The Bangko Sentral ng Pilipinas (BSP) reported a pick-up in bank lending activity alongside a slight cooling in overall money supply expansion for July, signaling continued economic momentum driven by robust borrowing.
Bank loans from universal and commercial banks accelerated to a 10.4 percent year-on-year growth in July, rising from 9.8 percent in June. Borrowing by local residents fueled this surge with a 10.8 percent increase. Business lending led the expansion, speeding up to 9.8 percent growth as enterprises expanded operations in vital sectors, including energy supply, trade, manufacturing, finance, and communications. For businesses, this faster loan growth indicates growing corporate confidence to invest in operations, inventory, and infrastructure, which typically supports broader economic expansion and job creation.
In contrast, consumer borrowing showed signs of deceleration. While consumer loans still grew by a strong 17.1 percent year-on-year in July, the pace softened compared to June due to slower growth in credit card purchases and vehicle loans. This pullback reflects persistent weakness in household confidence, suggesting that families are becoming more cautious about taking on new debt for major purchases amid cost-of-living considerations.
Meanwhile, total domestic liquidity, or the overall money supply known as M3, expanded by 10.3 percent year-on-year to reach ₱20.5 trillion in July. This represents a minor slowdown from June’s revised 10.7 percent growth rate. The easing was primarily driven by a contraction in net foreign assets, as commercial banks faced higher foreign-exchange liabilities, such as bills payable, while central bank foreign assets grew at a slower pace.
Despite the slight dip in liquidity growth, overall money supply remains ample to support economic activity. The growth in circulating money was sustained by heavy public and private sector borrowing, alongside government debt issuances and spending withdrawals from central bank deposits. For both households and businesses, a stable domestic money supply paired with resilient bank lending means financial institutions remain well-funded to extend credit, keeping borrowing channels open to fuel daily operations and consumer needs while central regulators keep a close watch on inflation risks
