Bank lending growth slowed to 2.8% in September

The Philippine banking sector posted its slowest growth in terms of outstanding loans in September this year on weak business environment and income prospects amid the lingering pandemic.

Data from the Bangko Sentral ng Pilipinas showed that the growth in outstanding loans of universal and commercial banks, net of reverse repurchase placements with the BSP, eased to 2.8 percent in September from 4.7 percent in August.

It also showed that on a month-on-month seasonally-adjusted basis, outstanding universal and commercial bank loans, net of RRPs, decreased by 1 percent.

"The general decline in bank lending growth partly reflects banks’ reduced tolerance for risk, decline in loan demand due, in turn, to weak business and income prospects  and observed shift by non-financial corporates to alternative sources of funds," the BSP said.

The growth in loans for production activities, net of RRPs, eased to 2.4 percent in September from 4.1 percent in August.  Outstanding loans to key sectors declined, particularly in manufacturing (-2.6 percent) as well as wholesale and retail trade and repair of motor vehicles and motorcycles (-3.4 percent).

Meanwhile, the following sectors contributed to the overall growth in production loans: real estate activities (7.3 percent); information and communication (9.7 percent); electricity, gas, steam, and air conditioning supply (3.0 percent).

Loans to households grew 10.2 percent in September, although this was slower than 12.9 percent in August on the continued slowdown in credit card and motor vehicle loans.

The BSP said its accommodative monetary policy stance, together with the government’s ongoing health and fiscal initiatives, remained crucial in supporting market sentiment and credit activity.

BSP reassured the public of its commitment to deploy a full range of instruments to ensure that domestic liquidity and credit remain adequate amid significant economic disruptions due to the health crisis.

Meanwhile, the growth of domestic liquidity or the money supply circulating in the financial system eased to 12.3 percent to about P13.5 trillion in September, slower than the revised 13.7-percent expansion in August. On a month-on-month seasonally-adjusted basis, M3 increased by 0.2 percent.

Topics: BSP , domestic liquidity , M3 , bank loans , September 2020
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