Big banks’ outstanding loans grew by 11 percent year-on-year in September, an improvement from the 10.4 percent reported in August, according to the Bangko Sentral ng Pilipinas (BSP).
Bank lending in peso terms amounted to P12.402 trillion in September, net of reverse repurchase (RRP) placements with the BSP. With RRP, the gross value totaled P13.14 trillion.
On a month-on-month seasonally-adjusted basis, outstanding universal and commercial banks’ loans, net of RRPs, went up by 0.8 percent. Meanwhile, domestic liquidity (M3) also rose by 0.7 percent on a month-on-month seasonally-adjusted basis.
In a separate report, the BSP said M3 grew by 5.4 percent year-on-year in September to P17.576 trillion. This was slightly lower than the 5.5 percent liquidity expansion in August.
The BSP noted that in September, outstanding loans to residents, net of RRPs, were up by 11.3 percent, compared to 10.9 percent in August. Outstanding loans to non-residents fell by 0.3 percent after increasing to 1.5 percent in the previous month.
With improving monetary conditions, productivity loans (borrowings for production activities) grew by 9.8 percent in September to P10.604 trillion, faster than the 9.4 percent growth in August.
During this period, bank lending to key industries increased. Loans to real estate activities were up 14.2 percent to P2.546 trillion; wholesale and retail trade, and repair of motor vehicles and motorcycles grew 12 percent to P1.434 trillion; manufacturing loans increased by 10.6 percent to P1.295 trillion; and loans to electricity, gas, steam, and air conditioning supply grew 7.5 percent to P1.328 trillion.
Data also showed that consumer loans improved by 23.4 percent in September, almost unchanged from 23.7 percent in August, “mainly due to sustained growth in credit card loans,” said the BSP.
Credit card loans grew by 27.7 percent to P845.282 billion; motor vehicle loans were up by 18.6 percent to P435.66 billion; salary-based general purpose consumption loans rose 15.2 percent to P155.284 billion; while other loans increased 26 percent to P37.201 billion.
The BSP said it will “continue to ensure that domestic liquidity and lending conditions remain in line with its price and financial stability objectives,” particularly with a decelerating inflation path and the Monetary Board’s gradual easing of policy rates.
In monitoring M3, the central bank is also ensuring that domestic liquidity conditions “are consistent with the prevailing stance of monetary policy.” M3 also serves as the country’s money supply. The BSP determines the money supply to manage inflation.
The BSP has reduced the policy rate by a combined 50 bps in August and October, with inflation settling within the government target range of 2 percent to 4 percent. The Aug. 16 rate cut was the first since November 2020. The market expects the BSP to cut the key rate by another 25 bps on Dec. 19.
With M3 growth, domestic claims expanded by 9.6 percent year-on-year in September, lower than the 10 percent growth in August.
Claims on the private sector were up 12.4 percent, compared to 11.9 percent in August, due to the “sustained expansion in bank lending to non-financial private corporations and households,” said the BSP.
The BSP also noted that net claims on the central government grew by 6.6 percent, slower than August’s 8.5 percent. This was because of the increase in government deposits with the BSP, which “tempered the increase in (National Government) borrowings.”
As part of the M3 data, the BSP also monitors net foreign assets (NFA), which in peso terms increased by 8.6 percent year-on-year in September, from 2.4 percent in August.
The BSP said its NFA was up by 14.2 percent due to the expansion of the country’s gross international reserves, which hit a record high of P112.7 billion in September.
The NFA of banks, on the other hand, declined “largely on account of higher bills payable,” said the BSP.