Bank lending continues to pick up

MANILA, Philippines — Bank lending further accelerated for the seventh straight month, growing by 8.8 percent in February from 8.6 percent in January, amid the easing of quarantine and lockdown measures, according to the Bangko Sentral ng Pilipinas (BSP).

Data released by the central bank showed the outstanding loans of universal and commercial banks amounted to P9.72 trillion in end-February or P782 billion higher than the P8.94 trillion disbursed in end-February last year.

“Credit activity continues to gain momentum as easing COVID-19 restrictions drive the improvement in mobility and market demand,” the BSP said.

After reimposing strict lockdown measures by placing the National Capital Region (NCR) and nearby provinces under Alert Level 3 in January due to the resurgence of COVID-19 infections with the more contagious Omicron variant, the government shifted the affected areas to Alert Level 1 as cases declined sharply.

Bank lending has been increasing since August last year as the economy finally absorbed the 200-basis-points cut in interest rates and lowering of reserve requirement ratio delivered by the Monetary Board as part of its COVID-19 pandemic response measures.

Loan disbursements slumped 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 global health crisis.

Data showed outstanding loans for production activities grew at a faster rate of 9.7 percent to P8.58 trillion and accounted for 88.3 percent of the total lending in February.

The real estate sector posted a strong double-digit increase of 16 percent to P2.05 trillion and accounted for 21.1 percent of the total disbursements, while lending to the wholesale and retail trade as well as repair of motor vehicles and motorcycles grew at a faster rate of 11.7 percent to P1.11 trillion for a share of 11.5 percent.

Lending to the manufacturing sector booked a two-digit increase of 11.4 percent to P1.08 trillion for a share of 11.1 percent.