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Bank Lending Eases in December

02.08.2012

The growth of outstanding loans of commercial banks, net of banks’ reverse repurchase (RRP) placements with the BSP, eased in December to 19.3 percent from the previous month’s expansion of 22.5 percent.  Meanwhile, the growth of bank lending inclusive of RRPs fell to 16.4 percent from       19.3 percent in November. Commercial banks’ loans have been growing steadily at double-digit rates since January 2011. On a month-on-month seasonally-adjusted basis, commercial banks’ lending in December fell by 0.6 percent for loans net of RRPs, while loans inclusive of RRPs increased by 0.2 percent.

Loans for production activities—which comprised more than four-fifths of banks’ total loan portfolio—grew by 20.1 percent in December from 23.4 percent a month earlier.   The growth of consumer loans likewise decelerated to 17.3 percent in December from 18.1 percent in November, mainly reflecting the continued slowdown in credit card lending.

The expansion of production loans was driven primarily by higher lending to wholesale and retail trade (by 57.8 percent); manufacturing (32.1 percent); electricity, gas and water (54.5 percent); real estate, renting and business services (25.2 percent); financial intermediation (16.8 percent); transportation, storage and communication (19.8 percent); mining and quarrying (60.1 percent); and construction (22.3 percent). Meanwhile, declines were observed anew in lending to education (-11.4 percent); health and social work (-11.3 percent); and agriculture, hunting, and forestry  (-37.6 percent).

In the midst of weaker global economic prospects, robust credit growth should provide adequate support to domestic production, investment, and spending. Going forward, the BSP will continue to assess conditions in the financial system to ensure that monetary policy settings remain consistent with the price stability objective as well as supportive of domestic economic growth.

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