THE CHAMBER of Thrift Banks (CTB) is no longer pushing for a cut in the industry’s minimum liquidity ratio (MLR) as they now have enough liquid assets to support their lending activities.
“You saw how MLR is already at 32% — way, way, way above the required limit. So, there’s no point for us to request to bring it down,” CTB President and CARD SME Bank, Inc. Vice Chairperson Mary Jane A. Perreras told BusinessWorld on the sidelines of an event last month.
The thrift banking industry’s minimum liquidity ratio stood at 32.2% on a stand-alone basis at end-June, rising from 30.79% a year prior and well above the 20% requirement, data from the Bangko Sentral ng Pilipinas (BSP) showed.
Ms. Perreras said in March that they want a lower MLR requirement amid an expected increase in loan volume due to the central bank’s reserve requirement ratio cuts.
The BSP last year rejected the industry’s call to reduce the MLR, saying the 20% requirement was “appropriate” to ensure they have enough buffers against shocks.
This comes as the thrift banking sector’s net loans have already reached P908.1 billion, Ms. Perreras said, higher than her earlier end-2025 forecast of P900 billion.
She said it is now likely that the industry’s loans could breach the P1-trillion mark before the end of the year as banks continue to extend credit to underserved sectors.
“We could reach P1 trillion. Why not? I think thrift banks are not stopping in moving our loans to SMEs (small and medium enterprises), et cetera.”
Loan disbursements will also be driven by lower borrowing costs amid the BSP’s easing cycle, Ms. Perreras added.
“The rate cuts are better for us… So, we will look forward to that, and that’s going to be beneficial to our consumers.”
On Thursday, the BSP unexpectedly cut benchmark interest rates by 25 basis points (bps) for a fourth straight meeting to bring the policy rate to 4.75%, the lowest since September 2022. Only six of the 16 analysts polled by BusinessWorld predicted the reduction.
The Monetary Board has now slashed borrowing costs by a total of 175 bps since it began its easing cycle in August 2024.
BSP Governor Eli M. Remolona, Jr. said they cut rates amid benign inflation and to help support growth as the widening corruption scandal involving state flood control and infrastructure projects has affected business sentiment and the outlook for the economy.
Mr. Remolona said another reduction is possible at their last meeting for the year scheduled for Dec. 11, with more cuts beyond that also on the table, as they are now looking at a neutral rate between 4% and 5%.
Analysts expect the BSP’s rate-cut round to continue until early next year, with most expecting a terminal rate of 4.25%.
Thrift banks booked a combined net income of P10.73 billion in the first half, BSP data showed. They also held P1.3 trillion in assets at end-August.
BSP Deputy Governor for the Financial Supervision Sector Lyn J. Javier said thrift banks have to balance the cost of digitalization with profitability by identifying their needs.
“We always see digitalization as having the capability to offer services through similar platforms or online services. But digitalization also means being able to automate whatever system or systems that you have in the office to facilitate the preparation of reports, monitoring of your exposures, and looking at the risks,” Ms. Javier said.
“At the end of the day, your investment should not outweigh the benefit you get from digitalization. So, it has to be proportionate to what the bank needs, what it should prioritize, and how it would enable the bank to better service customers.” — A.M.C. Sy
