Big banks’ outstanding loans grew by 4.6 percent year-on-year in December as overall lending activities recovered due to the lifting of stricter lockdown measures by end 2021.

The commercial banking sector managed to sustain its loan growth from August to December 2021 after reporting contractions for eight months or from December 2020 up to July last year because of the COVID-19 mobility restrictions.

“Credit activity continued to improve due to a more favorable economic outlook from businesses and households amid the sustained rollout of COVID-19 vaccines and the easing of community restrictions,” said the Bangko Sentral ng Pilipinas (BSP) on Monday, Jan. 31.

Based on BSP preliminary data, commercial banks’ outstanding loans, net of reverse repurchase (RRP) placements with the BSP, grew at a faster rate of 4.6 percent year-on-year in December from four percent in November.

Outstanding loans to residents, net of RRPs, increased by 4.7 percent in December from 4.1 percent in the previous month, driven by faster growth in loans for production activities, said the BSP.

Big banks’ outstanding loans in December in terms of peso value amounted to P9.6 trillion net of RRPs, and P9.87 trillion gross of RRPs.

In December, big banks’ outstanding loans for production activities rose 5.8 percent year-on-year to P8.50 trillion, higher than November’s 5.4 percent increase. The BSP noted the continued expansion in real estate activities which grew by 9.1 percent, while loans to the information and communication and manufacturing sectors increased by 27.3 percent and 9.4 percent, respectively.

Lending to the financial and insurance activities also grew by 9.9 percent in December while and transportation and storage increased by 9.1 percent.

BSP data also showed that consumer loans to residents continue to decline in December but it reported a smaller contraction of 5.7 percent compared to a 7.1-percent decrease in November.

The BSP said the year-on-year increase in credit card loans arrested a bigger decline for consumer loans. Total consumer loans amounted to P823.52 billion in December, of which credit card loans accounted for P427 billion. Automotive loans continue to decline, it was down by 17.2 percent year-on-year to P294.72 billion.

“Looking ahead, the BSP will continue to monitor credit dynamics to ensure that its monetary policy settings remain appropriate amid signs of economic recovery, consistent with its price and financial stability mandates,” said the BSP.

One of the reasons why lending was declining in months – aside from the pandemic -- was that business and personal loan borrowers were encountering severe bank requirements to take out loans. Some banks are still imposing unreasonable loan requirements that made it almost impossible for borrowers to comply.