MANILA, Philippines — Loans disbursed by big banks accelerated to their highest level in nearly two years, fueled by strong growth in credit for both production activities and consumer borrowing, the Bangko Sentral ng Pilipinas said.
Preliminary data released by the BSP showed loans disbursed by universal and commercial banks amounted to P12.68 trillion in November last year, 11 percent higher than the P11.4 trillion recorded in the same month in 2023.
The latest growth rate was faster than the 10.6-percent expansion recorded in October last year and marked the highest since the 13.7- percent expansion seen in December 2022.
Based on central bank data, outstanding loans for production activities grew faster at 9.8 percent to P10.81 trillion, accounting for 85.3 percent of the total lending at end-November.
Loans disbursed to the wholesale and retail trade as well as repair of motor vehicles and motorcycles sector grew by nine percent to P1.44 trillion, while lending to the electricity, gas, steam and air-conditioning supply sector increased by 9.6 percent to P1.39 trillion.
Likewise, lending to the financial and insurance activities sector went up by 4.4 percent to P1.04 trillion, while loans disbursed to the real estate sector grew by 10.1 percent to P2.57 trillion for a 20.3-percent share.
BSP data also showed that consumer loans grew by 23.3 percent to P1.54 trillion in end-November last year, for a share of 12.1 percent of total loans.
Credit card loans increased by 26.5 percent to P894.61 billion, while motor vehicle loans jumped by 19.6 percent to P450.69 billion.
Salary based general purpose consumption loans also went up by 15 percent to P154.99 billion.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said credit growth started to pick up following the BSP’s shift to a less restrictive monetary policy stance.
The cut in banks’ reserve requirement ratio in October 2024 also infused about P400 billion into the financial system, which fundamentally increased the loanable funds of banks, he said.
The Monetary Board lowered borrowing costs by 25 basis points at its policy meeting last December 2024. This brought the key rate down to 5.75 percent from six percent previously. The central bank has delivered a total of 75 bps of rate cuts since August 2024.
“Looking ahead, the BSP will ensure that domestic liquidity and lending conditions are in line with its price and financial stability mandates,” the central bank said.
In a separate data, the BSP reported a 7.7-percent increase in domestic liquidity to about P18.1 trillion in end-November last yar, faster than the revised 5.4 percent growth a month earlier.