Bank lending expands 14% to P4.67 T

MANILA, Philippines - The growth in bank lending picked up in August amid the higher loans extended for production activities particularly for construction as well as accommodation and food services.

According to the Bangko Sentral ng Pilipinas (BSP), the outstanding loans of commercial banks expanded 14.1 percent to P4.67 trillion in August from P4.09 trillion in the same month last year.

The expansion in August was faster compared to the 13.6 percent growth in July.

Together with reverse repurchase placements with the BSP, lending rose 14.3 percent to P4.96 trillion in August from a year-ago level of P4.34 trillion.

The BSP traced the increase in bank lending in August to the rise in loans for production activities which account for more than 80 percent of banks’ aggregate loan portfolio.

Data showed loans for production activities grew 13.8 percent to P4.16 trillion in August from P3.66 trillion in the same month last year.

Loans extended to manufacturing companies grew 5.8 percent to P711.89 billion from P672.7 billion followed by the wholesale and retail trade that grew 15.5 percent to P655.61 billion from P567.49 billion.

Lending for financial and insurance activities expanded 15.3 percent to P411.5 billion from P396.36 billion followed by loans for agriculture, forestry, and fishing that grew 15.5 percent to P149.7 billion from P129.61 billion.

In terms of growth rate, accommodation and food services activities booked the fastest growth with 50.4 percent followed by arts, entertainment and recreation with 45 percent as well as human health and social work activities with 42.5 percent.

On the other hand, loans for real estate activities grew 14.9 percent to P809.4 billion from P704.43 billion. The growth rate was slower compared to the 16.4 percent expansion booked in July.

In the latest Senior Loan Officers Survey of the BSP, the credit standards for loans to households and enterprises by banks were unchanged in the second quarter after a net tightening in the first quarter.

This is the 25th consecutive quarter since the second quarter of 2009 that the majority of banks reported broadly unchanged credit standards.

On the other hand, about 86.4 percent of the respondent banks in the second quarter indicated a net tightening of overall credit standards was noted for commercial real estate loans for the 12th consecutive quarter due to perceived stricter oversight of banks’ real estate exposure along with banks’ reduced tolerance for risk.

The BSP also noted the growth in lending for household consumption including credit card loans, auto loans, and salary also eased to 14 percent in August from 14.3 percent in July. Bank lending for household consumption amounted to P360.6 billion in August from P316.43 billion in the same month last year.