LENDERS left the rediscount facility of the central bank untouched in May as there was ample liquidity in the financial system.

The Bangko Sentral ng Pilipinas (BSP) said on Tuesday that its peso rediscount window was untapped anew last month following the P4.08-billion availment by a universal bank in April.

In 2021, banks only tapped the facility in June, July, and September. These peso rediscount loans amounted to P6.12 million.

The Exporters’ Dollar and Yen Rediscount Facility (EDYRF) was also untouched in May. The last time an availment was made under the EDYRF was a dollar rediscounting loan in 2016.

The BSP’s rediscount window gives banks access to additional money supply by posting their collectibles from clients as collateral.

In turn, banks may use the cash — denominated in peso, dollar or yen — to extend more loans to their corporate or retail clients and service unexpected withdrawals.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said there were no rediscount loans last month amid “continued excess liquidity in the financial system as the banks have other alternative sources of funding, such as the interbank market and through capital markets.”

Bank lending jumped by 10% in April, reflecting the rebound in economic activity as restrictions were eased alongside the steady decline in coronavirus cases.

This was the fastest loan growth seen in 23 months or since the 11.2% in May 2020.

Preliminary data from central bank showed outstanding loans of big banks expanded by 10.1% to P9.9 trillion in April from P8.99 trillion in the same month of 2021.

As lending increased, M3, which is considered as the broadest measure of liquidity in an economy, grew by 7.3% to P15.3 trillion in April year on year.

The declining trend in banks’ nonperforming loan (NPL) ratio also reduced the need for lenders to tap the BSP rediscounting facility, Mr. Ricafort said.

The banking industry’s gross NPL ratio went down to 4.08% in March from 4.21% a year ago. It is also lower than the 4.24% seen in February.

The March ratio is the lowest since the 4.1% logged in December.

For June, the applicable rate for peso rediscount loans will remain at 2.75%, regardless of maturity.

Meanwhile, dollar and yen-dominated borrowings will be priced at 3.61071% and 1.98246%, respectively. — K.B. Ta-asan