Bank lending picks up growth trend in September


CREDIT activity in the country continued to pick up pace in September, registering the second consecutive month of growth in loans for 2021.  

Data released by the Bangko Sentral ng Pilipinas (BSP) on Friday showed that bank lending expanded by 2.7 percent in September – up from the 1.3-percent expansion in August.  

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. The contraction persisted amid the sustained all-time low monetary policy rate in place.  

In comparison, the Philippines’s bank lending grew 13.6 percent before the onslaught of the global health crisis in March 2020 

“The observed increase in outstanding loans of universal and commercial banks reflects the modest recovery in banks’ overall lending attitudes along with improved economic prospects owing to the gradual lifting of pandemic containment measures,” the BSP said in a statement.  

Broken down, outstanding loans for production activities grew by 4.4 percent in September from 3.1 percent in August, driven mainly by the expansion in loans for real estate activities at 7.2 percent; information and communication at 26.6 percent; financial and insurance activities at 6 percent; and manufacturing at 4.4 percent.  

However, the decline in outstanding loans to other sectors such as agriculture, forestry and fishing at 11.9 percent; activities of households as employers, undifferentiated goods and services at 23.3 percent; and wholesale and retail trade and repair of motor vehicles and motorcycles at 1.7 percent softened the overall increase in outstanding loans for production. 

Consumer loans to residents, meanwhile, remained in contraction mode, albeit falling at a slower rate of 7.8 percent in September from an 8.4-percent revised decline in August.  

The BSP said this is due to the milder contraction year-on-year in credit card, motor vehicle, and salary-based general purpose loans. 

Domestic liquidity, measured as “M3”, meanwhile, grew 8.2 percent during the month to hit P14.6 trillion.  

“The BSP remains keen on sustaining policy support to the National Government’s ongoing initiatives towards a durable economic recovery,” the BSP said. 

“Looking ahead, the BSP will continue to provide the appropriate monetary policy support to allow economic recovery to gain more traction, in line with the BSP’s price and financial stability mandates,” it added.

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