC) past president Prudencio Gesta said that the banking sector is seeing an improving interest from the corporate sector to avail of lending and credit facilities from the banks.

Unlike in the past, wherein after the credit crunch during the 1997 regional economic crisis, loan takers from the corporate market slowed down, prompting the banking sector to strengthen its consumer lending products.

This time however, Gesta said companies have started to turn on banks for loans to support their expansion plans as well as other capitalization requirements. This development translates to the recovery of big-ticket lenders.

Although banks have maintained their strict loan processing requirement, Gesta said that most companies can now easily avail of big-ticket lending, as the economy improves.

Gesta, who is also the senior vice president and deputy group head for Rizal Commercial Banking Corporation (RCBC) said that in Cebu, corporate loans for manufacturing, trading, real estate and services (food, hotels and transport) are the top four sectors that are now showing more interest for lending.

According to Gesta, the wider opening of banks for corporate loans now, and the confidence of the private sector to invest, will not only provide healthy growth for the banks, but significantly boost the economy in the country.

The recent government's thrust to push Private-Public-Partnership (PPP) also encouraged Filipinos to invest on infrastructure.

Gesta said availability of funding is not a problem, as banks have money to be lent to the investors.

Immediately after the 1997 regional economic crunch, interest rates reached to as high as 21 percent, compared to average of five percent to 10 percent today.

Besides, the non-performing loan (NPL) of the banking sector is now at its lowest at four percent-opening up a favorable environment for corporate big-ticket lending activities.

Metropolitan Banking Corporation (Metrobank) vice chairman Francis Sebastian also said that Filipinos should take advantage of the P1 trillion idle funds in the Philippines this year.

Sebastian urged the business sector in the Philippines to ride on and grab the golden opportunity the economy is now offering.

Bangko Sentral Ng Pilipinas (BSP) governor Amado Tetangco earlier said that the fundamentally strong banking system facilitated a smooth flow of credit in the country. (FREEMAN)