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Bank loans grew 13.9% in October despite rate hikes

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Bank loans grew 13.9 percent year-on-year in October, faster than September’s 13.4-percent expansion, on sustained demand for credit despite the rising interest rates, data from the Bangko Sentral ng Pilipinas show.

The BSP said that on a month-on-month seasonally adjusted basis, outstanding universal and commercial bank loans, net of reverse repurchases or RRPs, went up by 1.1 percent.

“The sustained growth in credit activity and ample liquidity will continue to support the recovery of economic activity and domestic demand,” the BSP said in a statement.

“The BSP will continue to take all necessary action to ensure that liquidity and bank lending conditions remain consistent with promoting price and financial stability,” it said.

Rizal Commercial Banking Corp. chief economist Michael Ricafort earlier said bank loans and domestic liquidity could still accelerate in the coming months amid measures to further reopen the economy towards greater normalcy.

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He said government measures such as the resumption of in-person schooling and further boosting of local and foreign tourism would support the rising demand for loans.

Outstanding loans to residents, net of RRPs, increased 13.4 percent in October after growing by 13.1 percent in the previous month.

Outstanding loans for production activities went up by 12.5 percent in October from a 12.3-percent expansion in September, driven by the growth in loans to key industries such as real estate activities (14.0 percent); manufacturing (17.7 percent); wholesale and retail trade, repair of motor vehicles and motorcycles (11.5 percent); financial and insurance activities (12.8 percent); information and communication (25.0 percent); and electricity, gas, steam and air conditioning supply (10.9 percent).

Consumer loans to residents climbed 22.6 percent in October from 20.6 percent in the previous month, on increased credit card loans, motor vehicle loans and salary-based general purpose consumption loans.

Outstanding loans to non-residents also grew by 33.0 percent in October, from a 26.6-percent expansion in September.

Preliminary data also showed that domestic liquidity or the money supply in the financial system grew by 5.4 percent year-on-year to about P15.4 trillion in October from the 5.2-percent growth in September.

M3 also increased 0.7 percent on a month-on-month seasonally adjusted basis,

Domestic claims went up by 11.0 percent year-on-year in October from 11.2 percent in the previous month on continued improvement in bank lending to the private sector.

Claims on the private sector grew by 10.4 percent in October, from 10.3 percent in September with the expansion in bank lending to non-financial private corporations and households.

Meanwhile, net claims on the central government rose 14.7 percent in October from 16.5 percent in September, owing to the sustained borrowing by the National Government.

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