Bank lending growth eases

MANILA, Philippines - The growth in bank lending and domestic liquidity continued to ease in January but the Bangko Sentral ng Pilipinas said both remains supportive of the robust economic growth.

“The sustained expansion in bank lending amid adequate liquidity continues to provide a meaningful boost to domestic economic activity,” the central bank said.

While lending by universal and commercial banks minus their placements with the BSP increased 17.3 percent to P4.39 trillion in January, it was slower than the revised 19.9 percent expansion in December.

Together with placements with the central bank, lending climbed 16.6 percent to P4.66 trillion, also a deceleration from the 19.1-percent growth in December.

Loans for production activities continued to make up bulk of the borrowings at 90.3 percent, while household loans accounts for 7.5 percent.

Majority of the credit financed real estate (P780.91 billion); manufacturing (P691.38 billion); wholesale and retail trade (P627.19 billion); electricity, gas and water (P456.13 billion); and financial intermediation (P389.76 billion) activities during the month.

Consumer loans also jumped 20.5 percent to P337.03 billion on the back of a 25.7-percent climb in auto loans to P116.9 billion and a 83.2-percent surge in other loans to P58.44 billion.

Credit card loans also increased 4.4 percent to P161.69 billion during the period.

Meanwhile, M3 — the broadest measure of domestic liquidity — rose by 7.7 percent to P7.5 trillion, slower than the 11.3-percent expansion seen in December.

The BSP said the increase in money supply was due to  the sustained demand for credit .

“Domestic liquidity has continued to grow at a moderate pace during the month due in part to the increase in placements of trust entities in the BSP’s special deposit account facility relative to a year ago,” the BSP said.

“The M3 growth in January 2015 also reflects statistical base effects associated with the significant increase in domestic liquidity a year ago of 38 percent, following the operational adjustments involving access of trust entities to the BSP said.

M3 growth hit 30 percent in July 2013 and remained above that level for another nine months following rate reductions in the SDA and restriction of investment management accounts or singular fund accounts in the same facility.

Last year, the BSP raised the banks’ reserve requirements and the SDA rate to pull down the relatively high liquidity growth.

“Going forward, the BSP will ensure that credit and liquidity conditions remain supportive of overall economic growth in a manner consistent with the BSP’s price and financial stability objectives,” the central bank said.

“The BSP will continue to keep a close eye on monetary dynamics and remain prepared to take appropriate measures if needed to ensure that liquidity stays sufficient to support the growth requirements of the economy,” the BSP added.