July bank lending, liquidity increase

Bank lending slightly accelerated to 10.4 percent in July from 10.1 percent in June amid a high interest environment, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed last Friday.

Outstanding loans from universal and commercial banks to residents grew at a similar rate of 10.4 percent from 10.1 percent as firms increased production activities.

Outstanding loans for production rose by 8.8 percent to P10.37 trillion from 8.3 percent or P10.35 trillion.

Production activities that reflected highest growth in borrowings year-on-year were professional, scientific and technical with 438.3 percent change, followed by transportation and storage with 20.6 percent.

The others were real estate with 12 percent, manufacturing with 7.9 percent, and wholesale and retail trade, repair of motor vehicles and motorcycles with 6 percent.

Meanwhile, consumer loans grew slower at 24.3 percent to P1.42 trillion from 25 percent or P1.4 trillion amid high interest rates.

BSP data showed most consumers availed of credit cards, followed by auto loans and general purpose loans.

Domestic liquidity

Savings and deposits in the country also grew by 7.2 percent to P17.5 trillion in July from 6.6 percent in June.

Broken down, claims on residents rose by 11.3 percent from 10.5 percent while claims on the private sector grew slightly to 11.9 from 11.7 percent as banks approved more loans to consumers and non-financial firms.

Similarly, net claims on the central government increased by 14 percent from 12.1 percent as the national government continued to borrow funds for its various programs and projects.

Meanwhile, net foreign assets (NFA) in peso terms grew by 11.2 percent from 8.3 percent on the back of a 13.8 percent increase in the BSP’s NFA. Those of private banks declined due to higher bills and bonds payments.

“The BSP will continue to ensure that domestic liquidity conditions are consistent with the prevailing stance of monetary policy, in line with its price and financial stability objectives,” the central bank said.

The BSP recently eased its policy rate for private banks by 25 basis points to 6.25 percent from 6.5 percent to boost economic growth.

“We expect private consumption to become somewhat stronger. Public investment alongside easing price pressures and robust employment conditions are expected to support economic activity,” BSP Governor Eli Remolona Jr. said.

According to the Philippine Statistics Authority, household consumption grew much slower in the second quarter at 4.6 percent compared to government spending at 10.7 percent year-on-year amid the implementation of the previous BSP rate.