Loans to the micro, small, and medium enterprises (MSME) sector are expected to rise in 2024, according to a banking expert.
However, Enrico P. Villanueva, a senior lecturer in economics at the University of the Philippines Los Baños, noted that the figures are projected to remain below the mandated 10% quota of lenders’ total loan portfolios.
He highlighted the persistent challenge in estimating credit risk for small businesses, especially for banks not specifically targeting or just beginning to focus on this segment.
, “Booking sufficient MSME loans would be a challenge to a number of banks, especially those not really targeting or just beginning to target this segment. Estimating the credit risk of this segment is inherently difficult given the lack of information or reports,” he said.
During the first six months, loans allocated by the banking industry to small businesses reached P461.387 billion, constituting merely 4.71% of their overall loan portfolio, which amounts to P9.8 trillion.