THE growth in bank lending accelerated in March on the back of low interest rates and rising demand from individuals and corporations, according to the Bangko Sentral ng Pilipinas.
The BSP yesterday reported that outstanding bank loans in the country amounted to P2.37 trillion as of end-March, up by 14.1 percent from P2.08 trillion as of the same period last year.
“The continued broad-based growth in bank lending speaks well of the solid growth prospects for the domestic economy,” the BSP said in a statement.
Outstanding loans to individual borrowers reached P197.74 billion as of end-March, up 12.9 percent from P172.53 billion as of the same period last year.
On the other hand, outstanding loans to enterprises as of the end of the first quarter were valued at P2.15 trillion, up by 15.6 percent from P1.86 trillion in the same period last year.
The majority of loans to businesses went to the manufacturing, utilities, real estate, wholesale and retail trade and agriculture sectors.
The BSP also reported that the increase in bank lending placed the annual growth in domestic liquidity, measured in terms of M3, at 10.3 percent in March, faster than the 9.8 percent registered in February.
M3 is a broad measure of liquidity in the economy, and includes cash in circulation, bank deposits, and some liquid investment instruments.
Officials said the rise in bank lending indicated that banks are awash in cash and have sufficient liquidity to support consumption and investment needs of the economy.
Economists said, however, that credit expansion might slow down in the months ahead as interest rates are starting to inch up.
The BSP raised its key policy rates by 25 basis points in March and again by the same margin last week.
This placed the central bank’s overnight borrowing and lending rates, which influence commercial interest rates, at 4.50 percent and 6.50 percent, respectively.