BANKS have once been famously described by a former member of the Monetary Board as too lazy to earn its money by extending loans to real people instead of investing the bulk as special deposit accounts, or SDAs, with the Bangko Sentral ng Pilipinas (BSP).

On Monday, a BSP governor spoke on their behalf, saying while bank lending as a whole has slowed in the wake of the global economic downturn, the proportion of loans against investments in their balance sheets remain basically unchanged.

There was a point when the banks were seen by then-Monetary Board member and now Social Security System president Romulo Neri as having taken the easy way out of the economic downturn by investing the bulk of their money in the BSP’s SDA facility rather than risk being hit by defaulting households or corporate borrowers.

“During a crisis, an immediate reaction from financial institutions is to restructure their balance sheet such that loans shrink as a proportion and investments grow. We haven’t seen that among our banks,” BSP Governor Amando Tetangco Jr. said.

According to Tetangco, loans still comprise more or less 50 percent of the banking systems’ balance sheet and around 25 percent comprising the loan component. “If all the funds were in SDA only, you would have seen investments rise at the expense of loans,” he said in an e-mail.

“Nine months after Lehman, we still don’t see a balance sheet that is investments-dominated and where loans have shrunk. That by itself says a lot,” he quickly added.

Lehman Brothers was the securities giant that went bankrupt in September last year after it failed to find a buyer that could help it meet fear-driven investment withdrawals resulting from the subprime-mortgage fiasco.

Tetangco said the slowdown noted in bank lending at the moment may be more demand-driven than supply-constrained.

“Weaker economic activity, particularly in credit-intensive sectors such as manufacturing, would certainly contribute to reduced demand for loans particularly if firms are running down their inventories and postponing their expansion plans. “But remember, as we are an inherently service economy, there will be credit from these sectors,” he said.

The lending activities of all types of banks in the country still grew by 18.69 percent as at end-March this year, which is essentially where it was in January when this averaged 18.8 percent, BSP data show.