KB outstanding loans shrink 3.2% to P1.5T in end-March

The volume of outstanding loans of commercial banks (KBs) contracted by 3.2 percent to almost P1.5 trillion as of end-March 2004 compared to P1.4 trillion in the same period last year, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The March level was, however, an improvement of 1.5 percent from the previous month’s amount of P1.44 trillion.

According to the BSP, the continued expansion of bank lending was observed in a number of sectors, namely: mining and quarrying, 86.5 percent; construction, 18.1 percent; community, social and personal services, 10.7 percent; transportation, storage and communication, 8.8 percent; and agriculture, fisheries and forestry, 6.54 percent.

These sectors, the BSP said, accounted for 30.1 percent of total loans outstanding as of end-March 2004.

However, the BSP noted that the increase in bank lending to these sectors was offset partly by fewer loans to sectors such as wholesale and retail trade, for which loans fell by 5.8 percent.

Bank lending to the manufacturing, financial institutions, real estate and business services and electricity, gas and water sectors likewise declined during the month by 4.3 percent, 2.4 percent and 0.9 percent, respectively.

The BSP said the minimal increase in bank lending in March occurred against a backdrop of improving real sector activity.

It noted that the value of production index in the manufacturing sector maintained its uptrend, rising by 4.8 percent in Feb. 2004.

During the period under review, there was also a noted growth in merchandise exports of 7.1 percent.

Other demand-side indicators, cited by the BSP, were the improvements in passenger car sales which registered growth of 86.3 percent in March 2004 while the registered energy sales by the Manila Electric Co. (Meralco), the country’s largest power distribution utility, rose by 6.2 percent in Feb. 2004.

"Such developments suggest an improvement in credit demand in the months ahead," BSP governor Rafael Buenaventura said.

Buenaventura said, "going forward, given a generally manageable inflation outlook over the policy horizon, the monetary policy stance of the BSP will continue to ensure that the general macroeconomic environment remains conducive to credit demand and investment activity."

"Monetary authorities will continue to monitor closely the developments of bank lending activities and ensure that these are appropriately considered, together with other factors bearing on the inflation outlook, in the BSP’s regular assessment of the stance of monetary policy," he said.