Bank loans in Cebu likely to accelerate

CEBU, Philippines — Bank loan activity in Cebu is seen to further pick up on the back of its expanding economy, the president of the Cebu Bankers Club (CBC) said.

Mario Fritz Palileo, who is assistant vice president at Unionbank of the Philippines, said that "banks will continue to increase its loan activities to cater to the needs of the different industries of our economy."

"And this will result also in increase in deposits," the bank executive told The FREEMAN.

Citing official data, the CBC official said loans extended by banks in Cebu rose to P167.9 billion as of the first half 2017 from P136 billion in the same period last year.

He also noted bank loans in Central Visayas increased from P143.2 billion as of June 2016 to P176 billion as of the first half this year.

Palileo explained the continued growth of the domestic economy is largely contributed by the industry and services sectors encouraged bank lending.

"The good performance of our economy is the cause of the increase in banks deposits (and loans)," he said.

Based on data from the Philippine Deposit Insurance Corp (PDIC), bank deposits in Cebu as of June 2017 reached P467.824 billion, up 10 percent from P423.66 billion recorded in the same period last year.

From January to June 2017, Central Visayas, which also includes Bohol, Negros Oriental and Siquijor provinces, also recorded a 20.5 percent rise in bank deposit amount to P557.704 billion from P462.8 billion in same period last year.

Furthermore, data from the Bangko Sentral ng Pilipinas also showed that nationwide outstanding loans of commercial banks, net of reverse repurchase (RRP) placements with the BSP, grew by 21.1 percent in September from 20.4 percent in August.

Similarly, bank lending inclusive of RRPs increased by 20.1 percent from 17.9 percent in the previous month. On a month-on-month seasonally-adjusted basis, commercial bank lending for loans net of RRPs and loans inclusive of RRPs increased by 1.8 percent and 2.9 percent, respectively.

Loans for production activities—which comprised 88.8 percent of banks’ aggregate loan portfolio, net of RRP — grew by 20.7 percent in September from 19.5 percent in August.

The growth in production loans was driven primarily by increased lending to the following sectors: real estate activities (16.8 percent); electricity, gas, steam and airconditioning supply (24.1 percent); wholesale and retail trade, repair of motor vehicles and motorcycles (16.7 percent); financial and insurance activities (20.4 percent); other community, social and personal activities (174.9 percent); manufacturing (10.3 percent); and, information and communication (38.8 percent).

Bank lending to other sectors also increased during the month except in public administration, defense and compulsory social security, which declined by 0.8 percent.

Growth in loans for household consumption slowed down to 20 percent in September from 22.8 percent in August. The expansion in credit card loans was tempered by the slower growth in motor vehicle loans, salary-based general purpose loans and other types of household loans.

Going forward, the BSP will continue to ensure that the expansion in domestic credit and liquidity conditions proceeds in line with overall economic growth while remaining consistent with the BSP’s price and financial stability objectives. (FREEMAN)