MSME loan slips fall to 463.13 billion pesos in 2021

MANILA, Philippines — Lending by banks in the Philippines to micro, small, and medium-sized enterprises (MSMEs) fell 3.6 percent to 463.13 billion pesos in 2021 from 480.5 billion pesos in 2020, as the sector has yet to fully recover from the impact of the pandemic, according to the Bangko Sentral ng Pilipinas (BSP).

The industry’s total loan portfolio stood at 8,570 billion pesos in 2021, which means that allocations to the MSME sector should have reached 857.1 billion pesos.

In 2020, industry loanable funds amounted to P8.41 trillion.

BSP data showed that the total allocation of credit from the banking system to micro and small enterprises reached 178.14 billion pula, still below the 685.68 billion pula or 8%, as it only accounted for compliance of 2.08%.

The overall banking system compliance rate of 5.41% last year remained below the 10% required by Republic Act 6977, as amended by RA 8289 and RA 9501, otherwise known as Magna Carta for SMEs.

Funds allocated to medium-sized enterprises amounted to 284.99 billion pesos or more than the 171.42 billion pesos required. This translated into a compliance rate of 3.33%, exceeding the required 2%.

Eric Luchangco, head of corporate banking at Ayala-led Bank of the Philippine Islands, said in a virtual forum on the new BPI digital platform BizKo that the listed bank’s MSME portfolio continues to perform well despite the health crisis. .

Luchangco said MSMEs were hit harder by the pandemic than large customers.

“We are looking to continue to grow our business. We believe that with many areas moving to Alert Level 1, we expect activity to continue to grow this year. And so we are optimistic about our outlook for this year,” Luchangco said.

MSMEs contribute 35.7% of the total value added of the Philippine economy, represent 99.5% of the total number of establishments and employ 62.8% of the total workforce.

However, MSMEs are unable to reach their full potential due to difficulty in accessing credit and finance, especially now that banks are risk averse due to the uncertainties caused by the pandemic.

BPI has launched the simple, affordable and convenient subscription-based digital banking platform to help MSMEs manage their business finances and provide an integrated online system for invoicing and collections.

The all-in-one online platform available via app and web gives MSMEs immediate access to their account information – to view balances, deposits and debts, regularly pay employees, suppliers, utility and government dues, create digital invoices under their business name, receive invoice number reminders to avoid duplicates, and receive and monitor payments with its intuitive invoicing system.

Luchangco said the pandemic has made running a business even more difficult for Filipino MSMEs.

“In addition to declining profitability, contractors are dealing with increased complexity as issues such as illnesses and blockages have limited their mobility, made operations more expensive and caused significant delays that have inflated their overhead,” Luchangco said.

Ana Sison, Head of Transaction Services Division at BPI, said that BizKo aims to provide individuals and businesses with an efficient, inclusive, safe and secure digital payments ecosystem to reinforce BPI’s commitment to be the partner choice of MSMEs.

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