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BANK lending will sustain its growth this year
despite high inflation, Bangko Sentral ng Pilipinas (BSP) said based
on its quarterly survey of consumer and business expectations.
BSP Governor Amando Tetangco Jr.
said both sectors expect inflation to be well anchored this year,
adding: “When future price changes are well anticipated, both
users and providers of funds would be better able to determine their
requirements and risk appetites.”
However, Tetangco said BSP would
not hesitate to make any necessary refinements to the current stance
of monetary policy if any changes were perceived.
Besides traditional lending
activity, he said other means of raising funds would grow with the
economy such as the capital market.
Bank lending increased slightly
in February this year on modest demand as financial institutions,
real estate and business services sector (FIREBS) posted lower loans
during the month.
Loans extended by commercial,
thrift and rural banks grew 9.4 percent year on year in February,
slightly higher than the 9.3-percent rise in January. The amount of
loans outstanding stood at P1.904 billion in February from P1.704
billion in the same month last year but lower than the P1.918
billion in January.
FIREBS accounted for 29.6 percent
of the total outstanding loans at P445.197 million, which posted
slower growth of 12.1 percent in February from 16.3 percent in
January.
Some analysts said bank-lending
growth is expected to decline this year due to slower economic
growth as high prices will weaken consumer spending, which drives
the economy to expand. Banks’ profitability will also be affected
this year due to slower economic activities and increased
competition in the industry.
The government projected the
country’s economic growth to be within the range of 6.7 percent to
7 percent this year, lower than the three-decade high of 7.3 percent
last year.
Meanwhile, a central bank
official said bank lending growth is likely to post a double-digit
growth this year.
Oil and non-oil commodity prices
had driven inflation to rise further this year, which is likely to
reach more than the central bank’s target of 3 percent to 5
percent.
The official said “meeting the
2008 inflation target is now at risk, with the major risk factor
being movements in global oil and non-oil commodity prices—for
such supply side factors, monetary policy may be less effective than
direct supply intervention.”
BSP has forecast inflation or
increase of prices to reach 7 percent this month from 6.4 percent in
April, citing the prevailing high prices of oil and commodities as
well as adjustments in power rates.
Consumers’ electricity bills in
the franchise areas of the Manila Electric Co. shot up in April.
--Maricel E. Burgonio
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