Growth of bank loans accelerated in April — BSP

Outstanding loans granted by the country’s commercial banks grew at a faster rate in April compared to the previous month due to a surge in lending to the retail trade sector, the Bangko Sentral ng Pilipinas (BSP) said on Friday.

In a statement, the central bank noted, however, that this growth was dampened by a slowdown in demand for credit from household consumers which, traditionally, has been one of the the drivers of loans.

Excluding banks’ short term placements with the BSP, outstanding loans increased by 19.9 percent in April from the revised rate of 18.5 percent in March.

Likewise, the growth of bank lending, inclusive of short term placements with the central bank, accelerated to 19.9 percent in April from 18.8 percent in the previous month.

On a month-on-month seasonally-adjusted basis, commercial bank loans net of and loans inclusive of bank placements with the central bank increased by 2.2 percent and 1.2 percent, respectively.

Meanwhile, loans for production activities—which comprised 88.5 percent of banks’ aggregate loan portfolio — grew faster by 19.6 percent in April from 18.2 percent in the previous month.

The growth in production loans was driven primarily by increased lending to the following sectors: wholesale and retail trade, repair of motor vehicles and motorcycles (22.7 percent);

• real estate activities (15.7 percent);
• financial and insurance activities (27.1 percent);
• electricity, gas, steam and airconditioning supply (17.5 percent);
• manufacturing (14.4 percent);
• other community, social and personal activities (81.1 percent);
• transportation and storage (30.9 percent); and,
• information and communication (24.6 percent).

Bank lending to other sectors also increased during the month except in agriculture, forestry and fishing (-6.8 percent), and administrative and support services activities (-43.5 percent).

Meanwhile, the growth of loans for household consumption slowed down to 19.0 percent in April from 19.8 percent in March.

The slower increase in credit card loans and motor vehicle loans as well as the contraction in other types of household loans offset the faster expansion in salary-based general purpose consumption loans in April.

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

The central bank also said that domestic liquidity grew by 14.2 percent year-on-year to about ₱10.9 trillion in April 2018, slightly slower than the 14.4-percent expansion in the previous month. On a month-on-month seasonally-adjusted basis, money supply increased by 1.0 percent.

“Overall domestic liquidity conditions remain broadly in line with the BSP’s prevailing outlook for inflation and economic activity,” the central bank said. “Nevertheless, the BSP will continue to closely monitor domestic liquidity to ensure that monetary conditions are conducive to maintaining price and financial stability.” /vvp