Bank lending rises to 2-year peak

Bank loans rose in June by 18.8 percent, the fastest in more than two years, as the sustained increase in resources of the banking sector allowed it to extend more credit to individual and corporate borrowers.

Outstanding loans from universal and commercial banks amounted to P2.59 trillion by the end of June—higher than the P2.18 trillion recorded during the same period last year—data from the central bank showed.

According to the Bangko Sentral ng Pilipinas, the growth rate was the fastest since April 2009.

Growth in loans covered both the consumer sector and that of other enterprises. Outstanding loans for individual borrowers grew year on year by 14 percent to P206 billion, while outstanding loans for enterprises expanded by 21 percent to P2.26 trillion.

The balance from the total loans was accounted for by credit extended to non-Filipino households and businesses.

As far as enterprises are concerned, those that benefited from higher bank loans were the utilities, real estate, manufacturing, financial intermediation, wholesale and retail trade, and transportation and communications sectors.

The increase in bank lending also resulted in the growth of overall liquidity in the economy. The central bank said domestic liquidity inched up by 11.4 percent in June from a year ago, accelerating from the 8-percent rise recorded in May.

The significant increase in bank loans happened despite the move of the BSP to raise interest rates and the reserve requirement for banks.

In the first half of the year, the BSP raised the key policy rates by a total of 50 basis points and the reserve requirement by one percentage point.

The key policy rates, which influence commercial interest rates, are now at 4.5 percent for overnight borrowing and 6.5 percent for overnight lending.

Both policy tightening moves were meant to curb liquidity and temper the increase in the inflation rate.—Michelle V. Remo