Bank lending, liquidity up in May

MANILA, Philippines – The demand for credit continued rising in May with both bank lending and domestic liquidity expanding.

Preliminary data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday, June 30, showed that domestic liquidity grew by 13.5% year-on-year to hit nearly P8.7 trillion. The May figure also topped the revised 12.8% growth seen in April.

On a month to month seasonally adjusted basis, liquidity grew by 1.4%.

The BSP said sustained demand for credit was the main factor behind this. Domestic claims grew by 18.7% in May from 18.4% in April as credits to the private sector increased at a faster pace than in April.

The bulk of bank loans during the month was channeled to production sectors, especially real estate activities; wholesale and retail trade; vehicle repair; financial and insurance activities; and information and communication.

The central bank added that net claims on the central government also rose by 35.0% in May, slower than the revised 41.9% growth a month earlier.

The BSP also pointed out that net foreign assets (NFA) in peso terms grew by 9.0% in May from 8.0% the previous month.

One major bank, Metrobank, has already sought to take advantage of the liquidity with the announcement of an offering of long-term negotiable time deposits that could reach P20 billion.

Bank lending up

With more liquidity, bank lending also increased in May. BSP data showed that outstanding loans of commercial banks, net of reverse repurchase (RRP) placements with the BSP, expanded by 17.7% in May, up from 15.6% in April. Lending inclusive of RRPs grew by 16.6% in May from 14.8% in April.

On a month-on-month seasonally-adjusted basis, commercial bank lending increased by 2.2% for loans net of RRPs and by 2.5% for loans inclusive of RRPs.

The central bank also said that most of these loans were channeled to the production activities which accounted for 80% of all loans.

Loans for household consumption, meanwhile, expanded by 17.4% in May from 16.8% in April.

The BSP said this was due to the expansion in motor vehicle loans as well as sustained growth in credit card loans and salary-based general purpose loans, which offset the decline in other types of household loans. – Rappler.com