MANILA, Philippines — Bank lending grew in December last year as economic recovery goes underway.
Data released by the Bangko Sentral ng Pilipinas on Monday showed bank lending inched up 4.6% year-on-year to P9.6 trillion in December. That expansion was faster than the 4% print recorded in November, marking the fifth consecutive month of growth.
The latest figures were still an improvement compared to figures recorded at the end of 2020.
On a month-on-month basis, bank lending rose 0.4% in December, a performance that also meant more money circulated in the domestic economy during the month. A separate BSP report showed M3, a measure of money supply, surge 7.7% year-on-year in December to P15.3 trillion, albeit slower compared to the 8.3% recorded in November.
The figures show that the BSP's support to the economy, which involved slashing interest rates to 2%, has been absorbed by the economy. The rate cuts were meant to encourage credit growth in a time when the consumption-dependent Philippine economy suffered dismal activity then as a result of pandemic curbs.
Broken down, bank loans for production activities went up 5.8% year-on-year in December, slightly higher than 5.4% pace tallied in the previous month. Much of the increases came from credit extended to businesses engaged in information and communication, financial and insurance, and manufacturing.
Consumer loans continued to shrink in December amid relaxed restrictions then, although the contraction was softer at 5.7% on-year compared to the 7.1% decrease in November. The BSP noted the drop that happened despite the rise in credit card loans.
But bank lending could continue its nascent climb this year, as Jun Neri, lead economist at Bank of the Philippine Islands, sees it since the national government relaxed quarantine restrictions, such as reopening the country for international tourism, as daily infections continued to show steady declines.
"We will likely see high single-digit to low double-digit for this year on the recovery of high contact services such as restaurants and hotels," he said in a Viber message.