Bank credit growth is accelerating
The country’s major banks saw their lending activities grow for the seventh consecutive month and even faster at 8.8% year-on-year in February, while domestic liquidity increased again by 8.5% year-on-year, according to the Bangko Sentral ng Pilipinas. (BSP).
Preliminary data for February transactions show that growth in outstanding loans from universal and commercial banks – net of short-term loans to the BSP – accelerated from the January rate of 8.4%.
On a month-to-month basis, universal and commercial bank lending in February was up 0.3% from January volume.
“Credit activity continues to gain momentum as the easing of COVID-19 related restrictions spur improved mobility and market demand,” the BSP said in a statement.
Also in February, growth in outstanding loans to residents, net of short-term loans, accelerated again to 8.8% against 8.4% in January.
The BSP attributed this to faster growth in loans for production activities, which was pegged at 9.6% from 6% in December.
This was mainly due to a 9.7% increase in loans to production activities. In turn, this was driven by the increase in credit for real estate activities (16%); wholesale and retail trade, automobile and motorcycle repair (6%); information and communication (33%); financial and insurance activities (13%); manufacturing (11%) and supply of electricity, gas, steam and air conditioning (0.4%).
In addition, consumer loans to residents rebounded to rise 0.9% in February, from a 0.4% decline in January, amid rising credit card lending.
Outstanding loans to non-residents increased more rapidly by 7.3% in February against 3.2% in January.
The BSP said it continued to see the possibility of preserving the momentum of the economic recovery amid heightened uncertainty, although indications of a sustained improvement in credit activity allow the regulator to gradually unwind its interventions related to the pandemic.
“Looking forward, the BSP stands ready to adjust its monetary policy settings to ensure non-inflationary and sustainable growth, consistent with its price and financial stability mandates,” the BSP said.
Meanwhile, domestic liquidity growth remained at 8.5% year-on-year, similar to January, bringing money supply to around 15.2 trillion pesos in February.
On a seasonally adjusted monthly basis, the money supply increased by 0.3%.
“Domestic claims rose 8.8% year-on-year in February compared to [a revised] 8.3% the previous month due to faster expansion of net claims on central government as well as sustained improvement in bank lending to the private sector,” the BSP said.
In addition, the growth of net foreign assets (NFA) in pesos was faster at 6.5% in February against 6.4% in January.
“The expansion of BSP’s NFA position reflects the increase in the level of the country’s gross international reserves compared to the same period a year ago,” the regulator said.
“Similarly, the NFA of banks increased as foreign assets of banks grew at a faster rate due to increased interbank loans receivable and deposits held with non-resident banks,” he said. added.
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