Bank lending grew for 6th straight month in Jan

Lending activities of the country’s large banks grew for the sixth month in a row at 8.5 percent year-on-year in January, indicating continued economic recovery amid a prolonged COVID-19 pandemic, according to the Bangko Sentral ng Pilipinas (BSP).

Preliminary data for January transactions show that the increase in the outstanding loans of universal and commercial banks—net of short-term loans to the BSP—outpaced the 4.8 percent recorded in December.

Compared to the volume in December, lending by universal and commercial banks in January grew by 3 percent.

“Bank lending improved further as easing COVID-19 restrictions and the continuous vaccine rollout supported market sentiment and demand,” the BSP said in a statement.

Similarly in January, the growth of outstanding loans to residents, net of short-term loans, picked up pace at 8.7 percent compared to 4.8 percent in December.

Production activities

The BSP attributed this to the faster growth in loans for production activities, which was pegged at 9.6 percent from 6 percent in December.

This was helped by the continued rise in lending for real estate activities (16.8 percent); financial and insurance activities (17.1 percent); information and communication (31.4 percent); and manufacturing (11.5 percent).

Also, consumer loans to residents grew slightly by 0.1 percent in January following a 5.9-percent drop in December amid an increase in credit card loans.

“This is the first time household loans posted growth since December 2020,” the BSP said.

Further, outstanding loans to nonresidents grew faster by 2.8 percent in January from 2.5 percent in December.

Considering the numbers seen in January, the BSP said it continued to prioritize policy support for the economy in order to sustain the recovery in credit activity amid the continued uncertainty in the growth outlook. In its policy meeting last month, the Monetary Board kept the BSP’s overnight borrowing rate at a record-low of 2 percent.

Stronger signs

“Nevertheless, stronger signs of recovery in overall economic activity will allow the BSP to carefully plan for the eventual normalization of its pandemic-related interventions when conditions warrant, in line with its price and financial stability mandates,” the BSP said.

Meanwhile, growth in domestic liquidity approached 10 percent year-on-year, bringing money supply to about P15.3 trillion in January, revving up from the 7.3-percent growth recorded in December.

On a month-on-month seasonally-adjusted basis, money supply increased by 2.8 percent.

“Domestic claims increased by 9.6 percent year-on-year in January from 7.7 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, growth of net foreign assets (NFA) in peso terms was slower at 6.2 percent in January from 6.5 percent in December.

“The BSP’s NFA position grew during the month even as the country’s gross international reserves declined from a year ago,” the regulator said. INQ