THE DEVELOPMENT Bank of the Philippines (DBP) is on track to hit its P5-billion income target this year, its top official said.

The state-run bank also plans to restructure its loans to government contractors amid repayment issues to improve its financial position.

“We’re targeting about P5 billion this year, approximately. So, we’re on target. Right now, we’re about half of that,” DBP President and Chief Executive Officer Michael O. de Jesus told reporters on Thursday.

He said this was driven by loans for infrastructure projects.

DBP’s net income stood at P2.53 billion as of end-June, its latest financial statement posted on its website showed.

Mr. De Jesus said the bank will extend the payment terms of their “legacy loans” to help their contractor clients repay their debt and fix past dues that weigh on the DBP’s asset quality.

The bank’s nonperforming loan (NPL) ratio was at about 7% as of end-June, which the official noted is higher than industry average.

“We’re very selective also in our lending. We noticed a few contractors that have problems with collections and all that. Although we’re active in lending to them, we also have to be very careful because we’re monitoring our past dues. And I think there were some contractors that were having some problems with collections. Government contracts. So, they basically were having problems paying their loans, too,” he said.

“We do loans that maybe other banks would not do. But we do it because there’s a developmental aspect. But our priority is to fix those nonperforming loans, to restructure them… We extend the payments. We work with our borrowers to restructure… Sometimes, one or two accounts could increase the past due. Many of them are government contractors. They’re having a hard time collecting now from the government,” Mr. De Jesus added.

He said that while the bank’s current NPL ratio is still “manageable,” they want to eventually bring this down to 5%.

Meanwhile, Mr. De Jesus said the DBP could resume its lending for the jeepney modernization program if the loans could have more equity support as the loan program was suspended earlier this year as the repayment levels of the sector went to as high as 40%.

“We had a very poor experience with the jeepney modernization. Our past due in that field went up to as high as 40%. So, it wasn’t good for us. If we do come back, we have to look at other things. Maybe increasing the equity and all that. But it was not successful for the past two years,” he said.

“We want to help the industry, but there are a lot of issues. Sometimes you’re lending to cooperatives. The drivers, for example, their routes are changed. They have a profitable route, [but] a mayor can change the route to a less profitable route. That affects the payment capability. There are a lot of things going on… We have to change things. There should be more equity support.” — Aaron Michael C. Sy

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