Bank lending jumped 19.6% in July

Amid expectations of further interest rate hikes given elevated inflation, bank lending grew faster while money supply growth slowed in July.

In a report Friday, the Bangko Sentral ng Pilipinas (BSP) said commercial banks’ outstanding loans net of reverse repurchase (RRP) placements with the central bank in July expanded by 19.6 year-on-year to P7.747 trillion.

The bank lending growth in July was faster than the 19.1-percent increase in June.

Gross of RRPs, the total loans outstanding to residents and non-residents rose 18.7 percent year-on-year to P8.005 trillion in July, also faster than June’s 17.7-percent growth.

“On a month-on-month seasonally adjusted basis, commercial bank loans net of RRPs and loans inclusive of RRPs increased by 1.9 percent and 2.4 percent, respectively,” the BSP said.

In July, the 19.7-percent increase in loans for production activities, which accounted for 88.6 percent of banks’ aggregate loan portfolio, boosted bank lending.

The growth in production loans in July was also faster than June’s 19.2 percent.

However, the growth in loans for household consumption decelerated to 16.9 percent in July from 17.8 percent in June. The BSP said the contraction in salary-based general purpose consumption loans and other household loans, as well as the slower growth in motor vehicle loans, offset the faster expansion in credit card loans in July.

Meanwhile, money supply, expressed as M3, grew 11 percent year-on-year to P11.1 trillion in July,  slower that the 11.8 percent rise in June, preliminary BSP data showed.

M3 refers to the increase in domestic liquidity or the amount of money circulating in the system.

Month-on-month, M3 rose 0.6 percent, the BSP said.

“The overall growth in M3 remains in line with the BSP’s prevailing outlook for inflation and economic activity,” it said. —BEN O. DE VERA