Growth of bank loans, liquidity slowed in May

The growth of bank loans in the local economy slowed slightly in May, with the effects of the central bank’s monetary easing that started that month having yet to impact on the financial system’s overall liquidity, the latest data showed.

According to the Bangko Sentral ng Pilipinas (BSP), outstanding loans of universal and commercial banks, net of short-term deposits with the regulator, grew at a slightly slower rate of 11.9 percent in May from 12.7 percent in April.

Similarly, the growth in bank lending inclusive of short-term bank placements decelerated to 10.6 percent in May from 12.8 percent in the previous month.

On a month-on-month seasonally adjusted basis, commercial bank loans net of banks’ short-term deposits with the BSP grew by 0.5 percent, while commercial bank loans inclusive of these funds decreased by 0.7 percent.

“Loans for production activities—which comprised 88.2 percent of banks’ aggregate loan portfolio, net of RRPs increased at a slower pace of 11.5 percent in May from 12.4 percent in the previous month,” the BSP said.

The growth in production loans was driven primarily by lending to the following sectors: real estate activities (13.6 percent), financial and insurance activities (21.2 percent), manufacturing (11.6 percent), electricity, gas, steam and air conditioning supply (13.1 percent), construction (43.0 percent) and wholesale and retail trade, repair of motor vehicles and motorcycles (9.3 percent).

Bank lending to other sectors also rose except those in community, social and personal activities (-55 percent) and professional, scientific and technical activities (-22.5 percent).

Loans for household consumption grew by 14.6 percent in May, compared to 15 percent in April, as growth in credit card loans and other types of household loans during the month was slightly offset by the decline in salary-based general purpose consumption loans during the month.

Meanwhile, preliminary data show that domestic liquidity grew by 6.4 percent year-on-year to about P11.7 trillion in May 2019, slower than the 7-percent expansion in April 2019. On a month-on-month seasonally adjusted basis, money supply rose by 1.6 percent.