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BSP: Bank loans rose at faster pace in October despite high interest rates

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Bank loans grew faster in October on sustained demand for credit from the different sectors of the economy, the Bangko Sentral ng Pilipinas (BSP) said Wednesday.

Preliminary data showed that outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the BSP, went up by 7.1 percent year-on-year in October, slightly faster than the 6.5-percent expansion in September.

The BSP said that on a month-on-month seasonally-adjusted basis, outstanding universal and commercial bank loans, net of RRPs, went up by 1.4 percent.

The growth defied the rising interest rates meant to control the elevated inflation. The BSP’s Monetary Board decided to take off-cycle action on Oct. 26 to raise the overnight borrowing rate by 25 basis points to 6.50 percent.

Outstanding loans to residents, net of RRPs, increased by 7.5 percent in October, also faster than 6.6 percent in the previous month.

Outstanding loans for production activities grew by 5.9 percent in October, compared with 4.9 percent in September, driven by the growth in lending to key industries such as real estate activities (8.3 percent); electricity, gas, steam, and airconditioning supply (10.2 percent); and wholesale and retail trade, and repair of motor vehicles and motorcycles (9.3 percent).

Meanwhile, consumer loans to residents grew by 22.8 percent in October, slower than 23.5 percent in September mainly due to the sustained growth in credit card loans and faster increase in motor vehicle loans.

Outstanding loans to non-residents fell by 5.1 percent in October from an increase of 0.3 percent in September.

Meanwhile, domestic liquidity grew by 8.2 percent year-on-year to about P16.7 trillion in October. This is the same rate of expansion recorded in September. On a month-on-month seasonally-adjusted basis, M3 increased by about 0.7 percent.

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