Loans outstanding of commercial banks (KBs) grew slightly by 0.8 percent year-on-year to reach P1.45 trillion as of end-January 2004. The annual growth in KB lending in January was lower than the 3.8 percent rise recorded in December 2003, when lending and business activities were more vigorous during the holiday season.
During the first month of the year, there was a marked increase in KB lending to the mining and quarrying as well as construction sectors of 76.8 percent and 28.6 percent, respectively. Continued expansion in bank lending was also observed in the following sectors, namely: community, social and personal services sector rose by 13.5 percent; transportation, storage and communication sector, 5.7 percent; and agriculture, fisheries and forestry sector, 5.1 percent. Altogether, these sectors accounted for 30.5 percent of total loans outstanding as of end-January 2004. However, the significant expansion in bank lending to these sectors was offset partly by lower bank lending to the other sectors. In particular, bank lending to the manufacturing sector—which comprised about 24.4 percent of total KB loan outstanding—declined by 7.8 percent in January 2004.
Despite the slowdown, the growth in bank lending contributed to the sustained, albeit modest, growth in domestic liquidity or M3 of 4.1 percent in January 2004. The moderate increase in outstanding KB loans was also accompanied by improvements in the real sector. Sales of passenger cars in January 2004 reached 2,436 units, reflecting a 31.4 percent increase over the same period a year ago. Philippine exports grew by 4.1 percent year-on-year in January 2004, an uptrend compared to the 3.9 percent growth in January 2003.
Moving forward, monetary authorities will continue to monitor closely the developments in bank lending activities and ensure that these are appropriately considered, together with other factors bearing on the inflation outlook, in the regular assessment of the stance of monetary policy.