Growth in outstanding loans of commercial banks, thrift banks, and rural banks (net of reverse repurchase or RRP transactions) grew by 7.1 percent year-on-year in October, from the 6.9 percent (revised) growth recorded in September.
Gross of banks’ RRP placements with the BSP, bank lending growth slowed down to 3.2 percent year-on-year in October from 4.8 percent (revised) in September, as banks’ RRP placements with the BSP declined with the shifting of funds to special deposit accounts or SDAs. On a month-on-month basis, however, seasonally-adjusted lending in October grew by 2.7 percent from 1.5 percent in the previous month.
Year-on-year, lending to all sectors of the economy (with the exception of manufacturing) expanded in October. The increase in lending was channeled mainly to the following sectors: financial institutions, real estate and business services (net of RRPs); community and social services; transportation, storage, and communication; and wholesale and retail trade. Lending to the construction sector continued to grow at 13.3 percent from 11.3 percent in the previous month. Previous declines were reversed in the electricity, gas and water sector (6.2 percent growth after five months of contraction) and the mining and quarrying sector (6.7 percent growth after 11 months of contraction). Meanwhile, the growth of lending to the agriculture, fisheries and forestry sector slowed down to 0.7 percent from 3.6 percent in the previous month.
Bank lending activity supports the investment and working capital requirements of a growing economy. It is also a major driver of domestic liquidity. Monetary authorities will, therefore continue to promote conditions and support measures that are conducive to financial intermediation, while remaining mindful that credit and monetary conditions are kept consistent with non-inflationary growth.