Bank lending rises by 9.5% in February

By Katherine K. Chan, Reporter

Philippines banks’ lending growth picked up in February as loans for business activities expanded at a faster pace, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

The total outstanding loans from universal and commercial banks, net of reverse repurchase agreements, rose by 9.5% annually to P14.269 trillion in February from P13.027 trillion a year ago. This was a tad faster than the near two-year low growth of 9.3% in January.

On a seasonally adjusted basis, bank lending climbed by 0.8% month on month.

Lending to residents went up by 10.1% to P13.987 trillion in January from P12.702 trillion a year earlier, slightly improving from 9.9% in January.

Banks’ loans for residents’ production activities stood at P12.031 trillion, 8.6% up year on year. This was faster than the 8.2% climb the prior month.

This as lending for waste management and remediation activities jumped 26% in February, while loans for electricity, gas, steam, and air-conditioning supply grew by 23.5%, transportation and storage by 19.3%, real estate activities by 9%, and repair of motor vehicles and motorcycles by 8.2%.

Meanwhile, big banks’ consumer loans to residents rose by 20.8% year on year to P1.956 trillion in February, easing from the 21.3% growth in January. This includes credit card, motor vehicle, and general-purpose salary loans but excludes residential real estate loans.

“Consumer loans to residents grew at a slower rate of 20.8% from 21.3% due to the modest slowdown in credit card and motor vehicle loans,” the BSP said in a statement late on Tuesday.

On the other hand, outstanding loans to nonresidents, which include those disbursed by big banks’ foreign currency deposit units, fell by 13.2% year on year to P282.077 billion. This was a steeper decline than the 10.4% drop logged in the previous month.

“The BSP monitors bank loans because they are a key transmission channel of monetary policy,” the central bank said.

“Looking ahead, the BSP will ensure that domestic liquidity and bank lending conditions remain consistent with its price and financial stability mandates,” it added.

LIQUIDITY GROWTH RISES
Meanwhile, the country’s money supply grew by an annual 10.3% to P19.838 trillion in the second month of the year, picking up from the 8.6% growth in January, the central bank reported.

Based on separate preliminary BSP data, February’s domestic liquidity (M3) increased from the P17.987 trillion recorded a year ago.

Month on month, it nudged 1.2% higher on a seasonally adjusted basis.

M3 is a measure of the amount of money in the economy that includes currencies in circulation, bank deposits, and other financial assets that are easily convertible to cash.

Domestic claims, which include claims from private and government entities, climbed by an annual 11% to P22.423 trillion. This was faster than the 10% expansion in January.

Claims on the private sector increased by an annual 10.6% to P14.487 trillion in February, amid a “continued expansion in bank lending to nonfinancial private corporations and households.”

Meanwhile, higher borrowings boosted net claims on the central government to P5.955 trillion during the month, rising by an annual 12.4%.

Claims on a sector refer to that sector’s liabilities to depository corporations such as banks and the central bank.

BSP data also showed that net foreign assets (NFA) in peso terms reached P7.455 trillion in February, up 7.4% year on year but slower than the 10.2% growth in January.

This came as the central bank’s NFAs expanded at slower pace of 4.1% to P6.521 trillion from 9.2% a month ago.

However, this was offset by the 38.4% jump in banks’ NFAs to P933.142 billion in February, faster than the 18.1% climb in January. This was mainly driven by lower foreign currency-denominated bills payable.

NFAs reflect the difference between depository corporations’ claims and liabilities to nonresidents.