Lockdown crimps April bank loan growth

The Philippine financial system was flush with cash in April, but bank loan growth declined slightly as economic activity nearly ground to a halt due to the lockdown, according to the central bank.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said outstanding loans of universal and commercial banks, net of short-term placements with the regulator, grew by 12.7 percent in April—slower than the 13.6-percent expansion in March.On a month-on-month seasonally adjusted basis, commercial bank loans net of placements with the central bank grew by 0.7 percent.“The deceleration reflects in part constrained economic activity following the Luzon-wide lockdown to contain COVID-19 outbreak,” the BSP said.Loans for production activities expanded at a rate of 11.1 percent in April, lower than the reported growth in the previous month at 11.6 percent.

The sustained increase in production loans was driven primarily by lending to the following sectors: real estate activities (20.8 percent), financial and insurance activities (13.9 percent), electricity, gas, steam and air conditioning supply (11.2 percent), information and communication (29.4 percent) and transportation and storage (20.8 percent).

Bank lending to other sectors also increased during the month, except for mining and quarrying (-5.3 percent), professional, scientific and technical services (-18.4 percent) and manufacturing (-1.3 percent).Similarly, growth in loans for household consumption slowed down to 33.3 percent in April compared to 36.5 percent in March due to the slower expansion in credit card and motor vehicle loans during the month.Preliminary data from the BSP showed that domestic liquidity expanded by 16.2 percent year-on-year to about P13.6 trillion in April. INQ