Bank lending in June nears pre-pandemic levels–report

The Bangko Sentral ng Pilipinas (BSP) reported a 12 percent increase in bank lending in June this year, as the sector continues to recover from the ill-effects of the pandemic.

Data showed that the outstanding loans of universal and commercial banks grew at a faster pace of 12 percent year-on-year in June, relative to the 10.7-percent uptick in May.

Bank lending first collapsed into the contraction territory in December 2020 as the restrictions brought about by the pandemic affected the local banking industry. The contraction persisted amid the sustained all-time low monetary policy rate in place.

In comparison, bank lending grew 13.6 percent before the onslaught of the global health crisis in March 2020.

“The sustained growth in credit will support the momentum of economic recovery amid the ongoing withdrawal of monetary accommodation,” the BSP said in a statement.

“The BSP will continue to ensure that liquidity and credit dynamics remain consistent with the BSP’s price and financial stability objectives,” it added.

Broken down, outstanding loans to residents increased by 11.9 percent in June from 10.6 percent in the previous month.

Outstanding loans for production activities grew by 12 percent in June from 10.8 percent in May due mainly to the rise in credit for real estate activities at 18.1 percent; manufacturing at 17.5 percent; information and communication at 29.7 percent; and wholesale and retail trade, repair of motor vehicles and motorcycles at 8 percent.

Growth in consumer loans to residents accelerated to 10.6 percent in June from 8.5 percent in May, driven by the year-on-year rise in credit card loans and salary-based general purpose consumption loans.

Meanwhile, outstanding loans to non-residents rose at a faster rate of 16.3 percent in June from 12.5 percent in the previous month.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said bank lending could accelerate further in the coming months as the country continues to wotrk its way towards normalcy.

A risk factor, however, according to Ricafort, is higher commodity prices.