The total outstanding loans extended by universal and commercial banks grew at a faster pace in October which, according to monetary officials, indicated that the banking sector remained strong enough to fund the requirements of the economy.
The Bangko Sentral ng Pilipinas on Thursday reported that total loans extended by the banks reached P3.08 trillion as of end of October, up by 15.8 percent from P2.79 trillion in the same period last year.
The growth was attributed partly to the low interest rate environment which, according to the BSP, encouraged consumers and businesses to borrow more from banks.
Bangko Sentral Governor Amando Tetangco Jr. said bank lending was expected to remain strong over the short term as interest rates were seen to stay low. The low interest rate environment will keep demand for loans strong, he said.
“The recent round of monetary policy easing [interest rate cuts by the BSP that led to lower bank lending rates] and the favorable outlook for domestic demand are expected to continue to support bank lending in the months ahead,” Tetangco said in a statement.
Data further showed that outstanding loans to enterprises reached P2.8 trillion, growing by 16.4 percent from P2.54 trillion in the previous year.
Sectors that benefited the most from the increased lending to the business sector were wholesale and retail trade, real estate, financial intermediation, manufacturing, transportation and communications, and utilities.
Official data also showed that the total outstanding loans to consumers reached P250.12 billion, up by 13.9 percent from P225.57 billion.
“Going forward, the BSP will continue to monitor liquidity conditions to ensure that credit activity remains supportive of overall economic growth while remaining consistent with the BSP’s price stability objective,” Tetangco said.