Lending to agri seen improving
BANKS anticipate favorable lending conditions for agricultural borrowers in the next 12 months, a survey by the Bangko Sentral ng Pilipinas (BSP) showed.
The 2022 Countryside Bank Survey (CBS) revealed that respondents in the banking sector foresee positive lending conditions for agricultural borrowers. They expect improvements in both loan volumes and loan quality, which should contribute to increased profitability.
On average, survey participants anticipate single-digit percentage growth in agricultural loan volumes.
Rural banks (RBs) project around 9-percent growth, while government-owned banks (GBs), expect an increase of over 5 percent.
Conversely, universal and commercial banks (UKBs) appear to focus more on lending to thrift banks (TBs) and rural and cooperative banks (RCBs) subsidiaries.
UKBs anticipate a less than 4-percent increase in agricultural loan volumes, while TBs predict nearly a 9-percent growth in this area.
The BSP cited that banking institutions often struggle to lend to the agricultural sector due to several inherent risks, including exposure to natural disasters, uncertainty surrounding harvests and farmers' income, as well as aging agricultural producers.
AdvertisementThe central bank said that the pandemic has exacerbated these risks by impacting farmers' health and livelihoods, undermining borrowers' ability to repay loans.
«Banks consider it essential to implement measures that reduce information asymmetry when extending credit to the agricultural sector, thereby supporting confidence in extending loans to this sector,» the BSP said.
The central bank, meanwhile, reported that the share of agriculture loans and services rose to 18.1 percent in 2022 from 17.6 percent in the previous year.
«The increase was mainly observed in rural and cooperative banks,» the BSP said.
Advertisement«It reflects an expansion in loan products related to various agricultural needs, such as seeds, fertilizer, working capital, and farm equipment, sustainable projects, digitalization of farming activities, and agri-tourism activities,» it added.
The 2022 CBS Report is a joint effort by the Department of Agriculture-Agricultural Credit Policy Council (DA-ACPC) and
