Firms’ credit access improving, says BSP

Bank loans easier to tap in Q3

MANILA, Philippines—Local businesses found it easier to tap bank loans in what regulators said was an encouraging development that could help sustain a “respectable” growth rate for the economy.

According to a survey conducted by the Bangko Sentral ng Pilipinas, the so-called “credit access index” for the fourth quarter hit +10 percent, up substantially from only +0.1 percent in the same period last year.

The latest index, however, is slightly lower than the +10.1 percent registered in the third quarter.

The credit access index measures the assessment of enterprises around the country of how easy or hard it is to tap loans. It is measured as the difference between the percentage of enterprise-respondents that said they found it easier to access loans than before versus the percentage of those that voiced the contrary view.

The latest quarterly survey, conducted between October 1 and November 9, covered 1,624 firms and had a 75.4-percent response rate. The surveyed firms were of different sizes and represented various business sectors.

The central bank said the improvement in accessibility of credit as perceived by enterprises is consistent with the growth in bank loans.

Latest data from the BSP showed that outstanding loans from commercial banks amounted to P2.17 trillion as of end-September this year, registering a 9.8-percent expansion from P1.98 trillion as of the same period last year.

Central bank officials said that sustained growth in bank lending, even at the height of the global turmoil last year, was one of the factors that helped the economy avoid a recession.

The Philippine economy grew by 1.1 percent last year, significantly slower than the 3.8 percent in 2008 and the 7.2 percent in 2007. Nonetheless, the Philippines was one of the few countries whose economies did not contract.

BSP officials said low interest rates aided the increase in demand for and supply of loans.

However, some economists said that banks should be lending more given their high levels of liquidity, instead of just depositing these excess funds with the central bank.

Banking industry data show that deposits of banks in the special deposit facility of the BSP has already breached the P1-trillion mark, which is a historic high.

The BSP agreed that banks should lend more, encouraging them to ease credit requirements especially for small and medium enterprises.

On top of this, the central bank has also used moral suasion to encourage banks to lend more to smaller corporate borrowers.

Although access to credit is improving, many SMEs still find it difficult to meet bank requirements, forcing many of them to borrow from informal lenders.

Other borrowers, on the other hand, complain that banks often charge them rates that are higher than average. –Michelle Remo, Philippine Daily Inquirer