Philippine bank lending surged to an almost two-year high in November last year, fueled by easing inflation and aggressive monetary policy easing by the central bank.
Outstanding loans by big banks in the country grew by 11.1 percent year-on-year in November 2024, accelerating from the 10.6 percent growth recorded in October, data from the Bangko Sentral ng Pilipinas (BSP) showed.
Based on the BSP data, the November figure was the fastest lending growth since December 2022 and is more than double the 5.2 percent economic growth recorded in the third quarter of 2024.
Michael L. Ricafort, Rizal Commercial Banking Corp. chief economist, said this surge in lending follows a series of local policy rate cuts, totaling 0.75 percentage points in 2024, bringing the key rate down to 5.75 percent, its lowest level in two years.
Total loans reached P12.675 trillion, net of reverse repurchase (RRP) placements with the BSP. Including RRPs, the gross value of outstanding loans totaled P12.94 trillion. RRPs are a monetary instrument used by the BSP to manage liquidity in the banking system.
The BSP said on Friday, Jan. 10, that it continues to ensure that domestic liquidity and lending conditions support its price and financial stability goals.
Domestic liquidity, as measured by M3, expanded by 7.7 percent year-on-year to P18.066 trillion in November, from 5.4 percent in October. On a month-on-month seasonally-adjusted basis, M3 increased by 1.9 percent. Outstanding loans, net of RRPs, also increased by 1 percent on a seasonally-adjusted basis.
The BSP stated that these liquidity conditions are in line with its current easing monetary policy stance, which aims to ensure financial stability. In 2024, the BSP reduced its policy rate by a total of 75 basis points in response to decelerating inflation.
Loans for production activities increased by 9.8 percent to P10.813 trillion in November, compared to 9.1 percent growth in October.
The BSP noted the continued growth in loans to the wholesale and retail trade sector (9.1 percent growth) and the electricity, gas, steam, and air-conditioning supply sector (9.6 percent growth). Loans to financial and insurance activities also rose by 4.4 percent.
Consumer loans grew by 23.3 percent to P1.539 trillion, slightly slower than the 24 percent growth observed in October. Credit card loans led the way with 26.5 percent growth, while motor vehicle loans increased by 19.6 percent.
In a separate report, the BSP noted that domestic claims grew by 10.8 percent year-on-year in November, driven by sustained growth in bank loans to non-financial private corporations and households.
Net claims on the central government also increased due to government borrowings.
The BSP's net foreign assets (NFA) in peso terms increased by 9.8 percent year-on-year in November, supported by growth in gross international reserves. However, banks' NFA contracted due to higher bills payable and bonds payable.