Bank lending rose 1.3% year-on-year in August, ending an eight-month contraction with the deployment of more COVID-19 vaccines and the lifting of stricter lockdowns in major cities.
Big bank loans outstanding, net of reverse repurchase agreements (RRPs) with the BSP, reversed a 0.7% decline in July.
This is the first reported increase in outstanding loans from universal and commercial banks after eight consecutive months of contractions amid improving sentiment driven by continued rollout of COVID-19 vaccines and gradual easing quarantine restrictions, “BSP Governor Benjamin E. Diokno said in his weekly online” GBED Talks “.
At the same time, domestic liquidity or M3 in August increased 6.9 percent year-on-year to 14.4 trillion pesos, faster than the 5.9 percent growth in July.
On a monthly, seasonally adjusted basis, M3 increased by 1.2%. Bank loans also increased 1.1% net of RRPs on a monthly basis.
Bank credit improved mainly due to the increase in loans to production activities which rose 3.1% in August against 0.8% in the previous month. BSP said the expansion was driven by growth in loans for real estate activities, which rose 7.2% year-on-year.
Information and communications loans also increased by 20.3 percent; three percent manufacturing; professional, scientific and technical activities 89.8%; and transportation and storage 9.5 percent.
The central bank noted that consumer loans to residents have remained low due to the continued decline in auto loans and credit cards. It contracted 8.1% in August against a drop of 8.2% in July.
BSP data also showed that outstanding loans to residents, net of RRPs, increased 2% in August after declining 0.1% in July, while outstanding loans to non-residents increased by 2% in August. declined to a lower rate of 16.6% after declining 17.4% the previous month. .
The BSP said that with the government’s fiscal and health interventions, “the prevailing accommodative monetary policy should help boost domestic demand and market confidence to support economic activity.”
On domestic liquidity, the BSP said it would “keep a firm hand on its policy levers in support of the national government’s ongoing initiatives to allow the momentum of economic recovery to gain more weight. “.
Domestic claims in August rose 6.7 percent year-on-year from 4.5 percent in July as net claims on the central government expanded and bank lending to the private sector improved. Net claims on the central government increased 23.5% in August while claims on the private sector rose 2.3%.
Bank loans first declined in December 2020. The last time bank loans were taken out before December of last year was in the third quarter of 2006.
SUBSCRIBE TO THE DAILY NEWSLETTER
CLICK HERE TO REGISTER