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Bank Lending Continues to Expand in February

03.27.2013

Total outstanding loans of commercial banks, net of banks’ reverse repurchase (RRP) placements with the BSP, continued to expand in February but at a slower pace of 15.1 percent relative to the growth of 15.8 percent (revised) in January. Likewise, bank lending inclusive of RRPs in the same month grew by 14.5 percent from 16.9 percent (revised) in the previous month, to reach P3.4 trillion. On a month-on-month seasonally-adjusted basis, commercial bank lending in February increased by 0.5 percent for loans net of RRPs while loans inclusive of RRPs  declined by 0.3 percent.

Loans for production activities—which comprised more than four-fifths of banks’ aggregate loan portfolio—grew at a slower pace of 15.2 percent in February from 16.0 percent (revised) in January. Similarly, the growth in consumer loans eased slightly to 12.0 percent in February from 12.4 percent (revised) in January due mainly to the slowdown in credit card receivables and other household loans.

The expansion in production loans was driven primarily by increased lending to the following sectors: real estate, renting, and business services (25.1 percent); financial intermediation (27.2 percent); wholesale and retail trade (14.2 percent); manufacturing        (7.3 percent); and, electricity, gas and water (12.7 percent). Meanwhile, declines were observed in lending to agriculture, hunting, and forestry (-13.3 percent) and in other community, social and personal services (-3.9 percent).

The continued expansion in bank lending suggests that the momentum of domestic economic activity remains strong. Going forward, the BSP will continue to be watchful of the domestic financial environment to ensure that liquidity and credit conditions are appropriate to support economic growth while remaining consistent with its price stability objective.

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