Bank lending growth decelerated in April, says BSP

MANILA  -Lending by large banks in the Philippines grew slower at 9.7 percent in April, when total outstanding loans reached P10.86 trillion, according to the Bangko Sentral ng Pilipinas (BSP).

Preliminary data at the BSP also show that compared to March when the amount lent amounted to P10.78 trillion, bank lending “went up marginally” by 0.6 percent in April.

In April, lending to Philippine residents increased 9.6 percent to P10.55 trillion, net of short-term loans to the BSP.

This was also slower than the growth rate of 10.2 percent in March when resident owed banks a total of P10.46 trillion.

Of the amount lent to residents as of April, loans granted to businesses also grew by 8.6 percent to P9.47 trillion from the 9-percent growth in March when outstanding obligations for production activities were pegged at P9.41 trillion.

The biggest borrowers were companies engaged in real estate activities at P2.2 trillion; wholesale and retail trade, repair of motor vehicles and motorcycles at P1.25 trillion; manufacturing at P1.2 trillion; electricity, gas, steam and air-conditioning supply at P1.19 trillion; and financial and insurance activities at P1.02 trillion.

Consumer loans up

Further, the growth of consumer loans to residents—for credit card transactions, motor vehicle purchases, salary-based general purpose and other purposes—revved up to 22.3 percent at P1.08 trillion in April.

In March, lending to consumers grew by 21.8 percent to reach P1.06 trillion. Also, the growth of outstanding loans to non-residents slowed down further to 12.6 percent at P319.3 billion from 13.1 percent (P313.9 billion) in March.

“The sustained expansion in bank lending activity suggests that domestic liquidity remains sufficient to support economic activity,” the BSP said in a statement.

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“Looking ahead, the BSP will continue to ensure that domestic liquidity and credit dynamics are consistent with the prevailing stance of monetary policy, in keeping with its price and financial stability mandates,” it added.

According to the International Monetary Fund, many companies in the Philippines have borrowings that are nearing the level where they may be unable to service their debts.

READ: PH firms feared taking on too much debt

The Washington DC-based multilateral lender said this as it observed that in Asia, increased borrowing in recent decades had raised the region’s exposure to rising interest rates and heightened market volatility.

“The Philippines, Malaysia and Hong Kong had large shares of debt in companies with coverage ratios just above one, which could potentially become susceptible to default with rising borrowing costs,” the IMF said in a commentary penned by Thomas Helbling, Shanaka Peiris and Monica Petrescu.

—Ronnel W. Domingo