Philippine bank lending still rising

Growth in January, however, is slower than December’s.

Total outstanding loans of Philippine commercial banks less reverse repurchase placements with the central bank grew in January to 15.4% as against a growth of 16.2% in December.

M3 or domestic liquidity rose to US$123 billion in December, a 10.8% increase year-on-year. Bank lending inclusive of RRPs in January grew at a faster rate of 16.6% from 15.4% in December to reach US$84 billion.

Amando Tetangco, Governor of the Bangko Sentral ng Pilipinas, the central bank, noted that sustained credit growth is expected to support the momentum of the economy.

“Going forward, the BSP will continue to ensure that liquidity and credit conditions will keep at pace with overall economic activity while remaining consistent with the BSP’s price stability objective.”

On a month-on-month seasonally-adjusted basis, commercial bank lending in January increased by 0.8% for loans net of RRPs while loans inclusive of RRPs rose by 1.9%.

Money supply grew by 23.3% year-on-year in January from 19.2% in the previous month driven by the expansion in net domestic assets following the sustained increase in credits to the private sector.

The expansion in bank lending in January supports the perception that demand for credit from both firms and households will again increase this year. Bank loan officers foresee an increase in loan demand from businesses due to expectations of increased accounts receivables financing and working capital needs of borrowers in the next quarter and a sustained low interest rate environment.