Credit growth slows to 10.6% in October

MANILA, Philippines —  After accelerating for three straight months, credit growth slowed to 10.6 percent in October from 11 percent in September, according to the Bangko Sentral ng Pilipinas (BSP).

Preliminary data from the central bank showed that loans disbursed by universal and commercial banks amounted to P12.5 trillion in end-October, up by P1.19 trillion from the P11.31 trillion recorded in the same period last year.

The October credit growth marked the slowest in three months or since the 10.4 percent expansion in July.

“Looking ahead, the BSP will continue to ensure that domestic liquidity and lending conditions are aligned with its primary mandate of ensuring price and financial stability,” the central bank said.

For October, loan releases to production activities grew by 9.1 percent to P10.66 trillion, slower than the 9.8 percent rise in September.

The growth in disbursements to the volatile real estate sector eased to 11.3 percent with P2.54 trillion, followed by the wholesale and retail trade, repair of motor vehicles and motorcycles with a slower increase of 7.2 percent, to P1.41 trillion.

On the other hand, the electricity, gas, steam and air-conditioning supply sector booked an 8.8-percent increase to P1.37 trillion, faster than the 7.5-percent rise a month ago.

According to the BSP, consumer loans sustained their growth, rising by 23.6 percent to P1.5 trillion in end-October this year.

Credit card loans reached P865.82 billion while auto loans amounted to P440.85 billion.

Salary-based general purpose consumption loans also stood at P154.47 billion as of October.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said uncertainties involving US president-elect Donald Trump’s policies could lead to higher US inflation, which could lead to fewer Fed rate cuts in the coming months.

Earlier in November, the Bank of America (BofA) said the Philippines is expected to post the most optimistic credit growth trend across the Association of Southeast Asian Nations (ASEAN) region.

BofA’s analysis showed that the Philippines is the only country within ASEAN showing an “improving” trend, while other economies showed a flat or declining credit growth.

“The Philippines is the only country within ASEAN showing an ‘improving’ trend. It has seen a faster recovery in credit growth to nine to 10 percent and the latest reading of the Indicator implies slight improvement from current levels,” it said.

In a separate data, the BSP reported a 5.5-percent increase in domestic liquidity to about P17.7 trillion in end-October, unchanged from a month ago.