Preliminary data show that outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the BSP, grew by 12.9 percent in March, faster than the 12.0-percent (revised) expansion in the previous month. On a month-on-month seasonally-adjusted basis, commercial bank loans net of RRPs grew by 1.5 percent.
Loans for production activities net of RRPs expanded at a rate of 12.0 percent in March, higher than the recorded growth in February at 9.4 percent (revised). The sustained increase in production loans was driven primarily by lending to the following sectors: real estate activities (21.8 percent); financial and insurance activities (17.2 percent); wholesale and retail trade, repair of motor vehicles and motorcycles (6.8 percent); electricity, gas, steam and air conditioning supply (7.7 percent); and information and communication (20.8 percent).
Bank lending to other sectors also increased during the month, except for manufacturing (-0.4 percent) and mining and quarrying (-5.3 percent).
Meanwhile, growth in loans for household consumption eased to 22.9 percent in March from 37.7 percent (revised) in February due to the slower expansion in credit card and motor vehicle loans during the month.
It must be noted that community quarantine and enhanced community quarantine were declared March 15 and 16, respectively. Following this, the BSP crafted measures to ensure increased credit and domestic liquidity. These measures include: a policy rate cut totaling 125 basis points since February 2020; reduction of the reserve requirement ratios of universal and commercial banks and non-bank financial institutions with quasi-banking functions by 200 basis points; conduct of asset-purchase activities in the market (i.e., repurchase agreement with national government amounting to P300 billion and purchase of government securities in the secondary market); easing of lending to micro, small and medium enterprises (MSMEs) by allowing new MSME loans to be counted as part of banks’ compliance with reserve requirements; and increase of the single borrower’s limit for loans granted by banks and quasi-banks, among others.
Going forward, the BSP will remain vigilant in monitoring liquidity and credit dynamics amid significant disruptions to economic activity. The BSP reassures the public of its commitment to deploy its full range of instruments to ensure that domestic liquidity and credit remain adequate amid the ongoing coronavirus pandemic.