Thrift banks will ask the Bangko Sentral NG Pilipinas (BSP) to reduce the minimum liquidity ratio (MLR) for the industry to 16%, because the reserve -requirement Ratio (RRR) reduction will take effect later this month.
“I’m sure they will be open to that. Especially now that we have a 0% [RRR] Al. So let’s take a look. We will probably continue to ask them (the BSP), “Chamber of Thrift Banks (CTB) President and Map SME Bank Vice chairman Mary Jane A. Perreras told Reporters on the sidelines of the CTB General membership meeting on Friday.
Last year the BSP rejected the call from second -hand banking to reduce the MLR, and said it was not necessary. It noted that the MLR of 20% was ‘appropriate’ because it ensures that thrift benches have ‘sufficient liquid assets to withstand potential stress events and at the same time to continue to meet the financing needs of their customers’.
“It was 16%during the pandemic. Now they have reduced it to 20%. So hopefully they can bring it back, even as little by little, “said Mrs. Perreras.
In April 2020, the BSP reduced the MLR for Stand-Alone recycling banks, national banks and cooperative banks to 16% of 20% to help these lenders with the demand from customers to funds during the pandemic.
This regulatory aid measure went at the end of 2022 and brought the MLR back to 20%.
Mrs. Perreras said that the BSP could reconsider the earlier position due to the expected increase in the loan volume after the RRR reduction is in force.
The RRR for Spaarschutters will be reduced by 100 basic points to 0%, with effect from 28 March. The RRR is the part of reserves that banks must hold to ensure that they can meet obligations in the event of sudden recordings. When a bank is obliged to have a lower reserve evatio, it has more money to borrow to borrowers.
“That (RRRSnit) will hopefully increase the volume of loans. Because there will be more liquidity that will be on the market. And we still hope that after the RRR has been reduced to zero, the MLR can then be reduced, “she said.
Mrs. Perreras said that a reduction in MLR would further stimulate lending.
“We hope that might be the next one. Because that is much better for us, especially for banks to be able to borrow more … I am sure they have reasons why they keep it at 20%. But we hope they would also reconsider our request, “she said.
Spare loans
In the meantime, Mrs. Perreras said that loans paid by sparing banks could hit around the P900 billion this year, driven by the RRR cut -off and increased lending to small companies and the agricultural sector.
“I think this growth will continue this year. Especially that we now have a zero reserve requirement (ratio). So, that loan portfolio, we expect this to grow because we have more liquidity to do more loans outside, “she said.
In 2024, recycling banks paid loans worth P770 billion, said Mrs. Perreras in a speech on Friday. This was about 15% higher than the loans of P667.63 billion in 2023.
She said reporters that this year’s net income and assets of the sector could grow by 6-7%.
However, cyber security problems continue to pose a risk for the sector.
“I think most banks experience this, but because of the many solutions providers that will be very useful for all banks, not only the big banks, but the big and the small banks, I think we will really try it Fight this, “said Mrs. Perreras.
The total assets of the recycling bank industry grew by 6% to P1.1 trillion in 2024 from P1.04 trillion in 2023.
“Total capital reached P174 billion by 10.7% against P157 billion. Capital Adequacy Ratio (Car) is a strong 17.88%, very much above the minimally required car of 10%. Non -performing loan ratio remained manageable at 6.66%, “added Mrs. Perreras.
This year, the CTB looks at increasing loans for small companies, as well as farms, which are usually influenced by natural calamities.
“We have many disasters and usually the affected sector is agriculture. So, while we are still working on development and making this a larger sector. We will also look at the other sectors such as the small and medium -sized companies, “she said. – Aaron Michael C. Sy