PHILIPPINE BANKS did not tap the rediscount facility of the central bank in November amid easing bad loans, continued recovery in credit growth, and ample liquidity in financial markets.

The Bangko Sentral ng Pilipinas (BSP) said on Wednesday that its peso rediscount window was untouched last month following a P3.7-billion availment in October.

Total peso rediscount loans hit P15.3 billion in the January-to-November period, including availments worth P7.52 billion in June and P4.08 billion in April.

There were also no availments under the Exporters’ Dollar and Yen Rediscount Facility (EDYRF) last month. The last time the EDYRF was tapped was for a dollar rediscounting loan in 2016.

The BSP’s rediscount facility 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.

Last year, banks only tapped the facility in June, July, and September, amounting to P6.12 million availed loans in 2021.

Lenders did not borrow from the rediscount facility in November as bad loans eased and demand for credit increased, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Soured loans held by big banks declined for a seventh straight month in September, bringing the nonperforming loan (NPL) ratio to 3.43%, its lowest in 25 months or since the 2.84% recorded in August 2020.

The banking industry’s nonperforming loans dropped by 14.6% year on year to P415.225 billion in September from P486.362 in the same month last year, based on the latest data from the central bank.

This brought the systemwide NPL ratio to 3.43% in September, easing from 3.53% in August, and 4.44% in September 2021.

Meanwhile, bank lending expanded at the fastest pace in nearly four years  in October despite rising interest rates.

Outstanding loans by big banks, net of reverse repurchase (RRP) placements with the central bank, jumped by 13.9% year on year in October to P10.56 trillion. This was slightly faster than the 13.4% loan growth in September.

On the other hand, domestic liquidity grew at a quicker pace in October, expanding by 5.4% year on year in October to P15.4 trillion, from the revised 5.2% in September, BSP data showed.

“Banks also have other options to raise funding, in lieu of the BSP rediscounting facilities, such as through the interbank market, capital markets such as through the money market, bond markets, stock markets,” Mr. Ricafort said.

“Thus, this signals that there is still excess liquidity in the financial markets that also fundamentally reduces the need for banks to tap the BSP rediscounting facilities,” he added.

For December, the applicable rate for peso rediscount loans will be at 6.4201% for 90 loan maturity days, and at 7.3402% for 91-180 days.

Meanwhile, dollar borrowings will be priced at 7.69867% (1-90 days), 8.61877% (91-180 days), 10.45897% (181-360 days).

Yen-dominated borrowings will be priced at 2.87050% (1-90 days), 2.87050% (91-180 days), 5.63080% (181-360 days). — K.B. Ta-asan