MANILA, Philippines — Credit growth accelerated for the fifth straight month, expanding at a faster rate of 4.6 percent in December from four percent in November, as the economy rebounded strongly last year.
Preliminary data released by the Bangko Sentral ng Pilipinas (BSP) showed loans disbursed by universal and commercial banks hit P9.6 trillion in end-2021, P424 billion higher than the P9.18 trillion recorded in end-2020.
“Credit activity continued to improve due to a more favorable economic outlook from businesses and households amid the sustained rollout of COVID vaccines and the easing of community restrictions during the month,” the BSP said.
Loans released by big banks started picking up in August last year after slumping for eight straight months between December 2020 and July 2021 as banks remained risk-averse, while demand from borrowers remained tepid due to uncertainties brought about by the pandemic.
The economy finally absorbed the 200-basis-point cuts in interest rates and lowering of reserve requirement ratio delivered by the BSP as part of its pandemic response measures.
The Philippine economy emerged from the pandemic-induced recession that stretched through five quarters with a gross domestic product growth of 5.6 percent in 2021, slightly higher than the five to 5.5 percent GDP target set by the Cabinet-level Development Budget Coordination Committee (DBCC).
For this year, economic managers are looking at a faster growth of seven to nine percent as the country gradually recovers from the record 9.6 percent GDP contraction in 2020 due to the impact of the pandemic.
“Looking ahead, the BSP will continue to monitor credit dynamics to ensure that its monetary policy settings remain appropriate amid signs of economic recovery, consistent with its price and financial stability mandates,” the BSP said.
Data showed outstanding loans for production activities grew at a faster rate of 5.9 percent to P8.51 trillion and accounted for 88.6 percent of the total lending in December.
Loans disbursed to the real estate sector increased by 9.1 percent to P1.93 trillion and accounted for 20 percent of the total disbursements, while lending to the wholesale and retail trade as well as repair of motor vehicles and motorcycles expanded by 0.8 percent to P1.12 trillion for a share of 11.7 percent.
Likewise, credit growth to the manufacturing sector accelerated by 9.4 percent to P1.09 trillion for a share of 11.3 percent, while loans disbursed to the electricity, gas, steam and air-conditioning supply sector eked out a 0.2 percent growth to P1.05 trillion for a 10.9 percent share.
However, household lending continued to shrink, albeit at a slower pace of 5.7 percent to P823.52 billion for a share of 8.6 percent of the total loans.
Auto loans fell by 17.2 percent to P294.72 billion from P356.01 billion, while salary-based general purpose consumption loans shrank by 8.8 percent to P74.16 billion from P81.28 billion.
On the other hand, credit card loans went up by 4.7 percent to P437.09 billion from P417.66 billion.
The BSP kept interest rates at record lows for more than a year as it last tweaked interest rates when it delivered a 25- basis-point rate cut in November 2020.
BSP Governor Benjamin Diokno earlier said bank lending appears to have bottomed out when it contracted for eight straight months between December 2020 and July 2021.
“We are slowly seeing signs of economic normalization as a result of our concerted efforts. Bank lending appears to have bottomed out,” Diokno said.