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Philippines: Rate hike to temper loan growth — Fitch Ratings
MANILA, Philippines — The series of rate hikes by the Bangko Sentral ng Pilipinas may temper loan growth as higher inflation is expected to crimp consumer demand, according to global rating agency Fitch Ratings.
In a report, the debt watcher said the country’s credit growth would likely settle in the mid-teens this year from 19 percent last year.
Latest data from the BSP showed bank loans jumped, by nearly 20 percent to P7.75 trillion in end-July this year from P6.48 trillion in end-July last year.
Loans released for production activities grew faster at 19.7 percent to P6.86 trillion as of end-July from P5.73 trillion in the same period last year and accounted for 88.6 percent of the total loans disbursements.
Lending to the manufacturing sector picked up to 19 percent to P1.02 trillion, accounting for 13.2 percent of the total loans, while loans to the wholesale and retail trade as well as repair of motor vehicles and motorcycles increased faster at 25.6 percent to P1.07 trillion for a 13.9 percent share
On the other had, the growth in lending to the real estate sector eased by 15.9 percent to P1.31 trillion for a 16.9 percent share, while the amount disbursed to the electricity, gas, steam and airconditioning supply eased anew to 9.7 percent to P853.76 billion for an 11 percent share.
Furthermore, the BSP chief said the increase in loans for household consumption further slowed down to 16.9 percent in July as releases reached P615.35 billion from a year-ago level of P526.6 billion.
“We expect higher interest rates to temper loan growth, particularly as recent higher inflation may crimp consumer demand. Any moderation is likely to be modest,” Fitch said.
The debt watcher said interest rates are rising as domestic liquidity tightens, pointing to a less favorable environment for Philippine borrowers overall.
Source: https://www.philstar.com/business/2018/09/27/1854928/rate-hike-temper-loan-growth-fitch-ratings#jPcIsitjDTXRM9gE.99