Nov loan growth revs up to fastest pace in nearly 2 years
Bank lending posted its fastest growth in almost two years in November 2024 due to bigger appetite for business loans amid the ongoing rate-cutting cycle of the Bangko Sentral ng Pilipinas (BSP).
Preliminary data showed outstanding loans of big banks—excluding their lending with each other—expanded by 11.1 percent year-on-year in November to P12.68 trillion in November, beating the 10.6-percent loan growth in October, the BSP reported on Friday.
The credit expansion in November was the fastest since the 13.7 percent recorded in December 2022. Dissecting the BSP’s report, an uptick in demand for business loans offset the slower—but still strong—bank lending to consumers.
This, in turn, translated to higher money supply circulating in the economy. A separate BSP report showed that M3, a measure of domestic liquidity, grew by 7.7 percent to about P18.1 trillion in November from 5.4 percent in the previous month.
Business loans up
The central bank said loans to companies to fund various production activities went up by 9.8 percent to P10.81 trillion, the biggest gain in two months and surpassing the 9.1-percent expansion recorded in October.
Bank lending was notably brisk for firms engaged in wholesale and retail trade at 9.1 percent, as the start of the holiday season might have prompted these businesses to ramp up production to meet the typical surge in demand.
Credit growth was likewise strong for industries like electricity, gas, steam and air-conditioning supply (9.6 percent) and financial and insurance activities (4.4 percent).
Household borrowing
Meanwhile, bank lending to households grew by 23.3 percent in November to P1.54 trillion, slower than the 24 percent uptick in the preceding month. While the expansion was still relatively strong, figures showed this was the lowest consumer loan growth since October 2023.
The BSP reported that credit card loans grew at a slower pace of 26.5 percent from 27.7 percent before. Expansion of salary-based general consumption loans also eased to 15 percent from 18.4 percent previously.
As it is, credit growth is expected to further gain momentum in the coming months as the central bank proceeds with its easing cycle.
The BSP last year delivered a total of 75-basis point cut to the key rate that banks typically use as a guide when pricing loans.
And Governor Eli Remolona Jr. had hinted at additional easing moves for this year as financial conditions are still “somewhat tight,” even floating the possibility of another rate cut at the Feb. 20 meeting of the Monetary Board.
