Big banks’ lending activities slowed in June to 9.6 percent compared to 11.3 percent in May as high demand for liquidity at the height of the harsh lockdown eased up, the Bangko Sentral ng Pilipinas (BSP) said.
“The slowdown in bank lending reflects in part the weak domestic economic prospects and constrained economic activity following the imposition of quarantine measures to contain the COVID-19 outbreak,” said the BSP.
The outstanding loans of 46 universal and commercial banks, net of reverse repurchase (RRP) placements with the central bank, on a month-on-month seasonally-adjusted basis, slipped by 1.1 percent.
In June, productivity loans minus RRPs grew slower to 8.3 percent from 9.8 percent in May. Loans for production activities amounted to P8.071 trillion, of which the real estate activities had P1.719 trillion, it was up 16.8 percent year-on-year.
Lending to financial and insurance activities also increased by 10.6 percent to P898.431 billion, while lending to information and communication rose by 23.7 percent to P392.792 billion.
Loans to electricity, gas, steam and air conditioning supply grew by 5.4 percent, while transportation and storage went up by 11 percent to P1.02 trillion and P297.138 billion, respectively.
“Similarly, loans for consumption of households, still reeling from the partial mobility restrictions and weak consumer confidence, grew at a slower pace of 26.7 percent in June from 30.2 percent in May, following slowdown in credit card, motor vehicle, and salary-based general purpose consumption loans during the month,” according to the BSP.
Lending for household consumption totaled P893.538 billion. Credit card loans amounted to P410.399 billion while motor vehicle loans totaled P384.188 billion.
The BSP said it “continues to adopt measures to ensure the flow of credit to affected businesses and households, including a further reduction in the monetary policy rate as well as a cut in the reserve requirement ratios of thrift and rural/cooperative banks.”
It added that it sees credit activity stabilizing and it will “pick up in the coming months, as economic activity resumes with the gradual reopening of the economy.”
“The BSP reassures the public of its commitment to deploy its full range of instruments to ensure that domestic liquidity and credit remain adequate amid significant disruptions to economic activity due to the ongoing health crisis,” said the BSP.
The country’s domestic liquidity or money supply also had a slower growth in June of 14.9 percent at P13.6 billion compared to 16.7 percent of the previous month.