Bank lending grows for 7th straight month in March

MANILA, Philippines — Credit growth quickened anew to 8.9 percent in March from 8.8 percent in February on the back of a pickup in manufacturing, real estate and consumer loans, 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 P9.78 trillion in end-March or P800 billion higher than the P8.98 trillion disbursed in end-March last year.

“Lending activity has gained further traction as the country’s improved COVID-19 caseload continues to support market confidence,” the BSP said.

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

Loan disbursements had 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.

“The BSP continues to see scope to safeguard the momentum of economic recovery amid increased uncertainty over the outlook for growth and inflation. Moving forward, the BSP stands ready to take appropriate preemptive action as needed in ensuring non-inflationary and sustainable growth in line with our primary mandate to promote price and financial stability,” the BSP said.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said credit growth booked in March was the fastest in 1.5 years or since June 2020 amid measures to further reopen the economy toward greater normalcy, and as some borrowers rushed financing activities in view of some pickup in long-term interest rates locally and globally.

“For the coming months, bank loans and M3 growth could still fundamentally accelerate amid measures to further reopen the economy towards greater normalcy, such as the proposed nationwide Alert Level 1, resumption of in-person schooling, further boosting local and foreign tourism, among others,” Ricafort said.