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Bank Lending Growth Broadly Steady in January

03.09.2012

Bank lending grew at a broadly steady pace in January relative to last month’s growth. From 19.3 percent in December, the outstanding loans of commercial banks, net of reverse repurchase (RRP) placements with the BSP, increased by 19.1 percent.  Likewise, the growth in bank lending inclusive of RRPs was stable at 16.6 percent from 16.4 percent in the previous month. 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 January rose by 1.3 percent for loans net of RRPs, while loans inclusive of RRPs increased by 1.1 percent.

Loans for production activities—which comprised more than four-fifths of banks’ total loan portfolio—grew by 19.7 percent in January from 20.1 percent a month earlier.   Meanwhile, the growth in consumer loans accelerated to 19.9 percent in January from 17.3 percent in December, reflecting the growth in lending across all types of household loans, i.e., credit card and auto loans.

The expansion in production loans was driven primarily by higher lending to wholesale and retail trade (by 56.1 percent); manufacturing (27.2 percent); electricity, gas and water (48.4 percent); real estate, renting and business services (22.5 percent); financial intermediation (27.2 percent); and transportation, storage, and communication (10.2 percent). Meanwhile, loans to the agriculture, hunting, and forestry sector declined (by 43.4 percent).

Steady credit growth, together with expected ample liquidity and lower market interest rates, are seen to support the domestic economy in the midst of a weaker global economic outlook. Going forward, the BSP will continue to assess conditions in the financial system to ensure that the monetary policy stance remains appropriate to support domestic economic activity consistent with a non-inflationary path.

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