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Bank Lending Continues to Grow in April

06.08.2010

Bank lending growth, excluding banks’ reverse repurchase (RRP) placements with the BSP, accelerated in April to 6.7 percent year-on-year from an expansion of 5.0 percent in the previous month. Meanwhile, outstanding loans of commercial banks, inclusive of RRPs, increased by 6.2 percent in April. On a month-on-month seasonally-adjusted basis, commercial banks’ lending increased by 1.5 percent for loans net of RRPs, and by 3.2 percent for loans inclusive of RRPs.

Loans for production activities—which comprise around 84.6 percent of banks’ total loan portfolio—grew by 6.4 percent in April from 4.9 percent a month ago.  Likewise, loans for household consumption continued to rise, particularly those extended to credit card and auto loans.

The growth of production loans was traced mainly to real estate, renting and business services (which grew by 19.0 percent); wholesale and retail trade (17.2 percent); and transportation, storage, and communication (20.0 percent). In addition, lending to agriculture, hunting and forestry increased by 4.0 percent. Lending to construction activity also posted positive growth for the second month, after 11 consecutive months of contraction since April 2009. Meanwhile, lending for manufacturing activity continued to decline, but by a slower rate of 0.9 percent, mirroring the recovery in global trade. Other sectors that reflected negative growth in lending to production activities were financial intermediation (-0.8 percent) and other community, social and personal services (-32.8 percent).

BSP Governor Amando M. Tetangco, Jr. noted that given the strong first quarter economic growth, credit could continue to grow through the rest of the year. He pointed out further that the BSP will continue to ensure that the liquidity environment remains supportive of the strengthening domestic economy to the extent consistent with its inflation objectives.

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