Bank lending up 22.6% in October

CEBU, Philippines — The Bangko Sentral Ng Pilipinas (BSP) reported an improvement of 22. 6 percent of loans released by the banking sector to Filipino consumer loan borrowers in October 2022, from 20.6 percent recorded in the previous month of September.

According to BSP, rising outstanding loans to residents, net of reverse repurchase (RRP) is due mainly to the year-on-year increase in credit card loans, motor vehicles loans, and salary-based general purpose consumption loans.

Likewise, outstanding loans to non-residential grew by  33.0 percent in October from a 26.6 percent expansion in September 2022.

The sustained growth in credit activity and ample liquidity will continue to support the recovery of economic activity and domestic demand, the BSP said.

Looking ahead, the BSP will continue to take all necessary action to ensure that liquidity and bank lending conditions remain consistent with promoting price and financial stability.

 Meanwhile, preliminary data showed that outstanding loans of universal and commercial banks (U/KBs), RRP placements with the BSP, grew by 13.9 percent year-on-year in October from a 13.4 percent rise in September.

On a month-on-month seasonally-adjusted basis, outstanding universal and commercial bank loans, net of RRPs, went up by 1.1 percent.

 Outstanding loans to residents, net of RRPs, also increased by 13.4 percent in October after growing by 13.1 percent in the previous month.

Similarly, outstanding loans for production activities rose by 12.5 percent in October, from a 12.3-percent expansion in September, driven largely by the growth in loans to key industries such as real estate activities (14.0 percent); manufacturing (17.7 percent); wholesale and retail trade, repair of motor vehicles and motorcycles (11.5 percent); financial and insurance activities (12.8 percent); information and communication (25.0 percent); and electricity, gas, steam, and airconditioning supply (10.9 percent).

 On the other hand, the BSP underscored the resilience of the Philippine economy after its gross domestic product (GDP) grew by 7.6 percent during the third quarter of 2022.

 “The robust expansion recorded for the third quarter 2022 places the Philippines in a strong position to meet its target GDP growth rate of 6.5 to 7.5 percent this year,” said BSP Governor Felipe M. Medalla in a statement.

 The latest GDP growth rate marks the sixth consecutive quarter of economic expansion after pandemic-induced contractions between Q1 2020 to Q1 2021.

 “The favorable growth outcome shall also provide the BSP the flexibility to maneuver as it acts to bring inflation back to the target while helping the National Government steer the economy towards a durable recovery,” according to the Governor.

The central bank has increased its benchmark interest rates by a cumulative 300 basis points since May 2022 to anchor inflation expectations amid price pressures stemming from local and global developments.

 In line with its mandate of ensuring price and financial stability, the BSP stands ready to adjust its monetary policy settings and is reassured by the timely implementation of non-monetary interventions meant to address supply-side inflation pressures.