Outstanding loans of commercial banks, thrift banks and rural banks grew faster by 12.1 percent year-on-year in April compared to the 10.5 percent growth (revised) recorded in the previous month. This was more than fourfold the 2.9 percent expansion registered a year ago, and the highest since October 2006. On a month-on-month basis, seasonally adjusted data posted a growth of 2.0 percent, from the 0.8 percent growth registered a month ago.
Bank lending to most sectors increased year-on-year. Lending to financial institutions, real estate and business services as well as community, social and personal services, which together accounted for more than half of total loans outstanding, expanded by 25.5 percent and 19.3 percent, respectively. Lending to the wholesale and retail trade sector and to the transportation, storage and communication sector also posted strong growth of 14.3 percent each. Meanwhile, lending to the electricity, gas and water; construction; and the agriculture sectors registered modest growth rates. By contrast, loans to the mining and manufacturing sectors declined by 17.3 percent and 6.9 percent, respectively.
The rising volume of funds being channeled to the services sector reflects the evolving structure of economic activity, which has increasingly relied on services as a key driver of growth. More broadly, the recent upturn in total bank lending reflects progress that banks have made in strengthening their balance sheets as well as stronger demand by firms and consumers amidst an expanding economy.
The BSP will continue to closely watch credit developments to ensure that they are supportive of non-inflationary yet strong and durable output growth.