Bank lending expands by 5.9% in September

MANILA, Philippines - The growth in commercial bank lending remained steady at 5.9 percent in September, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Statistics released by the central bank showed that the outstanding loans of commercial banks excluding reverse repurchase agreements (RRPs) reached P1.98 trillion in September from P1.87 trillion in the same period last year.

The amount was also P39 billion more than the P1.94 trillion lent by commercial banks in August.

The expansion of outstanding loans net of RRPs was slower than the 8.7 percent growth registered in July to P1.93 trillion from P1.776 trillion in the same month last year.

On the other hand, total loans of commercial banks including RRPs grew by 6.9 percent to P2.178 trillion in September from P2.052 trillion in the same month last year and 3.5 percent higher than the P2.03 trillion registered in August.

BSP Governor Amando M. Tetancgo Jr. said the increasing signs of global economic recovery along with ample liquidity conditions should provide support to credit activity going forward.

Preliminary data indicated that loans for production activities expanded year-on-year by 5.2 percent to P1.765 trillion in September from P1.738 trillion in August, lower than the 5.7-percent growth reported in August.

The expansion of lending to some productive sectors, according to the central bank, was pulled down by the contraction in other sector led by manufacturing.

Manufacturing loans which accounted for 14.5 percent of the total loans contracted by 20.5 percent amid the still weak demand for exports while construction loans plunged by 18.3 percent due to the ongoing correction in the property market.

Loans extended to the following productive sectors, which comprised nearly half of total loans, were major contributors to lending growth particularly to transportation, storage and communication that surged by 42 percent followed by electricity, gas and water that jumped by 40.3 percent.

Furthermore, the growth in consumption loans improved to 6.9 percent in September from 5.3 percent in August due to faster growth in auto loans and credit card lending.

Despite the slowdown, the BSP still believes that bank lending would continue to grow in double digit level this year amid the slackening domestic economy brought about by the full impact of the global economic meltdown.

BSP Deputy Governor Nestor Espenilla Jr. earlier told reporters that the projected 10 percent growth in bank lending is “doable” this year despite the slackening domestic economy.

“I expect credit growth to remain positive. The projected 10 percent growth in bank lending is still doable,” Espenilla said.