Bank lending growth, net of banks’ reverse repurchase (RRP) placements with the BSP, accelerated in August to 19.8 percent from the previous month’s expansion of 19.1 percent. Meanwhile, outstanding loans of commercial banks inclusive of RRPs expanded at a faster pace of 24.8 percent from 23.6 percent in July, to reach P2.9 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 August broadly grew by 1.4 percent for loans net of RRPs and by 2.2 percent for loans inclusive of RRPs.
Loans for production activities—which comprised 83 percent of commercial banks’ total loan portfolio—grew steadily at 21.5 percent in August from 20.5 percent a month earlier. Meanwhile, the growth in consumer loans decelerated to 13.4 percent from 15.6 percent in July due mainly to the slowdown in auto loans.
The expansion in production loans continued to be driven largely by higher lending to electricity, gas and water (which grew by 50.2 percent); wholesale and retail trade (27.9 percent); financial intermediation (26.7 percent); transportation, storage and communication (25.7 percent); real estate, renting and business services (25.3 percent); construction (22.3 percent), and manufacturing (18.9 percent). Meanwhile, with rising global prices of minerals and strong investment in mining, loans to mining and quarrying tripled from a year ago in August, sustaining the three-digit growth since May 2011. Contractions were posted in lending to three production sectors, namely, health and social work (-4.3 percent), education (-10.2 percent), and public administration and defense (-2.9 percent).
The sustained expansion in bank lending supports the view that underlying domestic demand remains strong, coupled with positive expectations on the economy by both businesses and consumers. Going forward, the BSP will continue to watch credit and liquidity conditions closely to ensure that the monetary environment remains consistent with the price and financial stability objectives.