Bank lending growth slowed further in May

MANILA  -Lending activities among large banks in the Philippines grew slower for the second month in a row at 9.4 percent in May when total outstanding loans reached P10.91 trillion, according to the Bangko Sentral ng Pilipinas.

In April, loans extended by big banks rose by 9.7 percent to P10.86 trillion, slower than the 10.2 percent in March.

“The moderation in bank lending activity reflects the impact of the BSP’s cumulative policy rate adjustments,” the BSP said in a statement.

Preliminary data at the BSP show that compared to April, loans extended by banks in May went up marginally by 0.7 percent.

Lending to Philippine residents in May increased by 8.9 percent to P10.86 trillion, net of short-term loans to the BSP.

This was also slower than the growth rate of 9.2 percent in April when residents owed banks a total of P10.81 trillion.

Of the amount lent to residents as of May, loans granted to businesses also grew by 7.9 percent to P9.5 trillion. slower than the 8.3-percent growth in April when outstanding obligations loans for production activities amounted to P9.47 trillion.

The biggest borrowers were companies engaged in real estate activities at P2.19 trillion; wholesale and retail trade, repair of motor vehicles and motorcycles at P1.23 trillion; electricity, gas, steam and air-conditioning supply at P1.21 trillion; manufacturing at P1.15 trillion, and financial and insurance activities at P996 billion.

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 22.7 percent at P1.09 trillion in May. In April, lending to consumers grew by 22.3 percent to reach P1.08 trillion.

Also, the growth of outstanding loans to non-residents picked up to 13.2 percent at P320.88 billion from 12.2 percent (P319.31 billion) in April.

The BSP reiterated that it will continue to ensure that domestic liquidity and credit dynamics are in line with its price and financial stability mandates.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said the slower bank loans growth was partly due to the rising trend in interest rates, high inflation and concerns about slower economic growth across the globe as well as the risk of recession in the United States.

“Going forward, these risk factors are still somewhat overshadowed by measures to further reopen the economy towards great normalcy, which fundamentally increased demand for loans amid more jobs, income, and sales,” Ricafort said.

-CSN