Bank lending continued to expand in August but at a slower rate of 7.2 percent, significantly less than lending growth averaging 7.7 percent in July, the Bangko Sentral ng Pilipinas (BSP) said on Wednesday, citing preliminary data.
This developed even as domestic liquidity or M3 growth continued to accelerate to 6.8 percent in August from only 5.7 percent in July or a month-on-month acceleration of 1.6 percent.
Data show the outstanding loans of universal and commercial banks (U/KBs), net of reverse repurchase (RRP) placements with the BSP, went up during the period. RRPs are BSP borrowings from the various banks as tool helping regulate money supply in the system in keeping with its price stability mandate.
On a month-on-month seasonally-adjusted basis, outstanding universal and commercial bank loans, net of RRPs, expanded by 0.6 percent. The banks’ lending rate remain unchanged at 6.75 percent.
Outstanding loans to residents, net of RRPs, also grew by 7.2 percent in August from 7.7 percent in July.
Loan growth for production activities slowed to 5.5 percent in August from 6.2 percent in July even amid the sustained expansion in lending to key industries such as real estate (which grew 5.7 percent); electricity, gas, steam, and airconditioning supply (9.0 percent); wholesale and retail trade, and repair of motor vehicles and motorcycles (7.1 percent); information and communication (10.7 percent); and financial and insurance activities (6.1 percent).
The BSP said the expansion of consumer loans to residents steadied at 22.7 percent in August from 22.6 percent in July, due mainly to growth in credit card and motor vehicle loans.
Outstanding loans to non-residents went up by 7.8 percent in August from 6.2 percent in July.
Looking ahead, the BSP will continue to ensure that domestic liquidity and lending dynamics remain consistent with its price and financial stability mandates.
The whole point to all these exercises is to bring inflation, or the rate of change in prices, back to the 2 percent to 4 percent target by the end of the year.
Eight-month inflation is still above target at 6.6 percent after the headline rate unexpectedly rose to 5.3 percent in August on the back of food and transport cost increases.
The BSP projects inflation at the upcoming September price survey averaging a low of 5.3 percent up to only 6.1 percent.
