Bank lending grew in June but was relatively flat from the previous month as high interest rates tempered demand for consumer and business loans.
Excluding their lending to each other, outstanding loans of big banks amounted to P12.1 trillion in June, up 10.1 percent compared with a year ago, preliminary data released on Thursday by the Bangko Sentral ng Pilipinas (BSP) showed.
The annualized credit growth in June was the same as the increase in May. On a month-on-month basis, the uptick in bank lending was relatively flat at 0.4 percent.
READ: Bank lending, domestic liquidity up anew in June
Growth of cash circulating in the economy was also flattish. A separate BSP report showed that domestic liquidity as measured by M3, the broadest measure of money supply, posted a sequential expansion of 0.5 percent in June.
Dissecting the BSP’s report, loan growth steadied due to weaker appetite from consumers and companies amid a high-interest rate environment arising from the central bank’s aggressive tightening actions to tame stubbornly high inflation.
Earlier this week, BSP Governor Eli Remolona Jr. struck a less dovish tone and said a rate cut at the Aug. 15 policy meeting of the Monetary Board was “a little less likely” because the July inflation reading turned out “slightly worse than expected.” Data showed inflation had quickened to 4.4 percent in July, breaching the BSP’s 2- to 4-percent target range for the first time this year partly due to distortions from base effects.
Banks typically use the BSP’s policy rate as a guide when charging interest on loans. That said, the latest signal from the BSP chief suggested that the benchmark rate may stay at 6.5 percent, the highest in more than 17 years, for a much longer time.
Figures showed that outstanding loans to bankroll various production activities of businesses grew by 8.3 percent in June, easing from the 8.4-percent expansion recorded in May. Most of the credit during the month went to companies engaged in transportation and storage, cornering 26.2 percent of total.