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Commercial bank loans declined 2.4% in January on weak demand

The Bangko Sentral ng Pilipinas said Tuesday bank loans declined further in January as demand remained weak amid the prolonged impact of the global health crisis.

Data showed outstanding loans of universal and commercial banks, net of reverse repurchase placements with the BSP, decreased 2.4 percent year-on-year in January, following a 0.7-percent slump in December.

The BSP said outstanding universal and commercial bank loans, net of RRPs, fell 0.3 percent on a month-on-month seasonally-adjusted basis.

Outstanding loans to residents, net of RRPs, recorded a slight decline of 1.7 percent, while outstanding loans to non-residents also decreased by 21.6 percent.

“In general, credit activity remained soft due to weak demand as banks continued to be risk-averse on concerns over asset quality and profitability,” the BSP said in a statement.

Consumer loans contracted by 6.9 percent in January after increasing by 4.1 percent in December 2020 due to the decline in credit card and motor vehicle loans and slowdown in salary-based consumption loans during the month.

Meanwhile, outstanding loans to key sectors continued to decline, particularly to wholesale and retail trade and repair of motor vehicles and motorcycles (-6.9 percent), manufacturing (-7.4 percent) and financial and insurance activities (-6.3 percent).

The contraction was tempered by sustained growth in loans to some major production sectors, specifically to real estate activities (5.7 percent), transportation and storage (6.6 percent), construction (4.3 percent), and electricity, gas, steam, and air conditioning supply (3.5 percent).

Loans to other production sectors reflected marginal growth following the reopening of business activities especially human health and social work activities (11.0 percent) and accommodation and food services activities (4.0 percent).

Overall, outstanding loans for production activities, net of RRPs, went down by 1.1 percent in January from a 0.4-percent decline in December.

Accompanying data also showed that domestic liquidity growth eased to 9 percent in January from the 9.5-percent expansion in December 2020.

This brought domestic liquidity or the money supply circulating in the financial system as of January to about P14 trillion.

The BSP said that on a month-on-month seasonally-adjusted basis, domestic liquidity or M3 increased by 0.7 percent.

Topics: commercial bank loans , Bangko Sentral ng Pilipinas , BSP
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