Bank loans hit 13-month high

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) reported yesterday that bank lending zoomed to its fastest level in 13 months with corporate and individual clients borrowing more to finance expansion acitivities to cope with the stronger-than-expected economic growth in the first half of the year.

In a statement, BSP officer-in-charge Nestor Espenilla Jr. said bank lending grew at a faster pace of 12.5 percent in August from 11.7 percent in July after the country’s gross domestic product (GDP) growth surged to 7.9 percent in the first half of the year from 1.2 percent in the same period last year.

This was also the highest growth in bank lending since 14.3 percent in June last year.

“The upturn in credit cycle remains constant with the robust pick up in domestic demand and the rebound in global trend,” Espenilla stressed.

Data showed that total outstanding loans of banks excluding reverse repurchase placements with the BSP reached to P2.184 trillion as of end-August this year or P243 billion more than the P1.941 trillion registered in end-August last year.

The increase, the BSP said, could be attributed to the 12.7-percent growth of loans for production activities that comprise around 85 of the total loan portfolio of commercial banks as well as the 15.4 percent expansion of the credit card loans for individual borrowers and the 12.5-percent rise in auto loans.

The central bank loans for production activities reached P1.96 trillion in end-August or P222 billion more than the P1.738 trillion booked as of end-August last year. 

Data showed that production loans were driven mainly by the increase in lending to the manufacturing sector with 21.9 percent to P371.2 billion; real estate, renting, and business services with 12.4 percent to P330 billion; agriculture, hunting, and forestry with nine percent to P326.9 billion; electricity, gas, and water with 19.8 percent to P161.7 billion; wholesale and retail trade with 11.6 percent to P236 billion; and financial intermediation with 16.4 percent to P168.5 billion.

On the other hand, loans for household consumption increased by 15.4 percent to P185.22 billion as of end-August this year from P160.5 billion as of end-August last year. Auto loans surged 31.7 percent to P52.8 billion while credit card loans went up by 8.1 percent to P113.69 billion.

Monetary authorities that demand for loans would continue to rise due to the surprising GDP growth in the first half of the year.

“The BSP remains steadfast in its efforts to provide the appropriate credit conditions supportive of sustained domestic economic growth, while fulfilling its primary mandate of maintaining price stability,” Espenilla said.

Earlier, BSP Governor Amando M. Tetancgo Jr. said bank lending would continue to post strong growth in the second semester as more companies borrow more to bankroll their expansion programs.

Tetangco pointed out that bank lending would likely grow between nine percent and 10 percent after expanding by 9.6 percent in the first half of the year.

However, he explained that corporate borrowers are also taking advantage of better yields and are tapping both the equities and bond markets as alternative sources of much needed funds.