PH bank loans, money supply growth picked up speed in February

Bank loans grew at a faster pace in February of this year, as borrowers rushed to finance their real estate acquisitions, along with every other sector of the economy except agriculture, data from the Bangko Sentral ng Pilipinas revealed.

In a statement, the central bank said that outstanding loans of commercial banks—excluding bank placements with the BSP—expanded at a faster rate of 19.5 percent in February from 19 percent in January.

Meanwhile, the growth of bank lending inclusive of short-term placements with the BSP decelerated to 17.6 percent in February from 18.4 percent in the previous month.

On a month-on-month seasonally-adjusted basis, commercial bank loans, net of these short-term loans to the BSP and loans inclusive of them rose by 1.8 percent and 1.1 percent, respectively.

Loans for production activities—which comprised 88.4 percent of banks’ aggregate loan portfolio, net of loans to the central bank—grew by 18.6 percent in February from 18 percent in the previous month.

The growth in production loans was driven primarily by increased lending to the following sectors: Real estate activities (18.1 percent); electricity, gas, steam and air conditioning supply (28.5 percent); wholesale and retail trade, repair of motor vehicles and motorcycles (18.5 percent); manufacturing (10.7 percent); financial and insurance activities (15.3 percent), and information and communication (28.8 percent).

Bank lending to other sectors also increased during the month except in agriculture, forestry and fishing (-11.4 percent), and administrative and support services activities
(-40.0 percent).

Growth in loans for household consumption slowed to 19.9 percent in February from 20.2 percent in January. The slower increase in motor vehicle loans and contraction in other types of household loans offset the faster expansion in credit card loans and salary-based general purpose loans in February.

BSP Governor Nestor Espenilla said the central bank “will continue to ensure that the expansion in domestic credit and liquidity proceeds in line with overall economic growth while remaining consistent with the regulator’s price and financial stability objectives.”

Meanwhile, preliminary data show that domestic liquidity grew by 13.5 percent year-on-year to about P10.7 trillion in February 2018, faster than the 12.8-percent expansion in the previous month. On a month-on-month seasonally-adjusted basis, money supply increased by 1.5 percent.

Domestic claims grew by 13.8 percent in February, higher than the 13.6-percent (revised) increase in January due to sustained growth in bank lending.

Net foreign assets in peso terms grew, albeit slower, at 4.6 percent year-on-year in February from 4.9 percent in the previous month. Foreign exchange inflows coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts drove the growth in the BSP’s net foreign asset position. The net foreign assets of banks also expanded as banks’ foreign assets increased on account of higher loans and investments in marketable debt securities.

“The growth in money supply remains consistent with the BSP’s prevailing outlook for inflation and economic activity,” Espenilla said.