Bank lending was at its fastest pace in March as loans for productive sectors of the economy continued to rise, prompting the central bank to monitor credit and liquidity conditions more closely to maintain price and financial stability.
Data released by the Bangko Sentral ng Pilipinas (BSP) on Wednesday showed that outstanding loans of commercial banks, net of reverse repurchase (RRP) placements with the central bank, grew by 20 percent in March following a 19.4 percent increase the preceding month.
Bank lending during the month was at its fastest pace since November 2011, when it recorded 22.5 percent growth, the BSP said. Similarly, bank lending—inclusive of RRPs—grew 18.3 percent, slightly faster than the 18 percent pace in the preceding month. On a seasonally adjusted basis, commercial bank lending increased by 1.5 percent for loans net of RRPs month-on-month and by 1.9 percent for loans inclusive of RRPs.
“The sustained growth in bank lending reflects robust domestic demand. Going forward, the BSP will continue to closely monitor credit and liquidity conditions to ensure that bank lending moves in tandem with the pace of economic activity while at the same time maintaining price and financial stability,” the central bank said.
Comprising more than four-fifths of banks’ aggregate loan portfolio, loans for production activities expanded further by 18.1 percent in March from 17.8 percent in February.
The central bank said the expansion in production loans was driven primarily by increased lending to real estate, renting, and business services; electricity, gas and water; wholesale and retail trade; manufacturing; and financial intermediation sectors.
“All the other sectors posted positive growth rates during the month except lending to public administration and defense, which declined by 1.3 percent,” the BSP added.
The central bank also noted that loans for household consumption grew at a faster pace of 11.7 percent from 9.3 percent in the previous month because of the expansion of auto loans and other types of loans, such as personal and salary loans.