Bank lending grew for 5th straight month in Dec ’21

Lending activities of the country’s large banks continued to hint at an improving domestic economy as loans grew for the fifth month in a row in December 2021, even as the growth in liquidity slowed compared to November.

According to the Bangko Sentral ng Pilipinas (BSP), preliminary data for December transactions show that the growth of outstanding loans of universal and commercial banks—net of short-term loans to the BSP—revved up to 4.6 percent year-on-year.

Compared to the previous month, lending by universal and commercial banks in December 2021 grew by 0.4 percent.

“Credit activity continued to improve due to a more favorable economic outlook from businesses and households amid the sustained rollout of COVID-19 vaccines and the easing of community restrictions during the month,” the BSP said in a statement.

In December, the growth of outstanding loans to residents, net of short-term loans, picked up pace at 4.7 percent compared to 4.1 percent in November.

Production activities

The BSP attributed this to the faster growth in loans for production activities, which was pegged at 5.8 percent from 5.4 percent in November.

This was helped by the continued rise in lending for real estate activities (9 percent); information and communication (27 percent); manufacturing (9 percent); financial and insurance activities (10 percent); and transportation and storage (9 percent).

On the other hand, the contraction in lending to other industries—mainly activities of households as employers; undifferentiated goods-and-services-producing activities of private households for own use—slowed at negative 22 percent in December.

Also, consumer loans to residents continued to shrink but at a slower rate of 5.7 percent in December from a 7.1-percent decrease. The BSP said this happened amid a year-on-year rise in credit card loans.

Further, outstanding loans to nonresidents grew faster by 2.5 percent in December from 0.4 percent in November.

Meanwhile, domestic liquidity grew by 7.7 percent year-on-year to about P15.3 trillion in December, slower than the 8.3-percent recorded in November.

Sustained expansion

On a month-on-month seasonally adjusted basis, money supply increased by 0.2 percent.

“Domestic claims grew by 8 percent year-on-year in December from 8.1 percent in the previous month due to the sustained expansion in net claims on the central government as well as the continued improvement in bank lending to the private sector,” the BSP said.

Also, net foreign assets (NFA) in peso terms grew slower by 6.5 percent in December from 8.8 percent in November.

“The slower growth in BSP’s NFA position during the month reflected the decline in the country’s gross international reserves relative to the same period a year ago,” the regulator said. “Meanwhile, the NFA of banks increased as banks’ foreign assets increased on account of higher loans with nonresident banks.” INQ