BANK lending in the country contracted slower in July this year, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday, marking the third consecutive month of improvement in credit conditions in the country.
Data showed that bank lending contracted by 0.7 percent in July this year, easing from the 2 percent fall in the previous month. It is also the slowest contraction of loans extended by banks for the year.
Bank lending first collapsed into contraction territory in December 2020 by 0.7 percent as the restrictions brought about by the pandemic affected the local banking industry.
In comparison, the Philippines’s bank lending grew 13.6 percent before the onslaught of the global health crisis in March 2020.
Broken down, total outstanding loans for production activities already expanded by 0.8 percent in July following a contraction of 0.6 percent in the previous month. This is the first time that outstanding production loans have increased since the reported growth rate of 0.5 percent in November 2020.
The expansion was driven by growth in loans for real-estate activities at 5.9 percent; information and communication at 14 percent; electricity, gas steam and air-conditioning supply at 2.1 percent; and transportation and storage at 7 percent.
At the same time, outstanding loans to key sectors fell at a slower rate, particularly for wholesale and retail trade and repair of motor vehicles and motorcycles at 4.5 percent and manufacturing at 2.6 percent.
However, consumer loans to residents went down by 8.2 percent in July from a revised 8.7-percent decline in June, due mainly to the continued contraction in motor vehicle loans.
“Looking ahead, the BSP will continue to prioritize monetary policy support in order to ensure the continued momentum of economic recovery. At the same time, the national government’s targeted fiscal initiatives and health interventions will be crucial in boosting domestic demand and strengthening the recovery,” the BSP said in a statement.
Domestic liquidity, meanwhile, expanded by 5.9 percent year-on-year to about P14.4 trillion in July 2021. This was slower than the revised 6.5-percent growth recorded in June.
“The BSP will ensure that domestic liquidity remains adequate to support domestic economic activity, in line with the BSP’s price and financial stability objectives,” the Central Bank said in a statement.