Banks’ loans up 13.9%; liquidity grew 9.5%

The country’s large lenders reported a year-on-year loan growth of 13.9 percent in October, higher than last September’s 12.6 percent, the Bangko Sentral ng Pilipinas (BSP) said over the weekend.

With reverse repurchase (RRP) placements with the central bank – these are borrowings of the BSP from the banks – outstanding loans increased by 13.6 percent in October versus the 12.4 percent of the previous month.

In peso terms, bank lending minus RRPs totaled 4.82 trillion (both residents and non-residents), with RRPs it was 5.12 trillion.

The BSP said it will “continue to ensure that domestic credit and liquidity conditions will keep pace with overall economic growth” and balancing this with price and financial stability.

In a separate report, as of endOctober, domestic liquidity grew by 9.5 percent year-on-year to 7.9 trillion, a faster growth than the 8.7-percent expansion in September.

“Money supply continued to expand due largely to sustained demand for credit,” said the BSP. It added that the level of domestic liquidity indicates that money supply “remains sufficient to support economic growth.”

In a statement, the central bank said domestic claims increased by 12.4 percent in October from 12.7 percent in September. “Credits to the private sector increased at a faster pace relative to the previous month (while) the bulk of bank loans during the month was channeled to key production sectors,” said the BSP. These sectors include real estate activities; electricity, gas, steam and airconditioning supply; wholesale and retail trade, and repair of motor vehicles and motorcycles; financial and insurance activities; and construction.

The net public sector credit, on the other hand, went up by 12.1 percent in October, slower than the 16.5-percent growth in September.

Loans for production activities which is 80 percent of the total, grew by 14.4 percent in October from 13.2 percent of the previous month.

Loans for household consumption also expanded by 12.8 percent in October from 12.7 percent in September. “(This is) primarily due to the increase of salary-based general purpose consumption loans as well as sustained growth in credit card loans and auto loans,” said the BSP. (LCC)