Lending by universal and commercial banks slightly grew by 10.7 percent in August from 10.4 percent in July based on annual growth that was propped up by more borrowings from businesses, a report by the Bangko Sentral ng Pilipinas (BSP) showed.

Outstanding loans to residents rose by 10.9 percent from 10.4 percent after loans for production activities grew by 9.4 percent to P10.5 trillion by the end of August from 8.8 percent or P10.4 trillion in end-JTop borrowers were firms engaged in transportation and storage with a 23 percent growth in outstanding loans, real estate with 13 percent and wholesale and retail trade, repair of motor vehicles and motorcycles with 10.7 percent.

The others included manufacturing firms with a 9.8 percent growth in outstanding loans, and suppliers of electricity, gas, steam and air conditioning with a 7 percent growth.

On the other hand, loans to consumers decreased to 23.7 percent from 24.3 percent as the transaction value fell to P1.42 trillion from P1.45 trillion.

The bulk of loan transactions consisted of credit cards and auto loans.

Lending to non-residents grew much slower by 1.5 percent from 9.2 percent.

Lower domestic liquidity

Deposits grew slower by 5.5 percent to P17.435 trillion from 7.3 percent or P17.5 trillion as households, firms, and the government continued to incur loan repayments.

Claims on residents decreased by 10 percent from 11.4 percent, reflecting lower claims on households and firms at 11.9 percent from 12 percent as banks increased lending activities to their clients.

Net claims on the central government also declined by 8.5 percent from 14.1 percent as the national government continued to borrow to support public services.

The country’s net foreign assets (NFA) in peso terms grew slower by 2.4 percent from 11.2 percent as private banks fulfilled higher payments for bills and bond investments. Meanwhile, BSP’s NFA increased by 7.7 percent.

Based on its recent survey for bank leaders, BSP said they expect more lending in the fourth quarter as people purchase more goods and services during the holiday season.

“The more upbeat sentiment in the industry was seen in wholesale and retail trade, and services sectors. Meanwhile, firms in the construction sector cited a lack of new clients,” BSP said.

Bank executives also shared they see lower interest rates and easing inflation toward year-end which will encourage more consumption.

‘The more upbeat sentiment in the industry was seen in wholesale and retail trade, and services sectors. Meanwhile, firms in the construction sector cited a lack of new clients.’

Bank of the Philippine Islands chief economist Jun Neri said the BSP might further cut its policy rate in its meeting this month and again in December as recent inflation rates emerged as manageable.

BSP just recently eased its rate by 25 basis points in August to 6.25 percent.

The International Monetary Fund (IMF) expects local inflation this year to average at 2.2 percent, a bit higher than the 1.9 percent the government recorded for September.

IMF Mission chief Elif Arbatli-Saxegaard said easing food prices will likely free up some of the households’ funds for other purchases.