August bank lending growth fastest in three months

PHILIPPINE BANKS’ lending to businesses and consumers continued to grow in August, accelerating to its fastest pace in three months, Bangko Sentral ng Pilipinas (BSP) data showed.

Universal and commercial banks’ total outstanding loans, net of reverse repurchase agreements, increased by 11% to P15.121 trillion at end-August from P13.618 trillion a year earlier.

This was faster than the 10.4% expansion in July.

It was also the quickest growth in three months or since the 12.1% in May.

“Loans by universal and commercial banks (U/KBs) expanded in August, reflecting sustained demand for bank credit, particularly from businesses,” the BSP said in a statement late Wednesday.

Lending to residents accounted for the bulk of the sector’s total outstanding loans during the period, with the rest extended to nonresidents.

Big banks lent out a total of P14.816 trillion to residents as of August, up 11.3% from P13.308 trillion a year prior. This outpaced the 10.8% growth in July.

Broken down, loans granted for residents’ business activities climbed by 10.6% year on year to P12.731 trillion from P11.514 trillion, faster than July’s 9.8% expansion.

This came amid banks increased lending to key sectors including real estate; electricity, gas, steam, and air-conditioning supply; wholesale and retail trade, and repair of motor vehicles and motorcycles; financial and insurance activities; manufacturing; information and communication; and transportation and storage, according to the central bank.

Meanwhile, consumer loans jumped by 16.2% to P2.084 trillion at end-August from P1.794 trillion a year ago.

This eased from the 17.1% year-on-year increase in July amid slower lending activity in the credit card and motor vehicle segments.

Credit card loans jumped by an annual 23.3% to P1.323 trillion from P1.073 trillion the prior year, while loans for motor vehicles went up by 5.8% to P542.981 billion from P513.061 billion.

Both growth rates were slower than the 24.5% and 7%, respectively, recorded the previous month.

On the other hand, salary-based general purpose consumption loans went up by 11.6% to P183.587 billion from P164.456 billion a year earlier, outpacing July’s 9.9% increase.

Meanwhile, outstanding loans to nonresidents reached P305.186 billion as of August, slipping by 1.5% year on year from P309.789 billion. This was slower than the 6.8% decline in July.

The central bank monitors banks’ lending activities to track the transmission of monetary policy.

“Looking ahead, the BSP will continue to ensure that bank lending conditions remain consistent with its price and financial stability mandate,” it added. — Katherine K. Chan