The Department of Finance (DOF) has commended the Land Bank of the Philippines (LANDBANK) and the Development Bank of the Philippines (DBP) for their strong financial positions, noting the institutions are now in a better position to expand services and support national economic priorities. Both lenders have consistently exceeded the Bangko Sentral ng Pilipinas’ (BSP) required capital adequacy ratio (CAR), underscoring their financial stability and resilience in the face of economic challenges.
As of November 2024, LANDBANK reported a CAR of 16.42 percent, while DBP’s stood at 14.78 percent, well above the BSP’s regulatory minimum of 10 percent. The robust figures highlight the banks’ financial strength, which positions them as key players in advancing critical sectors like infrastructure, agriculture, fisheries, and micro, small, and medium enterprises (MSMEs).
Finance Secretary Ralph G. Recto, who as legislator successfully pursued raising the critically important value added tax to 12 percent, lauded the banks’ solid financial standing, saying the state-owned lenders are well-equipped to help drive the government’s growth agenda. “The strong financial health of these institutions reaffirms their vital role in the nation’s progress,” Recto said, emphasizing the banks’ ability to support sectors vital to the country’s economic development.
Recto’s lead role in helping reform the VAT system in the 2000s allowed the government to raise much-needed revenue that in the final analysis helped the Philippines address persistent fiscal imbalances.
Both banks have expressed confidence in their ability to fulfill their mandates. LANDBANK president and CEO Lynette V. Ortiz highlighted the bank’s consistent revenue growth, which enables it to contribute meaningfully to inclusive development. “Our strong financial foundation allows us to be a reliable partner in the government’s inclusive growth agenda,” Ortiz noted.
Similarly, DBP president and CEO Michael O. de Jesus reiterated the bank’s alignment with President Ferdinand Marcos Jr. ‘s economic vision, stressing DBP’s readiness to support the country’s long-term growth objectives. “DBP remains financially robust and ready to fulfill its role in the nation’s development,” he said.
In a bid to further enhance the banks’ financial capacity, the DOF is advocating for legislative amendments to LANDBANK and DBP’s corporate charters. Key proposed changes include enabling the banks to raise capital from private markets by offering shares to the public. The proposed adjustments would also increase their authorized capital stock, reducing their reliance on government funding and enhancing their financial flexibility.
Additionally, the proposed reforms aim to streamline the bond issuance process for LANDBANK, aligning it with DBP’s more efficient procedures. These changes would improve the banks’ ability to access capital, further empowering them to back the government’s economic and development programs.
The DOF’s push for charter reforms reflects its ongoing commitment to ensuring that key state-owned financial institutions are fully equipped to meet the country’s economic challenges and support its long-term development goals.
