Lower lending growth eases asset bubble risk – S&P

MANILA, Philippines - Standard & Poor’s (S&P) Global Ratings expects the loan growth of Philippines banks to slow down this year, boosting the debt watcher’s belief the risk of credit-fueled asset bubble in the country remains low.

S&P sees the loan growth of Philippine banks easing to between eight and 12 percent this year from last year’s 13.5 percent.

“The risk of a credit-fueled asset bubble will remain low in the Philippines, in our view,” S&P said.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed the growth of bank loans eased to 14.8 percent in March from 16.9 percent in February. Loans extended by banks reached P5.26 trillion in March from P4.63 trillion in March last year.

Loans for production activities amounted to P4.61 trillion, accounting for 89.5 percent of the banking industry’s total loan portfolio.

Loans to real estate activities jumped 20.2 percent to P903 billion and accounted for 17.5 percent of the total loan portfolio while lending to the manufacturing sector inched up by 1.8 percent to P736.53billion for a 14.3 percent share.

Lending to wholesale and retail trade, repair of motor vehicles and motorcycles grew 14.2 percent to P730.25 billion for a share of 14.2 percent, while lending to water supply, sewerage, waste management and remediation activities surged 31.8 percent to P588.4 billion for a share of 11.4 percent.

Likewise, loans for household consumption grew faster at 15.9 percent to P396.89 billion in end-March this year from P342.58 billion in end-March last year.

Motor vehicle loans zoomed 32 percent to P163.48 billion from P123.82 billion while credit card loans went up 9.3 percent to P174.1 billion from P159.22 billion. Salary-based general consumption loans surged 47.1 percent to P47.75 billion from P32.46 billion.