Lending steady amid stable prices

‘Lending to individual consumers slightly slowed by 23.5 percent from 23.6 percent.’

Lending of universal and commercial banks stabilized at seven percent as of the end of last year compared with that of November, preliminary data from the Bangko Sentral ng Pilipinas, or BSP, showed.

Banks’ outstanding loans were slightly up to P11.69 trillion from P11.4 trillion during the period.

Month-on-month, the banks registered higher outstanding loans at 0.3 percent, excluding seasonal factors of loan demand.

Outstanding loans to residents also posted little change at 7.3 percent growth from 7.4 percent year-on-year.

Similarly, lending to individual consumers slightly slowed by 23.5 percent from 23.6 percent.

Credit card-based loans posted the highest growth at 30 percent, followed by auto loans at 16 percent.

Strong property loan growth

Meanwhile, lending for production activities rose slower by 5.5 percent from 5.7 percent.

Specifically, loans for real estate activities grew by 10.9 percent, followed by wholesale and retail trade, and repair of motor vehicles and motorcycles with 7.2 percent.

Loans for electricity, gas, steam and airconditioning supply increased by 6.2 percent.

Outstanding loans to nonresidents dropped by 2.8 percent from 5 percent.

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

BSP Governor Eli Remolona Jr. said the central bank remains “hawkish” against a drastic policy rate reduction as it aims to stabilize inflation rates close to two percent.

Borrowing costs for consumers and businesses remain elevated with the BSP rate of 6.5 percent, while inflation further slowed to 2.8 percent last month, according to the Philippine Statistics Authority, or PSA.

However, Remolona said inflation might quicken again due to higher food prices due to possible low agricultural production brought about by El Niño, and demandside risks from proposals for wage increases among consumers.

Still, Finance Secretary and BSP Monetary Board member Ralph Recto told the media on Friday the central bank probably will not announce a rate hike in its policy meeting next week.

A major factor, he said, is the move by the United States Federal Reserve.

“Quarter-on-quarter, there might be some inflation adjustments upward but I think our policy rates today are high enough,” he said.

“I don’t expect a future rate hike because inflation is going down and it seems like it is going down globally also. But I think the key is what happens in the Federal Reserve,” Recto added.

The BSP, in principle, may adopt the decision of the Federal Reserve to keep healthy levels of foreign investments and foreign exchange.

Along with the Federal Reserve’s decision, Recto said the BSP will be looking into other indicators before it announces any policy rate adjustment on 15 February.