Loans outstanding of commercial banks (KBs) grew by 3.6 percent year-on-year to P1.543 trillion as of end-November 2004, following a similar increase in October. On a month-on-month basis, total KB loans increased by 4.2 percent in November, a reversal from the 1.1 percent contraction in KB loans registered in the previous month.
On a sectoral basis, the manufacturing sector continued to account for the largest contribution to the rise in total loans. Loans to the manufacturing sector grew by 16.2 percent year-on-year at end-November, an acceleration from the 2.5 percent growth a year earlier but slightly lower than the 17.9 percent growth posted in October 2004. In addition, the following sectors also contributed to the increase in KB lending: agriculture, fisheries and forestry (0.7 percentage point); wholesale and retail trade (0.2 percentage point); and electricity, gas and water (0.2 percentage point) and community, social and personal services (.03 percentage point). Nevertheless, the decline in lending to the other sectors such as the financial institution, real estate and business services; construction; transportation, storage and communication; and mining and quarrying, moderated the overall growth in commercial bank loans for November 2004.
The continued growth in KB lending coincides with the improvements in real sector activity and strengthens expectations that the domestic economy will remain on a steady growth path. Signs of an improving business climate, as evidenced by higher-than-expected GDP growth, the strong performance of the Philippine Stock Exchange in the fourth quarter as well as the continued decline in oil prices in the global market should support improving credit demand in the coming year. For its part, the BSP will continue to help promote a conducive monetary and financial environment for credit growth. At the same time, monetary authorities shall monitor and assess the evolving conditions for economic activity while guarding against the possible persistence of price pressures.