Bank loans rise 14% to P4.9 T

MANILA, Philippines – Philippine banks continued to extend more loans in the first 11 months of last year, helping sustain the momentum of the country’s economic expansion, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The central bank said the outstanding loans of commercial banks grew 13.6 percent to P4.91 trillion in November last year from P4.18 trillion in November 2014.

The growth in bank lending in November was slightly slower than the 13.9 percent expansion registered in October.

Together with reverse repurchase placements with the BSP, lending rose 13.2 percent to P5.05 trillion in November from a year-ago level of P4.44 trillion.

Loans for production activities reached P4.39 trillion and accounted to 89.4 percent of the total loan portfolio of the banking system in end November last year.

Data showed loans extended to manufacturing companies went up 3.2 percent to P746.65 billion in end November last year from P717.05 billion in end November 2014.

Likewise, loans for the wholesale and retail trade as well as repair of motor vehicles and motorcycles jumped 14 percent to P706.93 billion from P620.47 billion.

Real estate activities cornered the biggest share with 17.5 percent of the bank’s total loan portfolio in end November. Loans to the sector surged 21.8 percent to P861.22 billion in November last year from P706.88 billion in September last year.

Banks continued to tighten the lending standards for commercial real estate loans in the third quarter or a year after the BSP introduced stricter rules on bank’s real estate exposure.

Results of the third quarter 2015 Senior Bank Loan Officers’ Survey showed a net tightening of overall credit standards for commercial real estate loans for the 13th consecutive quarter.

The survey showed about 86.4 percent of the respondent banks indicated unchanged overall credit standards for commercial real estate loans using the modal approach.

The BSP stepped up its watch over the real estate sector as early as 2012 by ordering banks to disclose more comprehensive reports on their exposures to property industry.

The pre-emptive macroprudential policy measure approved by the Monetary Board required stress tests for banks to determine if their capital will be enough to absorb credit risk that may arise from their exposure to the property sector.

The BSP explained that universal, commercial, and thrift banks would need to meet a capital adequacy ratio of 10 percent of their qualifying capital following the stress test results.

Moreover, universal and commercial banks, along with their thrift bank subsidiaries will also need to keep a Common Equity Tier 1 level of at least six percent of their qualifying capital. Stand-alone thrift banks, meanwhile, are required to maintain a Tier 1 ratio of six percent of their qualifying capital.

Bank lending for household consumption booked a double-digit growth of 13.3 percent to P378.27 billion in November last year from P333.75 billion in November 2014.

Credit card loans went up eight percent to P173.97 billion from P161.08 billion while auto loans zoomed 30.4 percent to P148.47 billion from P113.87 billion.