Bank lending accelerated in June, fastest in 4 months
Bank lending rose at the fastest pace in four months in June, fueled by strong business loan demand and sustained growth in consumer credit, as the Bangko Sentral ng Pilipinas (BSP) pressed ahead with monetary easing.
Outstanding loans issued by large banks—excluding interbank lending—rose 12.1 percent year-on-year to P13.55 trillion, according to preliminary BSP data. The June figure marked the strongest growth since February, when bank credit expanded by 12.2 percent.
At the same time, M3—the broadest measure of money supply in the economy—went up by 6.3 percent to about P18.6 trillion during the month, picking up from May’s 5.5 percent expansion.
The BSP monitors bank loans because they are a key transmission channel of monetary policy. In June, the powerful Monetary Board (MB) trimmed the policy rate, which banks use as a guide when pricing loans, by a quarter point to 5.25 percent to support economic growth.
Rate reductions
It was a widely expected decision that brought the cumulative rate reductions under the current easing cycle to 1.25 percentage points. Governor Eli Remolona Jr. earlier said the MB may deliver two more cuts before year-end, with the next decision due on August 28. Additional meetings are set for October and December.
Broken down, loans extended to businesses to fund various production activities expanded by 11.1 percent to P11.49 trillion—also the fastest pace of growth in four months or since February’s clip of 11.2 percent.
The BSP said this performance was driven by increased lending to firms engaged in real estate activities (+9.9 percent); electricity, gas, steam and air conditioning supply (+29.2 percent); financial and insurance activities (+12.0 percent); and transportation and storage (+15.9 percent).
Meanwhile, retail loans jumped by 24 percent to P1.74 trillion, the strongest expansion in two months, due to growth in credit card debts (+29.9 percent), motor vehicle loans (+18.4 percent) and salary-based consumption loans (8.3 percent).
“Looking ahead, the BSP will ensure that domestic liquidity and bank lending conditions remain consistent with its price and financial stability mandates,” the central bank said.
