Bank lending growth slowed down in Sept.

Bank lending continued to grow, albeit at a slower pace, in September, the Bangko Sentral ng Pilipinas said on Friday, Nov. 9, 2012.

Bank lending continued to grow, albeit at a slower pace, in September as the increase in resources allowed banks to extend more loans to consumers and businesses.

The Bangko Sentral ng Pilipinas on Friday reported that outstanding loans from universal and commercial banks in the country hit P3.003 trillion by the end of September.

This was up by 13.5 percent from the P2.64 trillion reported in the same period last year.

The BSP said the continued rise in bank loans, which supported consumption and investments, would help keep the economy growing at least over the short term.

It also said credit could grow further given low interest rates.

“The recent rounds of monetary policy easing, alongside the favorable outlook for domestic demand, are expected to continue to support credit growth amid tepid global economic conditions,” BSP Deputy Governor Juan de Zuñiga Jr. said in a statement.

The BSP for the fourth time reduced its key policy rates, which influence commercial interest rates, by a total of 100 basis points.

The key rates now stand at record lows of 3.5 and 5.5 percent for overnight borrowing and lending, respectively.

The 13.5-percent growth in outstanding loans of banks in September, however, was the slowest in 19 months.

The last time bank lending growth came in lower than 13.5 percent was in February 2011 when it stood at 12.3 percent.

In November last year, bank lending stood at a high of 22.5 percent.

The BSP said growth in credit last September was recorded for both corporate and consumer loans.

Outstanding bank loans to businesses accounted for P2.7 trillion of the total—up by nearly 14 percent year on year from P2.4 trillion.

Outstanding loans to consumers reached P246 billion, up 14.6 percent from P214.68 billion.

Industries that benefited the most from the increase in lending are those engaged in wholesale and retail trade, real estate, manufacturing, transportation and communication, financial intermediation, and utilities.

Also, the BSP reported that overall liquidity within the economy, measured in terms of M3, grew year on year by 7.5 percent to P4.7 trillion by the end of September.

The increase in MR3 is boosted by the increase in bank loans.

M3 includes currencies in circulation, savings deposits, time deposits, demand deposits, and money market instruments.

The BSP expects domestic liquidity to maintain a significant pace of growth at least over the short term as the favorable outlook on the economy is seen to drive investments and income.

The government expects the economy to grow between 5 and 6 percent this year, and between 6 and 7 percent next year.—Michelle V. Remo