At A Glance
- Lending by big banks or universal and commercial banks (UK/Bs) expanded more slowly in August, with loans—excluding placements in the BSP's reverse repurchase window—rising 11.2 percent, down from 11.8 percent in July.
Lending by big banks or universal and commercial banks (UK/Bs) expanded more slowly in August, with loans—excluding placements in the Bangko Sentral ng Pilipinas’ (BSP) reverse repurchase window—rising 11.2 percent year-on-year, down from 11.8 percent in July.
This was the slowest annual expansion in nine months, or since the 11.1-percent growth in November last year.
Broken down, the growth in outstanding loans to residents slowed to 11.6 percent in August from 12.4 percent in July, according to the latest data from the BSP released on Thursday, Oct. 2.
Meanwhile, the contraction in outstanding loans to non-residents moved at a slower rate of 5.9 percent during the month from the decline of 8.1 percent in July. Outstanding loans to non-residents cover those extended by big banks’ foreign currency deposit units (FCDUs) to borrowers abroad.
Loans supporting business activities expanded by a slower 9.9 percent in August compared with 10.8 percent in July.
According to the BSP, the expansion was driven mainly by higher lending to key sectors, including real estate activities (11 percent); electricity, gas, steam, and air-conditioning supply (28.1 percent); wholesale and retail trade, and repair of motor vehicles and motorcycles (8.1 percent); financial and insurance activities (6.9 percent); as well as information and communication (7.5 percent).
Consumer loans to residents grew by 23.9 percent in August, faster than the 23.6-growth in the previous month. These include credit card, motor vehicle, and general-purpose salary loans.
Domestic liquidity, or the amount of money in the economy, as measured by M3, expanded by 6.6 percent year-on-year in August, reaching ₱18.6 trillion. This expansion rate was faster than July’s 6.2 percent.
M3 is a broad measure of money supply that includes currencies in circulation, bank deposits, and other financial assets that are easily convertible to cash.
Claims on the domestic sector—which cover both private and government borrowers—were the drivers of the growth in money supply. However, it grew slower at 9.8 percent in August from 10.5 percent in July.
Claims on a sector refer to the debts or obligations that banks and the central bank hold against that sector.
In particular, claims on the private sector increased by 11.1 percent, faster than the 11-percent growth in the previous month. The BSP attributed this growth to the “continued expansion in bank lending to non-financial private corporations and households.”
Meanwhile, net claims on the government eased to a 6.1-percent increase in August, from a faster 7.1-percent rate in July, due to the government’s higher borrowings.