Bank lending grew at an even faster pace in August, as the rising liquidity of the banking sector prompted banks to extend more loans.
According to the Bangko Sentral ng Pilipinas, the accelerated growth in lending will help boost the rate of expansion of the economy, which is being dampened by unfavorable external developments.
In a report, the BSP said the total outstanding loans extended by universal and commercial banks hit P2.62 trillion as of end-August this year, up 19.8 percent from P2.18 trillion as of the same period last year.
The increase was the fastest posted by the banking industry in more than two years.
Industry players said the rate of lending growth was considered significant, given that it was about four times faster than the growth of the economy, which expanded by only 4 percent in the first semester from a year ago.
They said the nearly 20-percent rise in bank lending indicated sufficient appetite of the industry to lend to consumers and businesses.
“The sustained expansion in bank lending supports the view that the underlying domestic demand remains strong, coupled with positive expectations on the economy by both businesses and consumers,” BSP Governor Amando Tetangco Jr. said in a statement.
Data from the BSP showed that the accelerated increase in lending benefited mostly the following sectors: utilities, trade, financial intermediation, transportation and communications, real estate, construction and manufacturing.
Outstanding loans to enterprises amounted to P2.38 trillion in end-August, representing a 21.5-percent year-on-year rise from P1.96 trillion.
Outstanding loans to individual borrowers reached P210 billion, up 13.4 percent from P185 billion a year ago.
The increase in loans extended by banks came with the sustained rise in their resources, which was largely driven by deposits from the public.
The BSP said the rising deposits, in turn, were fueled by a generally rising income level and the confidence of the public in the country’s banking sector.
The BSP said rising credit would help the economy register faster growth in the months ahead. This is particularly helpful given the sluggish global economy that is adversely affecting the country’s exports.