Credit growth slows on higher borrowing costs

MANILA, Philippines — Credit growth slowed down anew in December due to higher borrowing costs after monetary authorities lifted interest rates by a total of 175 basis points last year to prevent inflation from spiraling out of control, according to data released by the Bangko Sentral ng PIlipinas.

BSP Governor Nestor Espenilla Jr. said the loan exposure of the banking industry grew at a slower rate of 15.6 percent in December last year from 16.8 percent a month ealier.

Espenilla said loans disbursed by banks reached P8.33 trillion in end-December last year from P7.2 trillion in end-December 2017.

Loans released for production activities booked a slower growth of 15.8 percent to P7.39 trillion from P6.39 trillion and accounted for 88.8 percent of total loans disbursements in end-December.

The growth in lending to the real estate sector eased further to 11.1 percent to P1.44 trillion for a 16.8 percent share followed by the wholesale and retail trade as well as repair of motor vehicles and motorcycles that also slowed down to 15.2 percent to P1.16 trillion for a 13.9 percent share.

On the other hand, disbursements to manufacturing companies grew by only 13.1 percent to P1.07 trillion, accounting for 12.8 percent of total loans, while the amount disbursed to the electricity, gas, steam and airconditioning supply accelerated by 12 percent to P929.7 billion.

However, Espenilla said the increase in loans for household consumption eased slightly to 13.5 percent in December last year from 13.8 percent in November last year as releases reached P657.36 billion from a year-ago level of P579.16 billion.

The BSP chief attributed this to the slower expansion in motor vehicle loans as well as the contraction in salary-based general purpose consumption loans.

Data showed the increase in motor vehicle loans slowed to 12 percent in December last year from 13.1 percent as disbursements reached P287.25 billion.

Credit card loans grew by to 20.9 percent to P286.76 billion in December last year.