BSP wants to enhance banks’ credit exposure reporting

THE BANGKO SENTRAL ng Pilipinas (BSP) is looking to endorse the enhanced Comprehensive Credit and Equity Exposures Report (COCREE) for approval of the Monetary Board by this quarter.

“The draft BSP Circular on the expanded COCREE of 2023, known as COCREE 2.0, and its new reporting package have been both exposed to the industry for comments and is targeted to be endorsed for approval of the Monetary Board in early fourth quarter 2023,” the central bank said in a report on the financial system.

The draft circular on the new reporting package was posted on the BSP’s website in August. The insights given by BSFIs during the exposure period of the draft circular are expected to strengthen the formulation of data-driven policies, the central bank said.

“All credit and equity exposures, except written-off accounts with nominal value, are required to be reported in the COCREE. This allows the BSP to conduct an in-depth analysis of borrower performance and behavior, including the portfolio of retail consumers and micro and small borrowers,” it said.

Through the implementation of the new credit reporting system, the BSP will have a monthly compilation of granular credit and equity exposures of large BSFIs, it said.

The COCREE is a collection of credit and equity exposures from BSFIs and forms part of the central bank’s surveillance of emerging risks in supervised entities and the financial system.

The report compiles a monthly average of 31.7 million records, the BSP said. This is composed of granular borrower demographics (11.3 million records) and credit and equity exposure details (20.4 million records), which account for about 95% of the outstanding loan portfolio of the banking system.

The COCREE also aims to address the critical gaps, such as limited data elements and deficiencies in identifying exposures of a unique borrower, which was found in banks’ previous credit reporting method called the CREDEX. or the Report on Credit and Equity Exposures to Individuals/Companies/Groups.

“Considering that the CREDEX remained structurally the same for almost two decades, it can no longer adequately support the BSP’s data requirements for responsive supervision, insightful research, and empirically based policy development,” the BSP said.

The BSP noted that the CREDEX cannot capture granular information on small enterprises and consumer lending. It also needs to be updated to align with the 2009 Philippine Standard Industrial Classification (PSIC) and the Philippine Financial Reporting Standards.

“From only 35 data points in the CREDEX, the COCREE facilitated an expanded scope of 85 data points. It also provided more granular information to support on-site examination and off-site surveillance activities, including enriched forward-looking stress testing and scenario analysis, both on a micro and macro level,” the BSP said. 

The increase in data elements will improve the central bank’s capability to distinguish one borrower from another, it said. 

“Other than shifting to a more recent and frequent cycle of monthly submissions, compared with the quarterly cycle for the CREDEX, and adopting the updated PSIC codes and chart of accounts, the electronic submission of the COCREE prescribes the use of the Extensible Markup Language or XML platform,” the BSP said. 

“This platform is a more recent technology capable of efficiently processing voluminous and large data compilations relative to the outdated .dbf structure prescribed for the CREDEX,” the central bank said.

According to the BSP, the reporting coverage of COCREE caters to larger institutions who are capable of electronically compiling their credit data for submission.

These are universal and commercial banks (U/KBs), their subsidiary thrift banks (TBs), nonbanks with quasi-banking functions (NBQBs), trust corporations (TCs), and digital banks.

The BSP said efforts to expand the COCREE are ongoing.

“In terms of scope, the data points will increase from 85 to 164 to incorporate other relevant supplemental details. Meanwhile, covered institutions will widen to include all banks, NBQBs, and TCs. Data capture will also expand, with added coverage of smaller institutions, such as rural banks and stand-alone TBs, NBQBS, and TCs,” it added.

The COCREE 2.0 will be considered a category A-1 report by the BSP. — K.B. Ta-asan