The growth in commercial banks’ (KBs) lending activity picked up steam in December 2006. KBs’ outstanding loans rose by 10.1 percent year-on-year to reach P1.695 trillion from 6.8 percent in November. On a seasonally adjusted month-on-month basis, KB lending grew by 2.5 percent, a reversal of the 2.5 percent decline in the previous month.
Commercial bank lending to most sectors registered increases, and continued to be led by the financial institutions, real estate and business services sector (FIREBS) which grew by 28.0 percent. Double-digit growth in lending to the community, social and personal services sector (14.7 percent), and to the wholesale and retail trade industry (13.5 percent) were also registered, while moderate growth in lending was recorded for the transport, storage, and communications sector (8.8 percent), electricity, gas and water sector (7.7 percent), and agriculture (2.8 percent). The expansions in these sectors were partly offset by contractions in mining and quarrying (15.0 percent), manufacturing (8.7 percent), and construction (0.8 percent).
Monetary authorities will continue to monitor closely the developments in bank lending activities to ensure that these are appropriately considered, together with other factors bearing on the inflation outlook, in the assessment of the monetary policy stance. Careful monitoring is also warranted to obtain a better handle on whether or not the financing requirements of the growing economy are being adequately met.