MANILA, Philippines — Credit growth eased for the six straight months due to higher borrowing costs after monetary authorities lifted interest rates by 175 basis points last year to prevent inflation from spiraling out of control, data released by the Bangko Sentral ng Pilipinas (BSP) over the weekend showed.
BSP Governor Benjamin Diokno said the loan exposure of big banks grew at a slower rate for the sixth straight month at 12.7 percent in April from the revised 12.9 percent in March.
Diokno said loans released by banks amounted to P8.41 trillion in April from P7.46 trillion in the same month last year.
The BSP chief said loans released for production activities recorded a slower increase of 12.4 percent to P7.42 trillion from P6.6 trillion and accounted for 88.2 percent of the total loan disbursements.
The growth in lending to the real estate sector, he said, recovered to 13.9 percent at P1.43 trillion for a 17.1 percent share, while disbursements to the wholesale and retail trade as well as repair of motor vehicles and motorcycles grew at a slower rate of 11.9 percent with P1.14 trillion for a 13.6 percent share.
Likewise, the growth of disbursements to manufacturing companies inched up slightly to 10.7 percent to P1.1 trillion accounting for 13.1 percent of total loans.
On the other hand, the amount disbursed to the electricity, gas, steam and airconditioning supply picked up to 11.2 percent with P934.55 billion for an 11.1 percent share.
However Diokno said the increase in loans for household consumption further eased to 15 percent in April as releases amounted P689.98 billion from a year-ago level of P599.8 billion.
“Faster growth in credit card loans and motor vehicle loans was slightly offset by the slower expansion in salary-based general purpose consumption loans and other types of household loans during the month,” he added.
Data showed the increase in motor vehicle loans picked up to 9.2 percent from 8.9 percent as disbursements reached P298.06 billion in end April, while the growth of credit card loans improved slightly to 25.7 percent from 25.5 percent as released amounted to P307.75 billion.
On the other hand, the growth of other types of loans slowed down to 17.2 percent from 23.5 percent and salary-based general purpose consumption loan was almost unchanged.
Easing inflation as well as the slower than expected gross domestic product (GDP) growth of 5.6 percent in the first quarter from 6.3 percent in the fourth quarter allowed the BSP’s Monetary Board to slash interest rates by 25 basis points.
It also decided to reduce the reserve requirement ratio for big and mid-sized banks by 200 basis points as well as for small banks by 100 basis points to release around P210 billion in additional funds into the financial system over the next two months to boost the economy.
Last year, authorities raised interest rates by 175 basis points in five consecutive rate-setting meetings from May to November as inflation spiraled out of control and accelerated to 5.2 percent from 2.9 percent in 2017 and exceeded the BSP’s two to four percent target.
Likewise, Diokno said the growth in liquidity improved to seven percent in April from the revised 6.1 percent in March. Money circulating in the system amounted to P11.7 trillion in end-April.
“The BSP will continue to monitor domestic liquidity dynamics to ensure that overall monetary conditions remain in line with maintaining price and financial stability,” he added.