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Bank Lending Growth Continues in December


Bank lending, net of banks’ reverse repurchase (RRP) placements with the BSP grew at a faster pace of 10.0 percent in December compared to the previous month’s expansion of 6.6 percent. Outstanding loans of commercial banks, including RRPs, also increased more steeply by 9.1 percent from 2.6 percent in November, to reach P2.4 trillion. On a month-on-month seasonally-adjusted basis, commercial banks’ lending in December rose by 6.1 percent for loans inclusive of RRPs, and by 4.3 percent for loans net of RRPs.

Preliminary data showed that both production and consumption loans increased from the previous month’s level, accelerating at 9.9 percent and 11.0 percent from the previous month’s growth of 6.7 percent and 3.8 percent, respectively.
Production loans contributed 8 percentage points to bank lending growth, with the following sectors contributing to the growth in bank lending: transportation, storage & communication (which grew by 85.2 percent); financial intermediation (45.5 percent); real estate, renting and business services (12.3 percent); electricity, gas and water (28.1 percent); agriculture, hunting, and forestry (7.9 percent); public administration and defense (25.8 percent); wholesale and retail trade (4.6 percent); hotels and restaurants (34.1 percent); and health and social work (25.9 percent). 

The rate of contraction in manufacturing loans, which accounted for about 14 percent of total loans, was unchanged at 16.7 percent relative to that of the previous month. Meanwhile, construction loans declined more steeply at 27.4 percent from a contraction of 4.5 percent in November, due in part to the ongoing real estate market correction.

Consumption loans increased by 11.0 percent, higher than the previous month’s growth of 3.8 percent, driven by the increase in loans for car financing and credit cards. The growth in other consumption loans turned positive, following 12 consecutive months of contraction.

Officer-In-Charge Nestor A. Espenilla, Jr. noted that the pick-up in lending growth during the last two months is indicative of the growing confidence of business and households as financial and economic conditions stabilize. He added that with credit demand recovering, a private sector-led expansion is gradually gaining ground. Going forward, the BSP will continue to provide appropriate policy support to ensure credit availability in the system.

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