Outstanding loans of commercial banks, net of banks’ reverse repurchase placements (RRP) with the BSP, continued to grow by 9.8 percent in September 2010, albeit slower than the previous month’s expansion of 12.5 percent. Inclusive of RRPs, bank lending expanded at a slightly faster pace of 10.2 percent from an increase of 9.8 percent in August to reach P2.4 trillion. On a month-on-month seasonally-adjusted basis, commercial banks’ lending increased by 2.3 percent for loans inclusive of RRPs but declined slightly by 0.8 percent for loans net of RRPs.
The slower growth in bank lending, net of banks’ RRP placements, this month can be traced to the deceleration in lending to both productive and household sectors. Loans for production activities—which comprised 81.5 percent of banks’ total loan portfolio—expanded by 10.8 percent in September from 12.7 percent a month earlier. Likewise, the growth of consumer loans (which include credit card receivables and auto loans) decelerated to 8.0 percent from 15.4 percent previously.
The growth of production loans was driven mainly by lending to agriculture, hunting and forestry (which grew by 16.2 percent); manufacturing (13.1 percent); real estate, renting and business services (13.9 percent); and financial intermediation (19.6 percent). Lending to construction activities also continued to grow although at a slower rate of 13.8 percent from 18.9 percent in the previous month. Meanwhile, contractions in bank lending were posted in fishing (-3.3 percent) and other community, social and personal services (-26.6 percent).
The continued expansion in bank lending supports the BSP’s assessment that demand conditions remain firm. This assessment is also consistent with the stronger overall increase in net demand for loans shown in the results of the third quarter Senior Bank Loan Officers’ Survey of the BSP. Monetary authorities will continue to ensure a policy environment supportive of sustainable credit growth in the economy consistent with the BSP’s price stability mandate.