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Tuesday, March 5, 2024

Bank loans climbed 13.7% in November despite high interest

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Bank lending sustained its double-digit growth in November despite the rising interest rates and elevated inflation, data from the Bangko Sentral ng Pilipinas showed Wednesday.

The BSP said outstanding loans of universal and commercial banks, net of reverse repurchase placements with the BSP, rose 13.7 percent year-on-year in November, following a 13.9-percent increase in October.

“On a month-on-month seasonally-adjusted basis, outstanding universal and commercial bank loans, net of RRPs, rose by 0.3 percent,” the BSP said.

“[The] sustained growth in credit and domestic liquidity will continue to support economic activity and domestic demand. Looking ahead, the BSP will ensure that liquidity and lending dynamics remain consistent with its primary mandate of promoting price and financial stability,” the BSP said in a statement.

Outstanding loans to residents, net of RRPs, went up by 13.4 percent in November after increasing by a revised 13.3 percent in the previous month.

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Outstanding loans for production activities grew by 12.4 percent in November or at the same pace in October on sustained expansion in loans to key sectors including real estate activities (12.2 percent); manufacturing (15.6 percent); financial and insurance activities (13.1 percent); and information and communication (24.3 percent).

Consumer loans to residents climbed 24.1 percent in November, faster than the 22.6-percent rise in the previous month, driven by the year-on-year increase in credit card, motor vehicle and salary-based general purpose consumption loans.

Outstanding loans to non-residents grew by 24.8 percent in November after expanding by 33.0 percent in the previous month.

The Monetary Board, the policy-making body of Bangko Sentral ng Pilipinas, raised the benchmark interest rate on Dec. 15 by 50 basis points to a more than 14-year high of 5.5 percent to prevent the second-round effects of inflation. Inflation in November accelerated to a 14-year high of 8 percent and is expected to peak in December 2022.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the slight slowdown in bank lending was “partly due to the rising trend in US/global/ local interest rates, as well as higher inflation.”

“That led to higher borrowing and financing costs for consumers, businesses, industries, and other institutions that partly weighed/dragged demand for loans and credit,” Ricafort told Manila Standard.

BSP data also showed that domestic liquidity or the money supply circulating in the financial system grew by 5.4 percent year-on-year to about P15.6 trillion in November, or at the same rate of expansion in October. On a month-on-month seasonally-adjusted basis, M3 increased by 0.6 percent.

Domestic claims rose 10.8 percent year-on-year in November from 11.0 percent in the previous month with the steady pace of bank lending to the private sector.

Claims on the private sector grew by 10.4 percent in November from the same growth rate posted in October, due to the sustained expansion in bank lending to non-financial private corporations and households.

Net claims on the central government also rose 13.8 percent in November from 14.7 percent in October owing mainly to the borrowings by the government.

Net foreign assets in peso terms declined 1.8 percent in November from the 1.4-percent contraction in October. The NFA of banks fell mainly on account of higher bills payable.

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