Bank loan growth slows to 14%

MANILA, Philippines - Bank lending growth slowed in the first eight months of the year but remained robust according to the Bangko Sentral ng Pilipinas (BSP), which yesterday stressed the continued strength of the Philippine banking system.

Excluding BSP placements, outstanding loans of universal and commercial banks expanded 14 percent as of August to P2.982 trillion, losing pace from the 16 percent growth posted the previous month.

Growth was more sluggish if you include banks’ money with BSP, data showed. That figure hit P3.23 trillion, 12.4 percent up year-on-year, down from 15.2 percent the previous month.

 “Bank lending activity is expected to remain robust, thereby providing support to domestic demand and real sector activity in the coming months,” BSP Deputy Governor Juan de Zuñiga said in a statement.

Loans for production activities accounted for four-fifths of banks’ total loan portfolio, De Zuñiga said, with credit extended to the sector reaching P2.717 billion as of August, 14.1 percent up.

Money was mainly channeled to the wholesale and retail trade sector, which experienced 38 percent loan growth. Other sectors that benefitted from bank credit and their corresponding growth were: transportation, storage and communication (28.9 percent), financial intermediation (26.7 percent), real estate, renting and business services (24.7 percent), manufacturing (18.2 percent) and electricity, gas and water (15.9 percent).

Declines were recorded in lending to mining and quarrying, down 45.5 percent, and agriculture, hunting and forestry, down 43.9 percent, data showed.

Meanwhile, consumer loans such as credit card receivables, auto loans and other credit primarily used for household consumption- rose 15.8 percent to P243.151 billion, data showed. Expansion was slightly faster than the 15.4 percent posted as of July.

Money supply also grew slower, De Zuñiga said. This amounted to P4.6 trillion as of August, up 6.2 percent, which was slower than the 8.7 percent posted in the first seven months.

“Increasing domestic liquidity that the Filipino saver continues to have faith in our banking system,” BSP Deputy Governor Nestor Espenilla Jr. said in a speech at the 38th Philippine Business Conference and Expo in Manila.

 “In effect, this will help support domestic demand and productive capacity, which are both expanding as a sign of confidence,” he added.

Within this year, BSP cut key rates by an aggregate of 75 basis points to encourage bank lending and borrowing in order to boost consumption. This, in turn, is expected to support economic growth.

The local economy grew by 6.1 percent in the first semester, slightly exceeding the government’s five- to six-percent goal this year.