Higher rates, ample liquidity keep rediscount loans low

Loans granted to banks under the Bangko Sentral ng Pilipinas (BSP) rediscount window further declined as of end-July due to higher rediscounting rates and ample money supply in the financial system.

 

The availments of thrift and rural banks under the peso rediscount facility decreased by 69.4 percent to P251.7 million from P822.8 million in the comparable 2014 period, according to figures the central bank released on Monday.

 

Of the amount, 85.6 percent went to commercial credits, 2.6 percent to production credits and 11.8 percent to other credits comprising 6.9 percent for housing, 2.6 percent for permanent working capital and 2.3 percent for capital expenditures. 

 

The central bank also reported a decline in rediscount borrowings as of end-June. Peso-denominated loans then decreased by 74.3 percent to P189 million from P735 million in the first half of 2014.

 

Meanwhile, availments under the exporters dollar and yen rediscount facility (EDYRF) remained at $0.7 million or 89.4 percent lower from the $6.6 million recorded a year ago. No bank has borrowed yen-denominated loans so far. 

 

"Availments under the Peso Rediscount Facility and the EDYRF have declined due to the increase in rediscounting rates and ample liquidity in the financial system," BSP said.

 

The BSP rediscounting window provides banks with funds to meet short-term liquidity needs. Rediscounting also allows the central bank to regulate the amount of money circulating in the financial system.

 

The peso facility has two separate windows for universal and commercial banks and for thrift, rural and cooperative banks. The rediscount rates are based on the applicable one-month overnight lending and overnight borrowing rates of the BSP.

 

Rediscount rates has ranged from 6.125 to 6.250 percent for universal and commercial banks and 4.000 to 4.125 percent for thrift, rural and cooperative banks since September 15, 2014.

 

The rates for EDYRF loans are based on the 90-day London Inter-Bank Offered Rate. For August, the rates range from 2.30860 to 2.43360 percent for dollar-denominated loans and from 2.09643 to 2.222143 percent for yen loans. —KG, GMA News