Ayala-run Bank of the Philippine Islands’s (BPI) lending growth has proved steady throughout the year and driven mainly by corporate financing, according to one of its senior officials.
In the third quarter, BPI reported total loans growing 19.4 percent to P931.12 billion, with a 77:23 corporate-retail mix.
Senior Vice President Ronald Gerard Veloso Jr. said BPI is growing slightly above industry level. He said this was just “the right pace”.
“Overall, I think the growth has been particularly on the corporate. It’s been above industry; it’s been across the board. It’s not too quick also. It’s just growing at the right pace,” he said.
In July the central bank reported the banks’ aggregate loan portfolio grew 17.7 percent to P5.41 trillion on the basis of an economic acceleration traced to election spending. Veloso added that the industry generally fared well but is looking forward to better demand as the middle market continues to expand.
BPI is also mulling over better agricultural financing through rural enterprise development and value chain financing. In November BPI Foundation Inc. held the first AgriFinancing Summit to address the lack of funding in the country’s agricultural sector.
The Agri-Agra Law Reform Credit Act of 2009 mandates all banking institutions, both private and government-run, to allocate at least 25 percent of their total loan funds for agriculture and fisheries, 15 percent of which should be allotted for farmers and fisherfolk and the other 10 percent for agrarian-reform beneficiaries.
Data from the Bangko Sentral ng Pilipinas (BSP) show that for 2015, the compliance of banks—universal, commercial, thrift, rural and cooperative—was up 20.6 percent to P432.7 billion, from P358.7 billion in 2014. However, this was still below the mandated requirement as the compliance rate for lending to agriculture stood at only 14.5 percent.
According to Veloso, BPI allocated 14 percent for agriculture, almost meeting the central bank requirement. But agrarian loans barely reached one percent of the 10 percent mandate.
“[We] don’t see this reached, not in the near term,” Veloso told the BusinessMirror.
The industry compliance rate for agrarian-reform lending was at a mere 0.99 percent in the first quarter this year.
The executive said BPI/MS, the bank’s nonlife-insurance arm, is developing a product that will suit the seasonal cash flow of farmers. The lender is also looking to engage in crop insurance.
Veloso acknowledged large banks, like BPI, have difficulty lending directly to farmers and fisherfolk due to the inherent risks and organizational operating constraints.
“What we fail at, what we can’t crack up to this point is reaching out to small farmers. Let me be the first to say it won’t make sense for me to lend individually. It has to be collective because then it becomes economically feasible. It lessens the risks,” he said.
At present, BPI has over 900 borrowers from the agriculture industry within the medium- to large-scale bracket.