Loans swell at fastest pace in 2 yrs
Bank lending posted its fastest growth in two years to cross the P13-trillion mark in December, as the start of the interest rate-cutting cycle and the typical surge in economic activities during the holiday season boosted both consumer and business demand for loans.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that outstanding loans of big banks, excluding their lending with each other, expanded by 12.2 percent year-on-year to P13.14 trillion in the final month of 2024, beating the 11.1-percent growth in November.
That was the briskest pace of credit growth since December 2022. On a month-on-month basis, bank lending went up by 1.4 percent.
But despite recording such a level of loan growth, a separate BSP report showed that M3, the broadest measure of money supply in the economy, grew at a steady pace of 7.7 percent in December to P18.8 trillion.
Consumer, biz loans up
Broken down, credit extended to companies for various production activities rose by 10.8 percent in December to P11.22 trillion, accounting for the bulk of outstanding loans held by big banks.
Figures showed this was the highest growth in business loans in two years, driven by “sustained” increase in lending to firms engaged in wholesale and retail trade (10.1 percent), manufacturing (7.4 percent), financial and insurance activities (7.4 percent) and construction.
Meanwhile, consumer loans went up by 25 percent to P1.6 trillion in December, the best growth in seven months.
Such an uptick was driven by robust expansion in credit card borrowings, which went up by 29.4 percent to P934.56 billion following the usual surge in consumption during the Christmas shopping season.
In a commentary, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the ongoing easing cycle of the BSP might have helped boost bank lending activity.
As it is, 15 out of 16 economists polled by the Inquirer last week expected the powerful Monetary Board to slash the policy rate by a quarter point at its meeting today.
If realized, such a decision would bring the benchmark rate that banks use as a guide when pricing loans to 5.5 percent. It would also mark the fourth rate cut under the current easing cycle, which started in August last year.
The projected 25-basis-point cut today would also be one of the two quarter-point reductions that BSP Governor Eli Remolona Jr. sees for the whole 2025.
“Relatively benign inflation could justify further cuts in local policy rates that would lead to lower borrowing costs, though with some lag effects, going forward,” Ricafort said.
