Bank lending grew sharply in February as production stepped up, prompting the central bank to monitor credit and liquidity conditions more closely to maintain stability in the financial system.
Data from the Bangko Sentral ng Pilipinas (BSP) showed on Monday that outstanding loans of commercial banks, net of reverse repurchase (RRP) placements with the central bank, rose by 19.4 percent in February following a 17.1 percent increase the preceding month.
Similarly, bank lending—inclusive of RRPs —grew 18.0 percent, faster than the 15.9 percent pace in the month earlier. On a seasonally adjusted basis, commercial bank lending increased by 2.5 percent for loans net of RRPs month-on-month and by 1.8 percent for loans inclusive of RRPs.
“Going forward, the BSP will continue to closely monitor credit and liquidity conditions to ensure that bank lending growth continues to reflect the pace of domestic demand while at the same time maintaining price and financial stability,” the BSP said.
Comprising more than four-fifths of banks’ aggregate loan portfolio, loans for production activities expanded 17.8 percent in February from 16.2 percent in January.
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 1.7 percent,” the BSP added.
The central bank also noted that loans for household consumption grew at a faster pace of 9.2 percent from 8.9 percent in the previous month because of the expansion of auto loans and other types of loans, such as personal and salary loans.