Loans outstanding of commercial banks (KBs) grew by 1.9 percent year-on-year to P1.497 trillion as of end-September 2004, a slowdown from the previous month’s growth of 5.5 percent growth. On a month-on-month basis, total KB loans declined by 0.7 percent in September, a reversal from the 1.4 percent growth registered in the previous month.
In terms of sectoral contribution, the manufacturing sector, which accounted for more than a quarter of total loans, registered the largest contribution at 4.4 percentage points to the 1.9 percent growth in bank lending. The growth in loans to the manufacturing sector accelerated further to 17.8 percent as of end-September. This was a further improvement from the 15.6 percent year-on-year expansion recorded a month ago. In addition, the following sectors contributed to the increase in KB lending: agriculture, fisheries and forestry (0.5 percentage point); wholesale and retail trade (0.4 percentage point); and electricity, gas and water (0.3 percentage point). However, the decline in lending to the other sectors such as the financial institution, real estate and business services; construction; community, social and personal services; transportation, storage and communication; and mining and quarrying, offset the significant growth in manufacturing, which dampened the overall growth in KB loans to the other sectors.
The growth in KB lending came against a backdrop of some improvements in real sector economic activity and expectations that the domestic economy will remain on a steady growth path for the remainder of the year. Going forward, monetary authorities will continue to monitor and assess the evolving real sector activities at the same time, guarding against the possible persistence of price pressures. This will provide support to the improvement in credit demand and sustainability of economic growth.