Bank Lending Up 10%; Money Supply Hit ₱16-T

The outstanding loans of big banks grew 10% year-on-year in February on sustained credit demand despite high inflation, but the growth was slower compared to January’s 10.4% expansion, the Bangko Sentral ng Pilipinas (BSP) reported.

Photo Insert: Consumer loans went up by 21.2% in February to P1.04 trillion. Consumer loans include credit card, auto, and salary-based general-purpose consumption loans.

It also reported that domestic liquidity (M3) or money supply rose by six percent year-on-year to P16.08 trillion in the same period. This was a faster M3 growth from 5.6% in January as banks and the central bank remain very liquid.

On a month-on-month seasonally-adjusted basis, M3 increased by 0.8 percent while bank lending net of reverse repurchase (RRP) placements with the BSP, slightly eased by 0.2 percent.

The BSP said robust demand will sustain credit and ample liquidity. “Even as the Philippine banking system remains sound, the BSP will keep a watchful eye over evolving market conditions to ensure that credit and liquidity dynamics continue to be in line with its price and financial stability mandates,” it added.

In February, the total outstanding loans for both residents and non-residents net of RRP amounted to P10.69 trillion. Gross of RRPs, it is P10.96 trillion. Residents’ productivity loans during the period increased by 8.7% to P9.33 trillion.

This was driven by the 12.5% growth in lending to financial and insurance activities totaling P1.034 trillion, as well as lending to wholesale and retail trade, and repair of motor vehicles and motorcycles, which grew by 9.2% to P1.22 trillion.

Other sectors that posted increases are: electricity, gas, steam, and airconditioning supply, up by 9.3% to P1.15 trillion; information and communication, which rose by 18.6% to P586.42 billion; manufacturing, up by 8.3% to P1.17 trillion; and real estate activities which increased by 3.8% to P2.13 trillion.

The BSP said consumer loans, meanwhile, went up by 21.2% in February to P1.04 trillion. Consumer loans include credit card, auto, and salary-based general-purpose consumption loans.

In February, credit card loans rose by 29.4% to P567.12 billion while salary loans increased by 69.3% to P121.86 billion. Auto loans however declined by 1.3% to P331.29 billion. Other loans rose by 56.3% to P22.66 billion.

While balancing both inflation and liquidity, as well as managing credit growth, the BSP said it would continue “to ensure that domestic liquidity conditions remain consistent with the prevailing stance of monetary policy”.

Based on BSP data under M3, the domestic claims grew by 11.6% year-on-year in February while claims on the private sector were up 9.9% “due to the sustained expansion in bank lending to non-financial private corporations and households.”

The BSP said net claims on the central government also rose by 17.4% in February because of government borrowings. It also noted a continued decline in the net foreign assets (NFA) in February. “

The NFA of banks declined mainly on account of higher bills payable. Similarly, the BSP’s NFA position fell by 2.3 percent in February,” said the BSP. Bank economists observed that the slower lending growth may be due to the rising interest rates and higher inflation. As a result, consumers, businesses, and other institutions now face bigger borrowing costs

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