Banks’ rediscount borrowings increase in March

BANKS TAPPED more loans via the central bank’s rediscounting window in March, as credit for businesses and capital purchases rose during the period.

Peso rediscount borrowings totalled P17.406 billion last month, lower than the P20.433 billion loans secured in February, the Bangko Sentral ng Pilipinas (BSP) said yesterday. These debts are well above the P1.226 billion secured by lenders in March 2018.

The central bank’s rediscount facility allows banks to get hold of additional cash by accepting a lender’s collectibles as collateral for short-term credit. The lenders can then use the additional money supply — either in the peso, dollar or yen — to grant more loans for corporate or retail clients, as well as service unexpected withdrawals.

Rediscount credit lines amounted to P52.301 billion from January to March, versus the P7.036 billion secured by banks during the first quarter of 2018.

In a statement, the BSP said majority of the loans funded commercial credits at 43.97%, with over a third meant for imports while a tenth was used for goods trading. Loans for capital expenses accounted for 38.44% of the sum, followed by credit for other services (9.64%) and permanent working capital (7.95%).

The bigger rediscount lines come at a time when some financial firms are flagging tighter money supply in the system. However, central bank officials have stressed that such “tightness” is temporary as liquidity conditions remain sufficient.

On the other hand, the dollar and yen rediscount window catering to export firms remained untouched as of March, sustaining the trend for the past few years.

For April, rates for peso rediscount loans remain unchanged after the BSP’s Monetary Board voted to keep benchmark yields steady during their March 21 review.

Rediscount rates for peso loans stand at 5.3125% for loans maturing in 90 days or less, while those with a 91 to 180-day term are priced at 5.375%. These are based on the 5.25% ceiling of the interest rate corridor plus a premium.

New BSP Governor Benjamin E. Diokno said last month that the central bank needs to confirm a clear downward trend for inflation before they can pursue adjustments to the policy rate as well as the 18% bank reserve requirement.

March inflation slowed further to 3.3%, but policy makers said they remain watchful about rising world crude rates and the local dry spell for its impact to domestic prices.

Meanwhile, yields levied on foreign currency loans saw mixed movements for the month.

Dollar credit lines come with an even lower rate of 4.59975% for one to 90-day loans; 4.66225% for 91- to 180-day loans; and 4.72475% for 181- to 360-day loans, the BSP said.

Meanwhile, the rates for yen loans climbed to 1.936% for one to 90-day loans, 1.9985% for 91- to 180-day loans, and 2.061% for 181- to 360-day loans.

These reflect adjustments in the global financial markets, with the yields for US Treasuries having inverted by late March. — Melissa Luz T. Lopez