Commercial bank lending continued to grow in May. It is noteworthy that the loan portfolio of commercial banks has been expanding on an annual basis for the past 16 months now. Loan growth, however, weakened slightly relative to the April expansion. Loans outstanding of commercial banks reached P 1.44 trillion as of end-May 2001, marking a year-on-year growth of 5.0 percent compared to the 6.2 percent year-on-year expansion in April. In particular, bank lending to manufacturing; community, social and personal services; wholesale and retail trade; electricity, gas and water; transportation, storage and communications; and agriculture, fisheries and forestry have picked up. Meanwhile, lending to financial institutions, real estate and business services; construction; and mining and quarrying sectors was down in May relative to the year-ago level.
The sustained growth of commercial banks’ lending activity in May is consistent with the continued growth in domestic liquidity and domestic credit. The year-on-year growth in domestic liquidity (M3) accelerated to 14.7 percent from 13.0 percent in April, while total net domestic credits grew by 6.9 percent year-on-year in May. These developments reflect the accommodative monetary policy stance pursued by the BSP over the past few months, which is aimed at maintaining an appropriate monetary setting that is consistent with the output and price objectives of the economy.