Manila: Bank lending experienced a modest acceleration in growth during May, while domestic liquidity expanded by over 5 percent, as reported by the Bangko Sentral ng Pilipinas (BSP). Outstanding loans from universal and commercial banks (U/KBs) increased by 11.3 percent in May, up slightly from the 11.2 percent growth observed in April, according to preliminary data released on Monday.
According to Philippines News Agency, the growth in bank loans was primarily driven by increased lending to both businesses and individual consumers. The outstanding loans issued by U/KBs amounted to PHP13.37 billion in May, rising from USD13.25 billion in the previous month. While loans to residents expanded by 11.8 percent, there was a noted decline in loans to non-residents by 6.6 percent, which, however, was an improvement from a 10 percent decrease in April.
The report highlighted a slight easing in loans directed towards business activities, which grew by 10.2 percent in May compared to 10.3 percent in April. This was attributed to slower lending expansion in key industries such as real estate, wholesale and retail trade, motor vehicle repair, and transportation and storage. Notably, loans to the manufacturing sector saw a decline of 3 percent in June. On the consumer front, loans to residents, including those for cars, motorcycles, credit cards, and general-purpose salary loans, grew by 23.7 percent in May, down from 24 percent in April.
"The BSP monitors bank loans because they are a key transmission channel of monetary policy," the central bank stated. Meanwhile, domestic liquidity (M3), which encompasses all money in circulation, grew by 5.5 percent to reach PHP18.4 trillion in May, slightly lower than the 5.8 percent growth seen in April. M3 is considered a broad measure of money supply including currency, bank deposits, and other assets easily convertible to cash.
Claims on the domestic sector, comprising private and government entities, rose by 10.7 percent, down from 10.9 percent in April. Specifically, claims on the private sector increased by 10.9 percent, reflecting continued expansion in bank lending to non-financial private corporations and households. Net claims on the central government also rose by 9.1 percent, driven by higher government borrowings.
In terms of net foreign assets (NFA), there was a decrease of 4.6 percent in peso terms in May, compared to a minor 0.2-percent decline in April. The central bank's NFA fell by 4.4 percent, primarily due to the appreciation of the peso against the US dollar, while banks' NFA declined largely due to higher foreign currency-denominated bills payable.
"Looking ahead, the BSP will ensure that domestic liquidity and bank lending conditions remain aligned with its price and financial stability objectives," the BSP assured.
