Total outstanding loans of commercial banks, net of banks’ reverse repurchase (RRP) placements with the BSP, continued to expand in May, albeit at a slower pace of 14.7 percent from the previous month’s expansion of 19.2 percent. Likewise, bank lending inclusive of RRPs grew at a slower rate of 13.6 percent from 16.0 percent in April. Commercial banks’ loans have been growing at double-digit rates since January 2011. On a month-on-month seasonally-adjusted basis, commercial banks’ lending in May declined by 0.3 percent for loans net of RRPs but rose by 0.2 percent for loans inclusive of RRPs.
Loans for production activities—which comprised more than four-fifths of banks’ aggregate loan portfolio—grew by 14.7 percent in May from 19.7 percent a month earlier. The growth of consumer loans also eased to 16.8 percent from 17.5 percent in the previous month due mainly to the slowdown in auto loans.
The expansion in production loans was driven primarily by increased lending to the following sectors: wholesale and retail trade (by 50.6 percent); manufacturing (21.2 percent); real estate, renting, and business services (22.3 percent); financial intermediation (35.7 percent); transportation, storage, and communication (30.3 percent); public administration and defense (41.9 percent); electricity, gas, and water (10.9 percent); construction (48.5 percent); and hotels and restaurants (11.5 percent). Meanwhile, declines were observed in lending to mining and quarrying (-30.0 percent) and agriculture, hunting, and forestry (-48.8 percent).
The continued growth in bank lending supports the favorable outlook for domestic demand amid tepid global economic conditions. The BSP will continue to monitor liquidity conditions to ensure that credit activity remains supportive of overall economic growth while remaining consistent with the BSP’s price stability objective.