Bank lending maintains double-digit growth rate in May—BSP

Bank lending continued to post a double-digit pace of growth in May, the Bangko Sentral ng Pilipinas reported on Wednesday, July 11, 2012. INQUIRER.NET PHOTO/RICK ALBERTO

MANILA, Philippines—Bank lending continued to post a double-digit pace of growth in May as rising consumption and investment activities boosted demand for credit, the Bangko Sentral ng Pilipinas reported on Wednesday.

Data from the BSP showed that the outstanding loans of universal and commercial banks in the country amounted to P2.88 trillion by the end of May, up by 14.7 percent from P2.51 trillion in the same period in 2011.

The latest growth rate for loans, however, was slower than the 19.2 percent recorded in April.

BSP Governor Amando Tetangco Jr. said the continued expansion of loans has given comfort that the banking sector has remained able to support the credit requirements of businesses and households.

“The continued growth in bank lending supports the favorable outlook for domestic demand amid tepid global economic conditions,” Tetangco said in a statement.

Growth in loans as of the end-May benefited individual and corporate borrowers, data from the BSP further showed.

Of the latest outstanding loans, P2.6 trillion was extended to enterprises. This marked a 14.7-percent increase from P2.28 trillion.

Businesses that benefited most from increased bank lending were those in the sectors of wholesale and retail trade, manufacturing, real estate, financial intermediation, transportation and communications, utilities, and hotels and restaurants.

Loans to individual borrowers, on the other hand, accounted for P235.66 billion of the total outstanding loans. This was up by 16.8 percent from P201.69 billion.

The BSP said that aided by the increase in bank loans, total liquidity within the economy grew by 7.9 percent to P4.6 trillion in May from a year ago.

The BSP measures domestic liquidity in terms of M3, which is composed of currencies in circulation, savings deposits, time deposits, demand deposits, money market funds, and overnight repurchase agreements.

Monetary officials said the robust pace of bank lending partly aided in the accelerated expansion of the economy early in the year.

In the first quarter, the economy grew by 6.4 percent from a year ago, faster than the 4.9 percent registered in the same period in 2011.

The latest growth rate prompted the country’s economic officials to project that the full-year target of 5 to 6 percent is attainable.

The ability of banks to lend more to the public is credited to growing deposits by individual and corporate clients and rising profits of the banks.