Outstanding bank loans as of Nov. ’12 hit P3.13T

BSP says bulk of loans went to corporate sector


Outstanding loans issued by the country’s universal and commercial banks grew at a double-digit pace as of November 2012, on the back of rising loan demand from consumers and businesses.

The Bangko Sentral ng Pilipinas on Thursday reported that outstanding loans from universal and commercial banks reached a combined P3.13 trillion as of end-November last year, up by 14 percent from P2.79 trillion as of the same period the previous year.

According to the BSP, the growth in bank lending benefited both individual and corporate borrowers.

Data showed that outstanding loans to enterprises alone reached P2.86 trillion, accounting for the bulk of the total. The amount was up by P14.6 percent from P2.54 trillion in the 2011 period.

Benefiting the most from the increase in loans to businesses were companies in real estate, wholesale and retail trade, financial intermediation, manufacturing, and transportation and communications.

“The growth in bank lending, especially to productive activities, should provide the needed resources to raise the growth potential of the economy,” the BSP said in a statement.

Individual borrowers, who use loans largely to support purchase of residential properties and automobiles, accounted for P252.17 billion of the total. This was up by 12 percent from P225.57 billion the previous year.

The increase in bank lending pushed the overall liquidity in the economy, measured in terms of M3.

The BSP also reported that domestic liquidity amounted to P4.9 trillion as of end-November, up year on year by 9.8 percent.

M3 is composed of liquid instruments, mainly currencies in circulation, savings deposits, time deposits, demand deposits and money market instruments.

The BSP said the healthy pace of growth in bank lending partly helped the economy grow at a robust pace last year.

The Philippines was one of the fastest-growing Asian economies in 2012, growing by 6.5 percent in the first three quarters and was estimated by government officials to have expanded by at least 6 percent for the full year.

The double-digit pace of growth in bank lending, which was also seen in 2011, however, elicited concerns that the Philippine economy may eventually overheat.

Deutsche Bank has warned that the Philippines may be at risk of overheating, citing rising consumer spending that is aided by bank loans and low interest rates.

The BSP, however, stressed that the economy was not facing any threat of overheating.

BSP Governor Amando Tetangco Jr. said there was room for bank lending to continue growing at a double-digit pace without causing the economy to overheat.

He said total outstanding loans in the Philippines, including those for banks and non-bank financial institutions, stand at about 35 percent of the country’s gross domestic product (GDP).

He said that in some emerging economies, outstanding loans exceed GDP.

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