Bulk of the growth in KB loans was accounted for by the agriculture, fisheries and forestry sector which registered a growth of 9.9 percent during the period followed by the financial institutions, real estate and business services sector (FIREBS) with an 8.3 percent growth rate.
Loans from the community, social and personal services and from electricity, gas and water, likewise expanded by 5.8 percent and 1.5 percent, respectively.
However, there was a substantial decline in the loans to construction which recorded a drop of 23.9 percent. The mining and quarrying sector also recorded a drop of 17.3 percent.
Sectors which also recorded a drop in commercial bank loans were: manufacturing (down 02 percent); wholesale and retail (down 4.2 percent); and transportation, storage and communication (down 5.5 percent).
The BSP said credit activity is expected to pick up in the months ahead as the country’s economic conditions strengthen and business sentiment improves.
The strong performance of the stock exchange and financial markets on the back of the expanded value-added tax (EVAT), the BSP said, is a reflection of improved investor confidence and could influence the pick up in bank lending.
According to the BSP, the credit activity will also be supported by the improved balance sheets of commercial banks should they be able to further reduce their stock of non-performing loans.
The BSP said it would continue to support the restructuring and strengthening of financial sector by helping reduce their stock of NPLs.
The extension of the Special Purpose Vehicle Act (SPAV), it said, is now pending in Congress.
The monetary authority said the SPAV’s extension will facilitate the continued improvement in bank’s balance sheets.
The BSP said the cleaning up of banks’ books remains a policy priority as it will allow credit activity to resume a normal pace and enable the banking sector to better perform its intermediation function.