The Bangko Sentral ng Pilipinas (BSP) said big banks’ outstanding loans continued to decline by 4.5 percent year-on-year in March, higher than what was reported in February of 2.7 percent.
“Credit activity remained tepid on banks’ tighter lending standards as a resurgence in coronavirus cases dampened the domestic economic outlook,” said the BSP late Monday.
As bank lending remained weak, the BSP also reported an expansion in domestic liquidity or M3 growth of 8.3 percent year-on-year to P14.2 trillion, also in March. The M3 growth was, however, slower compared to February’s 9.4 percent.
Net of reverse repurchase (RRP) placements with the BSP, bank lending on a month-on-month seasonally-adjusted basis, dropped by 0.12 percent. M3 growth n a month-on-month seasonally-adjusted basis, rose by 0.7 percent.
Outstanding loans to residents minus RRPs declined by 3.9 percent while non-residents’ loans contracted by 20.4 percent, said the BSP. Outstanding loans to non-residents include loans by foreign currency deposit units.
In peso value, bank lending net of RRPs amounted to P8.98 trillion in March.
Lending for production by economic activity dropped by 3.2 percent year-on-year to P7.89 trillion while consumer loans to residents also decreased by 9.9 percent in March to P837.48 billion due to the decline in credit card and motor vehicle loans by 10 percent each.
The BSP noted that outstanding loans to major industries decreased. Lending to wholesale and retail trade and repair of motor vehicles and motorcycles declined by 9.7 percent in March to P1.04 trillion, while lending to the manufacturing sector also dropped by 5.5 percent to P985.10 billion. Loans to the financial and insurance activities likewise decreased by 5.1 percent to P851.17 billion.
The BSP said it will “continue to keep its monetary policy stance supportive of the government’s initiatives to address the pandemic” and that it “stands ready to take appropriate measures as needed to ensure ample liquidity and credit in the financial system, consistent with its price and financial stability objectives.”
In a separate report, the BSP said domestic claims increased by 5.6 percent year-on-year in March versus 5.7 percent in February and they attributed this to the modest expansion in net claims on the central government despite weak bank lending activities.
Net claims on the central government rose by 47.4 percent in March compared to 46.5 percent in February from the sustained borrowings by the National Government.
As for net foreign assets (NFA), in peso terms, the BSP said this increased by 18.1 percent in March from 21.8 percent in February. “The expansion in the BSP’s NFA position reflected the increase in the country’s level of gross international reserves relative to the same period a year ago,” it added. Banks’ NFA also registered an increase but at a slower pace. “Banks’ foreign liabilities continued to decline, albeit at a slower pace, on account of lower bills payables,” said the BSP.