The country’s large banks saw their lending activities grow for the seventh month in a row and again faster at 8.8 percent year-on-year in February while domestic liquidity again grew by 8.5 percent year-on-year, according to the Bangko Sentral ng Pilipinas (BSP).
Preliminary data for February transactions show that the growth in outstanding loans of universal and commercial banks—net of short-term loans to the BSP—accelerated from the January rate of 8.4 percent.
Month-on-month, lending by universal and commercial banks in February grew by 0.3 percent over the January volume.
“Credit activity continues to gain momentum as easing COVID-19 restrictions drive the improvement in mobility and market demand,” the BSP said in a statement.
Also in February, the growth in outstanding loans to residents, net of short-term loans, again picked up pace at 8.8 percent compared to 8.4 percent in January.
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 mainly due to a 9.7-percent rise in lending for production activities. In turn, this was driven by the increase in credit for real estate activities (16 percent); wholesale and retail trade, repair of motor vehicles and motorcycles (6 percent); information and communication (33 percent); financial and insurance activities (13 percent); manufacturing (11 percent) and electricity, gas, steam and air-conditioning supply (0.4 percent).
Further, consumer loans to residents turned around to grow 0.9 percent in February from a 0.4-percent decrease in January amid an increase in credit card loans.
Outstanding loans to nonresidents grew faster by 7.3 percent in February from 3.2 percent in January.
Economic recovery
The BSP said it continued to see scope to safeguard the momentum of economic recovery amid increased uncertainty, even as indications of sustained improvement in credit activity allows the regulator to gradually unwind its pandemic-related interventions.
“Looking ahead, the BSP stands ready to adjust its monetary policy settings in ensuring non-inflationary and sustainable growth, in line with its price and financial stability mandates,” the BSP said.
Meanwhile, growth in domestic liquidity remained at 8.5 percent year-on-year—the same as in January—bringing money supply to about P15.2 trillion in February.
On a month-on-month seasonally adjusted basis, money supply increased by 0.3 percent.
“Domestic claims increased by 8.8 percent year-on-year in February from [a revised] 8.3 percent in the previous month due to the faster expansion in net claims on the central government as well as the sustained improvement in bank lending to the private sector,” the BSP said.
Also, growth of net foreign assets (NFA) in peso terms was faster at 6.5 percent in February from 6.4 percent in January.
“The expansion in the BSP’s NFA position reflected the increase in the country’s level of gross international reserves relative to the same period a year ago,” the regulator said.
“Likewise, the NFA of banks increased as banks’ foreign assets grew at a faster pace on account of higher interbank loans receivable and deposits maintained with nonresident banks,” it added.