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Bank Lending Continues to Grow in August

10.17.2008

Outstanding loans of commercial banks including reverse repurchase agreements or RRPs increased in August by 24.1 percent year-on-year. This reflects a slight acceleration in the growth of lending relative to July, which was at 23.9 percent. Bank lending net of banks’ RRP placements with the BSP reflected the same trend, as it increased by 22.1 percent year-on-year in August, from 18.5 percent in July.

Preliminary data for August was obtained from the new system of bank reporting under the Financial Reporting Package (FRP), which replaced the Consolidated Statement of Condition (CSOC) reports. The FRP adopts the detailed classification of the amended 1994 Philippine Standard Industrial Classification (PSIC) for international comparability. The FRP also classifies lending by production activities (which covers 16 economic sectors) and by household consumption purposes (with three economic categories). Previously, bank reports classified loans into only nine economic sectors.

BSP Officer-In-Charge Nestor A. Espenilla, Jr. noted that loans for production activities led the expansion, growing by 19.8 percent in August compared to 16.4 percent in July. The following production sectors contributed significantly to lending growth: wholesale and retail trade (which grew by 54.0 percent); transportation, storage and communication (94.2 percent); electricity, gas, and water (65.8 percent); agriculture, hunting, and forestry (19.2 percent); manufacturing (8.3 percent); and real estate, renting, and business services (13.8 percent).

OIC Espenilla added that consumption loans also accelerated in August, as it recorded a 20.2 percent expansion from 18.0 percent in July. The increase in consumption loans came mostly from credit card receivables which posted a 27.0 percent expansion. Auto loan growth likewise reflected a 10.6 percent expansion in August reversing the negative growth registered in July.

The BSP monitors bank lending trends to assess liquidity and credit conditions.  This helps ensure that there is sufficient liquidity to support economic growth, particularly at a time when the global economy is under stress.

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