Bank lending growth drops, M3 expands to P13.7T

Published January 14, 2021, 7:00 AM

by Lee C. Chipongian

Bank lending growth has declined to 0.3 percent year-on-year in November last year versus 1.8 percent in October, the Bangko Sentral ng Pilipinas (BSP) reported late Wednesday.

“Bank lending growth waned during the month as the COVID-19 crisis continued to dampen consumer spending and business activity,” the BSP said in a statement.


Based on preliminary data, big banks’ outstanding loans net of reverse repurchase (RRP) placements with the BSP, on a month-on-month seasonally-adjusted basis, also contracted by 0.3 percent.

In the meantime, domestic liquidity or M3, expanded by 10.5 percent year-on-year to P13.7 trillion in November, but slower than October’s 11.6-percent. On a month-on-month seasonally-adjusted basis, M3 rose by 0.5 percent.

The BSP reported that net of RRPs, the universal and commercial banks’ lending for production activities went up by 0.5 percent to P7.84 trillion in November. This was lower than October’s two percent as “outstanding loans to key industries declined further, particularly wholesale and retail trade and repair of motor vehicles and motorcycles, and manufacturing.” The former was down six percent to P1.08 trillion and the latter decreased by 4.2 percent to P990.82 billion.

The BSP said the following sectors contributed to the overall increase in production loans: real estate activities (5.2 percent); electricity, gas, steam, and air conditioning supply (2.7 percent); human health and social work activities (45.3 percent); transportation and storage (8.1 percent); and information and communication (6.5 percent).

Consumer lending, on the other hand, eased due mainly to lower credit card and motor vehicle loans, said the BSP. Consumer loans amounted to P876.20 billion.

The central bank said its accommodative monetary policy stance in 2020, with “sustained fiscal initiatives to safeguard public welfare” is expected to support economic recovery. Last year, the BSP reduced key rates by 200 basis points and released fresh liquidity of almost P2 trillion.

“The BSP reassures the public of its commitment to deploy its full range of instruments as necessary to ensure sufficient liquidity and credit, in line with its mandate to promote non-inflationary and sustainable growth,” said the BSP.

In its M3 report, the BSP noted that domestic claims were up by 6.7 percent year-on-year in November from eight percent in October “as bank lending remained weak.”

The central government’s net borrowings went up by 40.7 percent in November from 46.6 percent in October “due in part to the sustained borrowings by the National Government,” said the BSP.

“The BSP will continue to be vigilant in monitoring domestic liquidity dynamics and stands ready to deploy further monetary measures as needed, in line with its commitment to support domestic economic activity amid the COVID-19 pandemic while maintaining price stability,” said the BSP.