Restructured bank loans surge by 574%

Philippine banks have gone out of their way to help restructure loans that would have otherwise fallen into default after the outbreak of the coronavirus pandemic last year, according to the latest data from the central bank.

In an online briefing, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the total amount of restructured loans in the local banking system at the end of the first half of 2021 was up almost sixfold on an annual basis—proof that the regulator’s policies to promote financial relief to borrowers was working.

As of end-June, the level of restructured loans of banks jumped by 574 percent to P328.6 billion from P48.7 billion a year ago. This was equivalent to 3.1 percent of total loans, up from 0.5 percent a year ago.

Meanwhile, loans to micro, small and medium enterprises (MSMEs) that were used as alternative compliance with the reserve requirements also surged since the start of the pandemic.

As of July 29, 2021, loans to MSMEs that were utilized as alternative compliance with the BSP’s reserve requirements amounted to P188.7 billion, up from P8.7 billion as of end-April 2020.

“These developments indicate banks’ continuing efforts to assist borrowers weather the challenges faced during this difficult period,” he said. “Thus, customers are encouraged to approach banks regarding adjustments to their loan terms to match their cash flows and paying capacity.”

Relief measures working

The BSP’s COVID-19 package of relief measures—which aim to incentivize lending, promote continued access to financial services and support the continuity of delivery of banking services— remain in place during this period.

Diokno said that, consistent with the policy intent of these measures, banks had been active in providing financial relief to their borrowers.

Meanwhile, Diokno assured the public of the continued access to and delivery of essential financial services amid the enhanced community quarantine being imposed by government.

He said essential banking services continue to be available to the general public during the ongoing lockdown in Metro Manila and select environs around the country to combat the spread of the COVID-19 pandemic and will remain available in case authorities decide to extend current mobility restrictions.

Diokno urged bank customers to make use of the central bank’s online portal to raise complaints and concerns on their financial transactions.