Bank lending tightens for 6th straight month

Lawrence Agcaoili - The Philippine Star

MANILA, Philippines — Loans released by big banks contracted for the sixth straight month, although at a slower pace of four percent in May from five percent in April, as demand remained subdued due to the resurgence of COVID-19 cases, according to the Bangko Sentral ng Pilipinas (BSP).

Preliminary data released by the BSP showed outstanding loans of universal and commercial banks reached P9.01 trillion in end-May from P9.39 trillion last year.

“Credit activity has remained muted as the emergence of new coronavirus variants and the continued risk of infection dampen prospects for economic recovery,” the central bank said.

Lending for production activities shrank by 2.9 percent, hitting P7.94 trillion in May from the year-ago level of P8.13 trillion for an 88.1 percent share of the total.

Disbursements to the real estate sector went up by 3.9 percent to reach P1.78 trillion and accounted for 19.8 percent of the total loan disbursements.

Loans disbursed to electricity, gas, steam and air-conditioning supply slipped by 0.2 percent to P1.03 trillion and cornered a share of 11.4 percent, while loan releases to manufacturing fell by 7.9 percent to P986.37 billion for a share of 10.9 percent.

The mining and quarrying sector also booked a 20 percent contraction to P39.69 billion, while lending to the agriculture, forestry, and fishing sector fell 7.4 percent to P192.48 billion.

Furthermore, consumer loans fell by 9.2 percent to P820.86 billion in May from P903.99 billion in the same month last year, for a share of 9.1 percent of total loan releases.

Credit card loans declined by 5.7 percent to P394.8 billion amid the rising default by borrowers affected by the pandemic.

The BSP has imposed a 24 percent ceiling on credit card charges since Nov. 3 to ease the burden of borrowers.

The BSP also noted a 13.8 percent decline in motor vehicle loans to P335.27 billion from P388.84 billion.

The aggressive 200-basis-point interest rate cuts delivered by the BSP last year has yet to translate to higher lending.

“In the near term, bank lending can be expected to remain subdued mainly due to the pandemic-related uncertainties and bank risk aversion,” BSP Deputy Governor Francisco Dakila Jr. said.


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