Big banks’ outstanding loans grew by 10.1 percent year-on-year in April, a faster rate of growth compared to 8.9 percent in March as borrowers are more confident in taking out credit from financial institutions.

The Bangko Sentral ng Pilipinas (BSP) said on Tuesday, May 31, that the 44 universal and commercial banks, net of reverse repurchase (RRP) placements with the BSP, reported total loans of P9.9 trillion in April versus P8.99 trillion same period last year.

“Credit conditions continue to improve as economic activity rebounds amid a manageable domestic COVID-19 caseload,” said the BSP. On a month-on-month seasonally-adjusted basis, bank lending net of RRP rose by 0.9 percent.

The BSP also reported a domestic liquidity or M3 growth of 7.3 percent year-on-year in April, to P15.3 trillion. This was slower compared to 7.7 percent in March. On a month-on-month seasonally-adjusted basis, M3 was “broadly unchanged.”

“The continued expansion in domestic liquidity indicates that liquidity remains sufficient to sustain the economy on a firm recovery path. A strong rebound in economic activity has also allowed the BSP to gradually withdraw its extraordinary liquidity intervention,” said the BSP.

Meantime, the central bank noted continued expansion in loans for production activities which grew by 10.3 percent to P8.94 trillion in April from 9.4 percent in March.

Consumer loans also grew by 6.7 percent to P879.39 billion which includes credit card loans and salary-based general purpose consumption loans.

“A steady improvement in overall credit activity and stable financial market conditions have allowed the BSP to continue rolling back its pandemic-induced liquidity interventions,” according to the BSP. It added that it will “continue to watch closely evolving credit and liquidity conditions to ensure that appropriate level of liquidity is available to nurture the momentum of economic recovery, while containing inflation pressures.”

For the domestic claims in April in the M3 report, the BSP said this went up by nine percent year-on-year from 8.1 percent in March due to the improvement in bank lending to the private sector and the expansion in net claims on the central government.

“Claims on the private sector grew by 6.5 percent in April from 5.6 percent in March with increased bank lending to non-financial private corporations and households,” said the BSP.

As for net claims on the central government, the BSP said this went up by 17.6 percent in April from 16.3 percent in March. The sustained borrowings by the National Government was a main factor for the improvement.

The central bank also reported that net foreign assets (NFA) under M3 in April, in peso terms, increased by 5.2 percent compared to 8.2 percent growth in March.

“The slower expansion in the BSP’s NFA position reflected the decline in gross international reserves relative to the same period a year ago,” the BSP noted.

The NFA of banks continued to expand during the period but at a slower pace. This was due to higher investments in marketable debt securities as well as loans and receivables with nonresident banks, said the BSP.