Credit growth accelerates in October

Lawrence Agcaoili – The Philippine Star

December 1, 2021 | 12:00am

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MANILA, Philippines — Credit growth accelerated for the third straight month in October, rising by 3.5 percent from only 2.7 percent in September as the outstanding loans of universal and commercial banks continued to improve, reflecting the expansion in business and economic activity amid the easing of mobility restrictions.

Preliminary data released by the Bangko Sentral ng Pilipinas (BSP) Monday evening showed big banks disbursed P9.27 trillion in October, P312 billion higher than last year’s P8.96 billion.

“The continued recovery in outstanding loans of universal and commercial banks reflects the expansion in business activity amid easing quarantine restrictions, declining COVID- cases, and increasing vaccinations,” the central bank said.

Loans disbursed by big banks slumped for eight straight months between December last year and July this year as banks remained risk averse, while demand from borrowers remained tepid due to uncertainties brought about by the pandemic.

Bank lending finally started to recover in August as the aggressive easing, including the 200-basis-point cuts in interest rates and lowering of reserve requirement ratio undertaken by the BSP, was finally absorbed by the economy.

“In conjunction with the national government’s fiscal and health interventions, the BSP will keep a patient hand in providing policy support in order to enable a sustainable recovery in domestic demand,” it said.

The Monetary Board has kept interest rates at record lows as BSP Governor Benjamin Diokno vowed to do whatever it takes to help the economy fully recover from the impact of the pandemic.

“Looking ahead, the BSP will continue to prioritize providing the appropriate monetary policy support for the overall economy, in line with the BSP’s price and financial stability mandates,” the central bank said.

Data released by the central bank showed outstanding loans for production activities grew faster at 4.9 percent to P8.21 trillion and accounted for 88.5 percent of the total lending in end-October.

Loans disbursed to the real estate sector grew by 7.6 percent to P1.85 trillion and accounted for 19.9 percent of the total disbursements, while lending to the manufacturing sector went up by five percent to P1.04 trillion for a share of 11.2 percent, while loans given to the electricity, gas, steam and air-conditioning supply sector expanded by 2.1 percent to P1.03 trillion for an 11 percent share.

On the other hand, loans to the wholesale and retail trade, as well as repair of motor vehicles and motorcycles contracted by 0.7 percent to P1.08 trillion for a share of 11.7 percent.

The BSP said household loans continued to contract at a slower pace of 7.2 percent to P806.75 billion in end-October for a share of 8.7 percent of total loans.

Credit card loans finally recovered, inching up by 0.9 percent to P410.8 billion from P407.04 billion.

However, motor vehicle loans shrank by 16 percent to P307.55 billion from P366.03 billion, while salary-based general-purpose consumption loans fell by 7.2 percent to P74.74 billion from P80.54 billion.

Meanwhile, the BSP reported that the country’s domestic liquidity or money supply expanded by 8.2 percent to P14.6 trillion in end – October.



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