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Bank loans grew by 12% in July despite rate hikes

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Bank loans expanded 12 percent in July from a year ago providing support to domestic activities that are crucial to economic recovery despite the series of interest rate hikes this year, data from the Bangko Sentral ng Pilipinas show.

The BSP said Wednesday outstanding loans of universal and commercial banks, net of reverse repurchase placements with the BSP, also rose 0.6 percent on a month-on-month seasonally-adjusted basis.

“The sustained growth in bank lending and liquidity will support the recovery of economic activity and domestic demand. Looking ahead, the BSP will continue to ensure that liquidity and credit dynamics remain in line with the BSP’s price and financial stability objectives,” the BSP said in a statement.

Outstanding loans to residents, net of RRPs, climbed by 11.9 percent in July following the same expansion in the June. Loans for production activities increased 11.6 percent in July after growing by 12.0 percent in June, driven by the rise in lending for real estate activities (14.6 percent); manufacturing (16.2 percent); information and communication (29.3 percent); and wholesale and retail trade, repair of motor vehicles and motorcycles (9.3 percent).

Consumer loans to residents jumped 14.7 percent in July, faster than the 10.9-percent rise in June on strong demand for credit card loans, motor vehicle loans and salary-based general purpose consumption loans.

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Outstanding loans to non-residents grew by 14.6 percent in July after a 16.4-percent uptick in the previous month.

Meanwhile, preliminary data also showed that domestic liquidity, or the money supply circulating in the financial system, grew by 7.0 percent year-on-year to about P15.4 trillion in July from the 7.2-percent growth in June. The BSP said that on a month-on-month seasonally-adjusted basis, domestic liquidity increased by 0.3 percent.

Domestic claims rose 11.5 percent year-on-year in July from 9.9 percent in the previous month on improvement in bank lending to the private sector. Claims on the private sector grew by 8.9 percent in July from 8.8 percent in June with the sustained expansion in bank lending to non-financial private corporations and households.

Net claims on the central government rose 22.2 percent in July from 15.3 percent in June owing to the sustained borrowing by the national government.

Net foreign assets in peso terms decreased 0.5 percent in July after expanding by 5.6 percent in June. The BSP’s NFA position declined during the month, reflecting the decrease in gross international reserves relative to the same period a year ago.

The NFA of banks also contracted on account of higher foreign deposit liabilities and bills payable.

The BSP said that as it proceeds with the withdrawal of monetary accommodation, it would continue to ensure that domestic liquidity conditions remain conducive to sustaining the economic recovery.

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