Bank lending continued to lose momentum in March this year, growing by 11.8 percent, marking the lowest expansion rate in four months or since November last year when it posted an 11.1 percent growth.

March’s movement was a further slowdown from February, as weaker credit expansion to major industries such as real estate, construction, and trade weighed on overall growth, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP).

Preliminary data from the central bank showed that outstanding loans of big banks or universal and commercial banks, excluding reverse repurchase (RRP) placements with the BSP, expanded at a slower pace from the 12.2 percent growth in February.

Big banks’ loans to residents grew at a slower rate of 12.3 percent in March, down from 12.6 percent in February. Residents refer to individuals, businesses, and entities based in the Philippines.

Meanwhile, outstanding loans to non-residents or foreign entities fell by 5.6 percent in March, after a 3.2 percent decline in the previous month.

Loans for production activities grew by 10.9 percent in March, but at a slower rate than the 11.2 percent growth in February.

According to the BSP, loan growth slowed due to weaker lending to major industries, including real estate at 9.6 percent, trade and vehicle repair at 11.6 percent, information and communication at 8.9 percent, construction at 1.8 percent, arts and recreation at 12.6 percent, utilities and waste management at 12.9 percent, and accommodation and food services 19.3 percent.

Consumer loans to residents climbed by 23.6 percent in March, slightly down from 24.1 percent in February. The BSP said the rise in credit card, motor vehicle, and salary-based general-purpose consumption loans drove this.

“Looking ahead, the BSP will ensure that domestic liquidity and bank lending conditions remain consistent with its price and financial stability objectives,” it said.

Continued money supply slowdown

Money supply growth accelerated by 6.1 percent year-on-year in March, slightly slower than the 6.3 percent growth recorded in February.

Domestic liquidity, as measured by M3, reached ₱18.2 trillion in March.

Domestic claims increased by 10.4 percent in March, up from an annual 10.1 percent increase in February. In contrast, claims on the private sector grew at a slower pace of 11.5 percent, down from 12.3 percent, as bank lending to companies and households continued to expand.

Meanwhile, net claims on the central government jumped by eight percent in March, up from 5.9 percent in February, due to the bloating borrowings by the Marcos administration.

Net foreign assets (NFA) also grew by 2.5 percent, slower than the 5.8 percent increase in February. The central bank’s NFA climbed by 4.5 percent, driven by higher US dollar stock than the previous year.

Meanwhile, banks’ NFA fell mainly due to increased foreign currency-denominated liabilities.