Rising borrowing costs temper bank lending in April
MANILA, Philippines — Bank lending posted slower growth in April, as the series of rate hikes fired off by the Bangko Sentral ng Pilipinas to fight inflation continued to work its way through the economy and temper demand for loans.
Excluding inter-bank lending, outstanding loans of big banks in the country grew 9.7% year-on-year in April, data from the BSP released Wednesday showed. This was slower than the 10.2% expansion recorded in March.
Month-on-month, loan growth went up marginally by 0.6%.
Bank lending eased as higher borrowing costs as a result of the BSP’s rapid-fire rate hikes weigh on demand for loans, which has the effect of reigning in inflation by tempering consumption of key consumer items with limited supply.
Data showed loans to companies grew 8.3% in April, easing from 9% expansion registered in the preceding month.
Meanwhile, consumer loans expanded at a faster rate of 22.3% in April, from 21.8% in March, as household consumption continues to show strength despite rising borrowing costs.
Earlier this month, the central bank kept its policy rate unchanged at 6.25% as headline inflation slows.
But some analysts believe another hike would be a prudent choice considering that core inflation remains near a two-decade high, an indication of lingering demand-side pressures.
Governor Felipe Medalla said the BSP is unlikely to touch its key rate for the next two or three policy meetings of the powerful Monetary Board to avoid damaging an economy that is still recovering from the pandemic’s onslaught.
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