Commercial bank lending up 2.4% to P1.561T in February

Commercial bank lending rose by 2.4 percent to hit P1.561 trillion in February as financial services and real estate development continued to recover, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

The BSP said the improvement in commercial bank lending was driven mainly by loans to the financial institutions, real estate and business services (FIREBS) sector, which recorded a 18.8 percent year-on-year increase during the month in review.

According to the BSP, however, the growth was considered sluggish because overall corporate demand was moderate and banks were still cautious about lending to corporate borrowers despite the decline in their non-performing loans (NPLs) in the past few months.

The BSP said only the FIREBS sector was showing some appetite for bank loans, possibly due to the surging growth in business process outsourcing (BPO) which required both financing and very specialized locations which then spurred property development activities.

BSP Acting Governor Nestor A. Espenilla Jr. said the recent extension of the effectivity of the Special Purpose Vehicle Act should facilitate the banks’ thrust to dispose of their NPLs.

"Hopefully this will result in a further improved lending climate as the industry’s NPL ratio continues to decline," Espenilla said. "For its part, the BSP remains focused on its efforts to strengthen overall asset quality in the banking sector as a means of encouraging lending activity to the real estate sector."

On the demand side, Espenilla said loan demand is expected to benefit from favorable domestic interest rates and improved business expectations as a result of steady progress in fiscal consolidation and other key economic reforms.

By sector, the BSP said the community, social and personal services sector expanded by 2.8 percent; the electricity gas and water rose by 2.3 percent; and the agriculture, fisheries and forestry sector grew by 8.1 percent.

However, increases in lending to these sectors were offset by declines in loans to other key sectors such as construction (27.4 percent); mining and quarrying (1.5 percent); manufacturing (8.9 percent); wholesale and retail trade (3.3 percent); and the transportation, storage and communication sector (1.3 percent).