Growth in outstanding loans of commercial banks, net of banks' reverse repurchase (RRP) placements with the BSP, accelerated in May to 18.8 percent from the previous month's expansion of 14.2 percent. The increase is the highest rate recorded since April 2009. Likewise, bank lending inclusive of RRPs grew at a faster rate of 20.6 percent from an expansion of 18.0 percent in April, to reach P2.8 trillion. Commercial banks' loans have been growing steadily at double-digit growth rates since January 2011. On a month-on-month seasonally-adjusted basis, commercial banks' lending in May rose by 5.3 percent for loans net of RRPs and by 3.6 percent for loans inclusive of RRPs.
Loans for production activities-which comprised about four-fifths of commercial banks' total loan portfolio-expanded at a brisker pace of 20.5 percent in May from 15.7 percent a month earlier. The growth in consumer loans also accelerated to 14.9 percent from 12.9 percent due to the stronger expansion in credit card receivables and auto loans by 9.1 percent and 29.0 percent, respectively.
The expansion in production loans was driven largely by increased lending to electricity, gas and water (which grew by 52.7 percent); manufacturing (20.2 percent); real estate, renting and business services (21.3 percent); agriculture, hunting and forestry (13.1 percent); and financial intermediation (20.4 percent); wholesale and retail trade (11.5 percent); transportation, storage and communication (15.9 percent). The growth in lending to construction activities accelerated to 5.4 percent from 0.1 percent in the previous month. Meanwhile, contractions were posted in lending to five production sectors, namely, health and social work (-2.3 percent); fishing (-18.8 percent); hotels and restaurants (-2.7 percent); education (-11.8 percent); and public administration and defense (-6.3 percent).
The steady pace of domestic economic activity and stable financial conditions supported the credit expansion in May. Going forward, the BSP will continue to watch evolving credit and liquidity conditions closely to ensure that bank lending growth continues to reflect the pace of domestic demand while at the same time maintaining overall price and financial stability.