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Bank Lending Growth Slows Down in August

09.28.2018

Outstanding loans of commercial banks, net of reverse repurchase (RRP) placements with the BSP, grew at a lower rate at 18.9 percent in August from 19.6 percent in July. Likewise, the growth in bank lending inclusive of RRPs slowed down at 18.4 percent in August from 18.7 percent in the previous month. On a month-on-month seasonally-adjusted basis, commercial bank loans net of RRPs and loans inclusive of RRPs increased by 1.2 percent and 0.6 percent, respectively.

Loans for production activities—which comprised 88.6 percent of banks’ aggregate loan portfolio, net of RRP — expanded at a slightly lower rate at 19.1 percent in August from 19.7 percent in the previous month. The growth in production loans was driven primarily by increased lending to the following sectors: wholesale and retail trade, repair of motor vehicles and motorcycles (24.5 percent); financial and insurance activities (37.2 percent); real estate activities (15.6 percent); manufacturing (19.9 percent); electricity, gas, steam and airconditioning supply (12.0 percent); and, construction (36.9 percent). Bank lending to other sectors also increased during the month except in agriculture, forestry and fishing (-25.2 percent).

Similarly, the growth of loans for household consumption decelerated to 15.8 percent in August from 16.9 percent in the previous month due to the slower expansion in credit card loans and motor vehicle loans, as well as the decline in salary-based general purpose consumption loans and other types of household loans during the month.

The BSP will continue to ensure that the expansion in domestic credit and liquidity proceeds in line with overall economic growth while remaining consistent with the BSP’s price and financial stability objectives.

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