The latest growth was faster than the 1.7 percent annualized expansion recorded in May.
The BSP said the surge in commercial bank loans was fueled by lending to the manufacturing sector, trade and the financial institutions, real estate and business services sector.
The growth in loans extended to manufacturers accelerated by 4.7 percent year-on-year in June from 2.3 percent in May. It accounted for more than a quarter of commercial banks’ loans.
"Overall expansion in the economy continues to be robust, with output growth driven by non-credit intensive sectors such as agriculture and services," BSP Deputy Governor Amando Tetangco Jr said.
"The observed pattern of moderate credit demand and investment growth implies that the stance of monetary policy should give due consideration to the state of credit demand from the real estate sector," Tetangco said.
Other sectors contributing to higher lending activity were the wholesale and retail trade; agriculture, fisheries, and forestry; electricity, gas, and water; and transportation, storage and communication.
The BSP said commercial bank loans extended to the agriculture, fisheries and forestry sector posted double-digit growth for the third consecutive month in June, rising 10.3 percent year -on-year.
The BSP said, bank lending to other sectors limited overall growth especially with the lackluster performance of lending to such sectors as mining and quarrying, construction and the financial institutions, real estate and business services sector.
The BSP said that in the near term, there were favorable prospects for sustained growth in bank lending given the strong performance of the economy in the first semester.
"Credit activity could strengthen further in the months ahead as consumption spending continued to be robust and investments started to pick up," the BSP said.
The BSP said there were also indications suggesting continuing improvements in economic activity, such as the sustained rise in sales of consumer durables and energy sales.
Data from the BSP earlier showed that government borrowing has completely dominated the local credit market as private demand for credit remained weak.
Data from the BSP indicated that net domestic credit which represented total borrowing in the financial system, expanded by 9.17 percent from P2.18 trillion in June last year to P2.38 trillion this year.
The growth was significant but it was no thanks to any increase in economic activity that could have translated into more demand for corporate loans and greater economic activity.