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Bank Lending Expands Further in February

04.08.2010

Bank lending, net of banks’ reverse repurchase (RRP) placements with the BSP, grew at a faster pace of 6.1 percent in February from the growth of 5.0 percent registered a month earlier. Outstanding loans of commercial banks including RRPs also continued to grow, albeit at a slower pace of 5.9 percent relative to the month-ago expansion of 6.9 percent, to reach P2.3 trillion. On a month-on-month seasonally-adjusted basis, commercial banks’ lending in February grew by 1.2 percent for loans inclusive of RRPs, and by 1.1 percent for loans net of RRPs.

Loans for production activities—which comprise around 80 percent of banks’ total loan portfolio—grew by 5.8 percent in February from 4.4 percent a month ago. This was driven mainly by lending to the following sectors: real estate, renting and business services (which expanded by 17.3 percent); transportation, storage, and communication (34.0 percent); and agriculture, hunting and forestry (9.3 percent). Other sectors that contributed to the growth in lending were: wholesale and retail trade (8.8 percent); hotels and restaurants (46.6 percent); public administration and defense (9.6 percent); mining and quarrying (63.3 percent); electricity, gas and water (2.0 percent); and health and social work (11.2 percent). Meanwhile, loans to the manufacturing sector contracted at a slower rate of 6.4 percent from 15.5 percent in the previous month. Similarly, the contraction in construction loans decelerated to 1.4 percent from 3.7 percent in January.

Loans for household consumption grew at a broadly steady pace of 12.0 percent at end-February from 12.5 percent in the previous month. This reflected the relative stability in the expansion of credit card and auto loans.

According to BSP Governor Amando M. Tetangco, Jr., improving domestic economic activity contributed to the pick-up in bank lending. He added that banks could take advantage of the improved financial market conditions to further strengthen their capital base, and in the process increase their capacity to extend credit to support a self-sustaining and durable economic growth.

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