Bank loans grew at a faster pace of 12 percent in June compared to the 10.7-percent expansion in May, on higher demand for credit as the economy recovers from the pandemic and returns to normalcy, the Bangko Sentral ng Pilipinas said over the weekend.
Preliminary data showed that on a month-on-month seasonally-adjusted basis, outstanding loans of universal and commercial banks, net of reverse repurchase placements with the BSP, expanded 2.3 percent.
Outstanding loans to residents, net of RRPs, increased 11.9 percent in June from 10.6 percent in the previous month.
Outstanding loans for production activities grew 12 percent in June, faster than 10.8 percent in May on increased credit for real estate activities (18.1 percent); manufacturing (17.5 percent); information and communication (29.7 percent); and wholesale and retail trade, repair of motor vehicles and motorcycles (8.0 percent).
“The sustained growth in credit will support the momentum of economic recovery amid the ongoing withdrawal of monetary accommodation. Going forward, the BSP will continue to ensure that liquidity and credit dynamics remain consistent with the BSP’s price and financial stability objectives,” the BSP said.
It said the growth in consumer loans to residents accelerated to 10.6 percent in June from 8.5 percent in May, driven by the year-on-year rise in credit card loans and salary-based general purpose consumption loans.
Outstanding loans to non-residents rose at a faster rate of 16.3 percent in June from 12.5 percent in the previous month.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the 12-percent year-on-year growth in bank lending in June was the fastest in more than two years or since April 2020. It reached P10.192 trillion, or equivalent to more than 50 percent of GDP.
Ricafort said bank lending expanded despite the local policy rate hikes of 25 basis points on May 19, 25 bps on June 23 and the surprise 75 bps increase on July 14 which brought the borrowing rate to 3.25 percent from the record low of 2 percent before May 19.
“Loan growth again posted a positive year-on-year growth for the 11th consecutive month and picked up for the 14th straight month; as the economy re-opened further towards greater normalcy, with Metro Manila and other areas at the lowest Alert Level 1 since March 2022 and more areas eased to Alert Level 1,” Ricafort said.
He said bank loans and domestic liquidity growth could still fundamentally accelerate amid measures to further re-open the economy towards greater normalcy.