Bank lending continues ascent in November — BSP

MANILA, Philippines — Bank lending continued to expand in November as the Philippine economy reopened for business in past months, but an analyst expects hefty interest rates to temper credit growth. 

Excluding lending among each other, outstanding loans of universal and commercial banks grew 13.7% year-on-year in November, slightly lower than the 13.9% expansion recorded in October, the Bangko Sentral ng Pilipinas reported Wednesday.

Data showed this was the 16th straight month of loan growth despite the BSP’s aggressive rate hikes meant to temper consumer demand fueling painfully-high inflation. Month-on-month, credit inched up 0.3%.

At the same time, more money circulated in the domestic economy during the month. A separate BSP report also released on Wednesday showed M3, the broadest measure of money supply, fattened 5.4% year-on-year in November to P15.6 trillion. Growth proved flat compared to the preceding month.

Sought for comment, Nicholas Antonio Mapa, senior economist at ING Bank in Manila, expects credit growth to slow down in the coming months. 

“Growth of lending to productive sectors lags consumer lending suggesting that the rise in loan growth is partly driven by the sugar high from reopening and the fact that BSP has yet to lift the cap on credit card rates,” he said in a Viber message. 

Data broken down revealed loans to businesses grew 12.4% on-year in November, inching down from 12.5% growth in the preceding month. 

Consumer loans accelerated 24.1% on an annual basis, faster than the 22.6% expansion in October. The central bank said the growth came from an increase in credit card loans, motor vehicle loans, and salary loans.

“In the coming months, we can expect loan growth to continue but at a muted pace as rate hikes bite,” Mapa added.