The Home Development Mutual Fund (HDMF) or Pag-IBIG Fund does not see any changes on the interest rates it offers for members’ housing and multipurpose loans, which is expected to hit P100 billion this year.
In an online briefing on Thursday, Pag-IBIG Fund CEO Acmad Rizaldy P. Moti said the fund is not keen on making any changes even if things turn for the worse.
Moti said Pag-IBIG’s finances remain sound and all it needs is to provide for are “the needs of members.” This, according to him, enables Pag-IBIG to continue offering the lowest interest rate of 5.375 percent.
“The rates for Pag-IBIG Fund will remain for as long as we don’t borrow from the market,” Moti said adding that “based on our projections—we just finished our stress testing—even in the worst case, we won’t borrow this year; so, that’s a good thing.” The HMDF chief said some of his colleagues from the banking sector has already alerted him that Pag-IBIG’s interest rates may be “artificially low.”
He assured that despite this, Pag-IBIG was still able to grow its net income to P33 billion in 2018 and a notch higher at P34.37 billion in 2019.
Moti added that the low interest rates offered by Pag-IBIG to its members was achieved after introducing reforms to address its non-performing loans (NPL) ratio at 25 percent when Pag-IBIG’s interest rates were around 11 percent in 2011.
He explained that by “copying” the best practices and reforms that improved collection efforts from the banking industry, Pag-IBIG was able to bring down its NPL ratio to the current range of 8 percent to 9 percent.
“Since 2012, the rates have been going down and, in 2018, we announced the lowest at 5.375 percent with 3-percent subsidized rate for minimum wage earners. So that’s below market; it’s a subsidy program,” Moti said. “Our tax savings are being plowed back through subsidy program for the minimum wage earners.”
Based on his presentation, Pag-IBIG Fund has 14.69 million active members as of 2019. Its total assets reached P603.39 billion and membership savings is at P50.38 billion.
It was also able to release dividends of P31.07 billion as of 2019. Dividend rates for regular savings reached 6.73 percent and dividend rates for MP2 savings at 7.23 percent.
Housing loan releases reached P86.7 billion in 2019, a 15-percent increase from P75.38 billion in 2018. Membership savings, meanwhile, reached P50.4 billion in 2019, a 25-percent growth from P40.3 billion.