Bank lending grows by 19.7% in March

MANILA, Philippines – Both bank lending and liquidity are off to an encouraging start this year, with both key measures of the economy growing in March, according to the Bangko Sentral ng Pilipinas (BSP).

Preliminary data released by the BSP on Tuesday, May 2, showed that outstanding loans of commercial banks, net of reverse repurchase (RRP) placements with the central bank, grew by 19.7% in March from 18.1% in February. 

At the same time, bank lending inclusive of RRPs expanded by 18.4% in March from 17.5% in February.

On a month-on-month seasonally-adjusted basis, commercial bank lending for loans net of RRPs and loans inclusive of RRPs increased by 1.7% and 0.9%, respectively.

Loans for production activities comprised the bulk of this at about 88.6% of banks’ aggregate loan portfolio, net of RRP. These loans grew by 18.5% in March from 17.6% in February, according to BSP data.

Broken down into sectors, loans for information and communication (40.2%) led the list, followed by real estate activities (18.8%), financial and insurance activities (17.3%), and manufacturing (16.4%).

Loans for the sectors of public administration and defense as well as compulsory social security fell at -10.0%, however, along with water supply, sewerage, waste management, and remediation activities (-0.6%).

Meanwhile, loans for household consumption also increased by 23.6% in March from 24.6% in February. The BSP attributed this to the growth across all types of personal loans ranging from credit card loans and auto loans to salary-based and general-purpose loans.

Liquidity up but slowing

Preliminary BSP data also showed that domestic liquidity was up in the economy, consistent with the expansion of bank lending.

Domestic liquidity (M3) grew by 11.2% year-on-year to P9.5 trillion in March, although this was slower than the 12.6% expansion in February.

On a month-on-month seasonally-adjusted basis, M3 increased by 0.3%.

Demand for credit remains the principal driver of money supply growth, according to the BSP, with domestic claims growing by 15.8% in March, down slightly from the revised 15.9% growth in February. This was due largely to sustained growth in credit to the private sector.

Meanwhile, net claims on the central government expanded by 14.0% in March as a result of increased borrowings and the continued withdrawal by the national government of its deposits with the BSP as part of its cash operations. 

Net foreign assets (NFA) in peso terms grew by 5.3% year-on-year in March down slightly from 7.2% in February.

Foreign exchange inflows coming from overseas Filipinos’ remittances and business process outsourcing receipts continued to be the main drivers behind the increase in the BSP’s NFA position.

The NFA of banks also expanded due mainly to the growth in banks’ foreign assets resulting from higher loans, deposits with other banks, and investments in marketable debt securities. – Rappler.com