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Bank Lending Growth Moderates in October


Total outstanding loans of commercial banks, net of banks’ reverse repurchase (RRP) placements with the BSP, continued to expand in October, albeit at a slower pace of 8.4 percent from the previous month’s expansion of 9.8 percent. Bank lending inclusive of RRPs also grew at a slower rate of 9.1 percent from 10.2 percent in September, to reach P2.4 trillion. On a month-on-month seasonally-adjusted basis, commercial banks’ lending declined by 1.0 percent for loans net of RRPs and by 1.3 percent for loans inclusive of RRPs.

Loans for production activities—which comprised 81.9 percent of banks’ total loan portfolio—expanded by a slower rate of 9.4 percent from 10.8 percent a month earlier due largely to weaker lending growth in the manufacturing; public administration and defense; and agriculture, hunting and forestry sectors. By contrast, the growth of consumer loans (which include credit card receivables and auto loans) rose to 8.9 percent from 8.0 percent previously.

The growth of production loans was driven mainly by lending to real estate, renting and business services (which grew by 15.2 percent); agriculture, hunting and forestry (13.8 percent); manufacturing (8.1 percent); electricity, gas and water (17.9 percent); and financial intermediation (16.9 percent). Lending to construction activities also continued to grow at a slightly slower pace of 13.2 percent from 13.8 percent in the previous month. Meanwhile, contractions in bank lending were posted in fishing (-9.9 percent); education (-3.9 percent); public administration and defense (-2.4 percent); and other community, social and personal services (-25.7 percent).

The continued growth in bank lending indicates that the economic outlook for the country remains generally positive. The BSP affirms its commitment to help provide the appropriate monetary and financial conditions for continued credit expansion, while fulfilling its primary mandate of maintaining price stability.

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