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Bank Lending Continues to Expand

11.28.2014

Outstanding loans of commercial banks, net of reverse repurchase (RRP) placements with the BSP, grew by 21.1 percent in October. In the previous month, loans grew by 20.5 percent. Bank lending inclusive of RRPs expanded by 20.0 percent in October compared to the 19.5 percent growth posted in the previous month.  On a month-on-month seasonally-adjusted basis, commercial bank lending increased by 1.4 percent for loans net of RRPs and by 1.2 percent for loans inclusive of RRPs.

Loans for production activities—which comprised about four-fifths of banks’ aggregate loan portfolio—expanded further by 19.7 percent in October from 18.7 percent in September. The rise in production loans was driven primarily by increased lending to the following sectors: manufacturing (20.9 percent); real estate, renting, and business services (15.9 percent); wholesale and retail trade (19.4 percent); electricity, gas and water (22.9 percent); and, financial intermediation   (22.1 percent). Bank lending to other sectors also rose during the month except for public administration and defense, which declined by 1.2 percent.

Loans for household consumption grew at a broadly steady pace of 17.3 percent in October, primarily due to the continued expansion in auto loans and other types of loans  (i.e., salary loans and personal loans) which offset the slowdown in the growth of credit card loans.

The continued broad-based growth in bank lending supports the view that underlying demand prospects remains favorable amid buoyant business expectations on the economy. Going forward, the BSP will continue to pay attention to evolving credit and liquidity conditions to ensure that bank lending growth continues to reflect the pace of domestic demand consistent with its price stability objective.

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