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Freeman Cebu Business

Bank lending surges by 20% in Nov 2014

C&C VIEWS - Ed Limtingco - The Freeman

According to the Institute for Development and Econometric Analysis, Inc. latest NewsBriefs, Bank lending surges by 20percent in November 2014. Universal and commercial banks in the Philippines continued to increase their lending net of their reverse repurchase placements with the BSP in November 2014, surging by 20.0percent from a year earlier to settle at P4.317 trillion. Inclusive of RRPs, loans outstanding stood at P4.585 trillion, 18.9percent higher from a year ago.

Loans for the production sector took the lion’s share of outstanding loans (four-fifths) and expanded by 18.6percent for the month. The sectors of financial intermediation, wholesale and retail trade, transport, utilities, manufacturing and real estate fueled the increase in loans.

On the other hand, loans for household consumption also notched a 20.7percent growth for the month, noticeably higher than the 17.3percent growth it posted in October 2014. On the run up to the holidays, credit card, automobile and other types of personal loans drove the increase in consumer loans.

The BSP assured that the continued increase in bank lending will further support domestic economic growth.

Likewise per same published report, state under-spending pierces through the fourth quarter of 2014, effectively threatening over-all Philippine growth for the year. The Bureau of Treasury reports a P6.8 billion fiscal surplus in November 2014, as expenditures slid faster than revenues. Government spending plunged by 8percent to just P151.4 billion from P164 billion a year ago; revenues also fell by 4percent to P158.2 billion from P165 billion a year earlier.

Furthermore, according to the Bangko Sentral ng Pilipinas’ (BSP) Governor Amando M. Tetangco, Jr., the average bank lending rate inched up to 5.697percent in October 2014 from 5.391percent in June 2014 stemming from tighter policy actions by the BSP. In between the months covered, the BSP hiked key policy rates to stave off inflation. For 2015 and 2016, the BSP expects an inflation target range of 2-4percent.

The Bangko Sentral ng Pilipinas announced that preliminary data indicate that domestic liquidity growth considerably eased in November 2014, expanding by just an annualized 9percent from a 15.4percent growth a month earlier. Domestic liquidity, as measured by the M3, amounted to P7.3 trillion for the month. The continued demand for public and private credit fuelled the expansion.

On the other hand, fitting with the holiday celebration, the government has recently announced that de minimis benefits of up to P10,000 are now tax-exempt. Accordingly, the total tax-free package Filipinos could avail has been increased to P104,225 from the present P94,225.

However, based on a national survey conducted by the Social Weather Stations, the average self-rated poverty among Filipinos in 2014 stood at 54percent, the worst since 2006. An estimated 9.1 million families in December 2014 consider the food that they eat as ‘mahirap’ according to the researchers of IDEA.

elimtingco@yahoo.com

BANGKO SENTRAL BILLION BSP BUREAU OF TREASURY DEVELOPMENT AND ECONOMETRIC ANALYSIS GOVERNOR AMANDO M GROWTH LOANS PILIPINAS SOCIAL WEATHER STATIONS TETANGCO
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