Double-digit bank lending growth continues in May, hitting 10.7%
CREDIT growth in the country continued to accelerate in May this year, rising further into the double-digit growth territory during the month, according to data from the Bangko Sentral ng Pilipinas (BSP) released on Thursday.
Outstanding loans of universal and commercial banks expanded at a quicker rate of 10.7 percent yearon-year in May after a 10.1-percent increase in the previous month.
Money circulating in the economy—which is measured as M3— also grew during the month, by 6.9 percent to hit P15.3 trillion in May.
Bank lending first collapsed into contraction territory in December 2020 by 0.7 percent as the restrictions brought about by the pandemic affected the local banking industry. The contraction persisted amid the sustained all-time low monetary policy rate in place.
In comparison, bank lending grew 13.6 percent before the onslaught of the global health crisis in March 2020.
“With the ongoing normalization of its monetary policy settings, the BSP will continue to ensure that the expansion in credit and liquidity proceeds in line with the outlook for inflation and economic growth while remaining consistent with the BSP’S price and financial stability objectives,” the BSP said in a statement.
Broken down, outstanding loans to residents increased by 10.6 percent in May from 10.0 percent in April.
Specifically, outstanding loans for production activities went up by 10.8 percent in May from 10.3 percent in April with the rise in loans for real estate activities (16.4 percent); manufacturing (16.0 percent); information and communication (27.1 percent); wholesale and retail trade, repair of motor vehicles and motorcycles (6.2 percent); and construction (12.3 percent).
Similarly, growth in consumer loans to residents accelerated to 8.5 percent in May from 6.7 percent in April with the year-on-year increase in credit card loans and salary-based general purpose consumption loans.
Meanwhile, outstanding loans to non-residents expanded at a slower rate of 12.5 percent in May from 13.5 percent in the previous month.
In his analysis, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the strong credit growth in the country could be indicative of stronger gross domestic product (GDP) growth in the coming months.
“Universal and commercial banks loan growth again sustaining double-digit growth rate recently, at 10.7 percent, has become one of the bright spots in the Philippine economy and also fundamentally supports faster GDP growth, going forward,” the economist said.