BSP survey shows higher agri loans and services in 2022

By Anna Leah Gonzales

May 3, 2024, 8:44 pm

<p><em>(File photo)</em></p>

(File photo)

MANILA – The share of agriculture loans and services went up to 18.1 percent in 2022 from 17.6 percent in 2021, results of a survey released by the Bangko Sentral ng Pilipinas (BSP) on Friday showed.

The 2022 Countryside Bank Survey (CBS) report showed that the increase was mainly observed in rural and cooperative banks (RCBs).

"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," the central bank said.

The 2022 CBS Report, a collaborative effort between the Department of Agriculture-Agricultural Credit Policy Council and the BSP, aims to examine lending trends and policy implications concerning agricultural financing by leveraging branch-level data.

The report evaluates banking units' agricultural lending activities in 2022 compared to 2021 and covers aspects such as loan demand, borrower profiles, interest rates, repayment dynamics, profitability, risk management, challenges, and future plans.

Administered electronically nationwide, survey respondents came from universal and commercial banks (UKBs), thrift banks (TBs), RCBs, government-owned banks (GBs), and digital banks (DBs).

The BSP's report showed that at least 40 percent of RCBs and 74 percent of GBs underscored their lending support for small-scale agricultural borrowers.

RCBs maintained a strong commitment to supporting agricultural borrowers, including small-scale farmers and fisherfolk.

The report also said the average interest rates on agricultural loans ranged from 12 percent to 18 percent, higher than those on non-agricultural loans, which ranged from 7.5 percent to 16 percent.

The overall repayment loan rate, meanwhile, was at 67 percent, with GBs recording a higher rate of 70 percent.

Some banking units attributed lower repayment rates in 2022 to the impact of the coronavirus disease 2019 pandemic.

The report said respondent banking units still require traditional loan securities from agricultural borrowers, mainly favoring real estate mortgages.

"Banking units often face challenges when lending to the agricultural sector due to inherent risks like exposure to natural disasters, uncertain crop yields, fluctuating borrower incomes, and an aging population. They see it crucial to adopt measures that address information gaps in agricultural lending to boost confidence in extending credit to this sector," the BSP said.

Looking ahead, respondent banks anticipate favorable lending conditions for agricultural borrowers. (PNA)