STATE-RUN Land Bank of the Philippines (LANDBANK) may sell its bad assets through the provisions of the Financial Institutions Strategic Transfer (FIST) Law as it seeks to improve its asset quality and boost lending to sectors affected by the pandemic.

“LANDBANK is considering selling nonperforming assets (NPAs) through FIST corporations to avail of the benefits such as tax exemptions and other privileges afforded by the law,” the bank said in an e-mail to BusinessWorld.

“Ultimately, the disposal of nonperforming assets via FIST will expectedly improve LANDBANK’s asset quality, thereby putting the bank in a better position to carry out its expanded role as a partner in the National Government’s efforts to rebuild the economy,” LANDBANK added.

Republic Act 11523 signed in February allows financial institutions to sell their nonperforming assets to FIST corporations, which will be given tax perks for the transactions performed to complete the process.

Under the law, assets that will be recognized as nonperforming until end-2022 will be qualified to be offloaded to FIST corporations.

The government hopes that through the law, lenders would be less cautious about granting new loans as they can improve their balance sheets, which have been affected by the coronavirus pandemic’s economic impact.

LANDBANK said they have started identifying eligible NPAs under the law. It said it will ensure the concerned borrowers of the loan they will sell to FIST corporations will be notified or given the chance to restructure their debt.

“As the pandemic adversely affected most, if not all, sectors of society, LANDBANK will most likely prepare a balanced nonperforming loan portfolio mix composed of large corporates and MSMEs (micro-, small- and medium-sized enterprises) for disposal,” it said.

The state-run lender said the benefits of the FIST Law will enable them to lend more to sectors in need of financing.

“LANDBANK’s main thrust is to intensify financial and technical support to its mandated sectors, and further pursue an agri-value chain approach to promote financial inclusiveness,” it said.

The bank said it will also prioritize extending credit to local government units and small businesses to help them rebound from the impact of the pandemic.

However, even as it seeks to boost lending to these sectors, LANDBANK said it will remain “prudent” as risks to the outlook linger.

“As banks continue to face an uncertain credit outlook, LANDBANK will adopt a more prudent stance in lending while striking a balance in pursuing loan growth. We will also ensure that all actions are proactive, timely, reasonable, and consistent with safe and sound lending practices to avoid an escalation in nonperforming loans,” the state-run lender said.

LANDBANK’s net income inched up by 1.67% to P5.48 billion in the first quarter. Its assets rose by 16.13%. — Luz Wendy T. Noble