The monetary authorities reported bank lending remaining resilient and still growing in double digits, averaging 10.4 percent in July.
This compares with bank lending expanding only 10.1 percent in June as the various commercial and expanded license banks posted loans 0.8 percent faster month-on-month on seasonally adjusted basis.
This develops against a backdrop in which local output growth measured as the gross domestic product (GDP) is forecast at a significantly slower pace averaging only 6 percent this year by one of the three major sovereign credit watchers from 6.3 percent originally.
Growth across the USD437 billion southeast Asian economy is consumption-driven and the expectation is for loan growth to stage a stronger performance in the waning months of the year.
According to the BSP, the outstanding loans to residents, net of RRPs or central bank borrowings for purposes of maintaining a given level of liquidity in the financial system, also expanded by 10.4 percent in July from 10.1 percent in June. The outstanding loans to non-residents also increased by 9.2 percent in July from 9.8 percent in the previous month.
Production loans for the period rose by 8.8 percent in July from 8.3 percent in June. This was driven by lending to major sectors such as real estate activities (12.0 percent); professional, scientific, and technical activities (438.3 percent); manufacturing (7.9 percent); transportation and storage (20.6 percent); and wholesale and retail trade, repair of motor vehicles and motorcycles (6.0 percent), the BSP said.
Consumer loans to residents grew at a slightly slower pace of 24.3 percent in July from 25.0 percent in June due mainly to credit card lending.
Looking ahead, the BSP vowed to continue to ensure that domestic liquidity and credit activity are aligned with its price and financial stability objectives.
Domestic claims expanded by 11.3 percent year-on-year in July, compared to 10.5 percent in the previous month. Claims on the private sector grew by 11.9 percent in July from 11.7 percent in June with the continued expansion in bank lending to non-financial private corporations and households. Net claims on the central government expanded by 14.0 percent, up from 12.1 percent partly due to sustained borrowings by the National Government.
Net foreign assets (NFA) in peso terms rose by 11.2 percent year-on-year in July, compared to 8.3 percent in June. The BSP’s NFA grew by 13.8 percent, while the NFA of banks contracted, largely on account of higher bills and bonds payable.
The BSP will continue to ensure that domestic liquidity conditions are consistent with the prevailing stance of monetary policy, in line with its price and financial stability objectives.
