Banks step up lending in July

MANILA, Philippines – Banks’ loan portfolio grew 17.7 percent to P5.41 trillion in July as the country’s economic growth accelerated in the second quarter on the back of election-related spending, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP Governor Amando Tetangco Jr. said outstanding loans of commercial banks grew faster from June’s 17.6 percent expansion amid strong demand from production firms and household borrowers.

Data showed loans for production activities increased 17.4 percent to P4.82 trillion from P4.1 trillion and accounted for 89.4 percent of banks’ total loan portfolio in July.

Loans to real estate activities rose 18.8 percent to P948.43 billion and accounted for 17.5 percent of total loan portfolio while lending to the manufacturing sector booked a 10-percent growth to P766.87 billion for a 14.2-percent share.

Loans to wholesale and retail trade, as well as repair of motor vehicles and motorcycles grew 14.1 percent to P743.53 billion for a 13.7-percent share while lending to electricity, gas, steam and airconditioning supply jumped 26.4 percent to P612.29 billion for an 11.3-percent share.

On the other hand, loans extended to household consumers surged 20.6 percent to P430.59 billion in July from P357.15 billion last year.

Statistics showed motor vehicle loans zoomed 37 percent to P184.01 billion while credit card loans inched up 7.7 percent to P178.67 billion. Salary-based general consumption loans jumped 58.5 percent to P55.52 billion.

This translated to a faster expansion of liquidity in the financial system. Money supply grew faster at 13.1 percent to P8.76 trillion from P7.75 trillion last year.

Tetangco said growth in July was faster than the 12.4 percent expansion booked in June on account of sustained demand for credit.

“The robust expansion of M3 (domestic liquidity) in July indicates that overall liquidity remains adequate to support economic growth,” the BSP chief said.

The country’s gross domestic product (GDP) growth accelerated to seven percent in the second quarter from 6.8 percent in the first quarter due to the boost from election related spending.

This resulted in a GDP growth of 6.9 percent in the first half of the year from 5.5 percent in the same period last year. Economic managers penned a lower GDP expansion of six to seven percent instead of 6.8 to 7.8 percent this year.

“Moving forward, the BSP will continue to monitor monetary conditions closely to ensure that liquidity growth remains consistent with BSP’s objectives of price and financial stability,” Tetangco added.