Bank lending eases in September

MANILA, Philippines - Bank lending activity slowed down in September amid the decline in loans extended for production activities particularly for the manufacturing sector.

Data released by the Bangko Sentral ng Pilipinas (BSP) yesterday showed outstanding loans of commercial banks expanded 12.5 percent to P4.73 trillion in September from P4.2 trillion in the same period last year.

The expansion in September was slower compared to the 14.1 percent growth in bank lending booked in August.

Together with reverse repurchase placements with the BSP, lending rose 14.1 percent to P5.1 trillion in September from a year-ago level of P4.47 trillion.

BSP Governor Amando Tetangco Jr. said the decline in the growth in bank lending to the slow down in the growth of loans for production activities to 13 percent in September from 13.8 percent in August.

Tetangco said loans for production activities reached P4.21 trillion and accounted to 89.4 percent of the total loan portfolio of the banking system in end September this year.

Data showed loans extended to manufacturing companies contracted 2.1 percent to P701.76 in September from P717.05 billion in September last year.

Likewise, loans for the transportation and storage sector declined 0.1 percent to P144.76 billion from P144.94 billion.

Real estate activities cornered the biggest share with 17.5 percent of the bank’s total loan portfolio in end September. Loans to the sector jumped 20.3 percent to P828.75 billion in September from P689 billion in September last year.

In the latest Senior Loan Officers Survey of the BSP, banks imposed tighter credit standards for loans to commercial real estate for the 13th straight quarter.

The survey showed about 86.4 percent of the respondent banks indicated unchanged overall credit standards for commercial real estate loans using the modal approach.

However, based on the diffusion index approach, a net tightening of overall credit standards was noted for commercial real estate loans in the third quarter.

The BSP also noted a slowdown in the growth in lending for household consumption including credit card loans, auto loans, and salary to 12 percent in September from 14 percent in August.