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Philippines: Credit growth picks up to 13.4% in September
MANILA, Philippines — Despite the series of interest rate hikes, credit growth accelerated further to the fastest pace in more than two years at 13.4 percent in September from 12.2 percent in August due to higher loan demand from both corporate and household borrowers, according to the Bangko Sentral ng Pilipinas (BSP).
Based on BSP data, loans disbursed by big banks reached P10.49 trillion in end-September, P1.24 trillion higher than P9.25 trillion a year ago.
BSP Governor Felipe Medalla attributed the steady rise in credit growth to the further reopening of the economy with the lifting of strict COVID quarantine and lockdown protocols.
“The continued expansion in lending activity and ample liquidity will support the recovery of economic activity and domestic demand. Looking ahead, the BSP will ensure that liquidity and lending conditions remain consistent with its price and financial stability mandates,” Medalla said.
Bank lending has been accelerating for the past 14 months or since August last year after contracting for eight straight months between December 2020 and July 2021 due to the impact of the pandemic.
The 13.4 percent growth booked in September was the fastest since the 13.6 percent recorded in March 2020, when the government started imposing a strict COVID lockdown.
Data from the central bank showed loans to production activities went up by 12.3 percent to P9.2 trillion in September from P8.19 trillion in the same month last year and accounted for 87.7 percent of the total loans disbursement.
The real estate sector posted a faster 16.3 percent increase to P2.12 trillion, followed by the manufacturing sector with a 16.2 percent growth to P1.22 trillion as well as wholesale and retail trade, repair of motor vehicles and motorcycles with a 10.8 percent increase to P1.2 trillion.
Likewise, loans extended to the electricity, gas, steam and air-conditioning supply sector grew by 8.5 percent to P1.13 trillion.
Medalla also reported a 20.5 percent jump in consumer loans to P965.99 billion.
The BSP chief said credit card loans surged by 26.1 percent to P507.42 billion, while auto loans inched up by 4.3 percent to P324.12 billion.
Likewise, salary-based general purpose loans soared by 56.8 percent to P117.39 billion for a 1.1 percent share.
Since the liftoff that started last May 19, the BSP has raised interest rates by 225 basis points, bringing the reverse repurchase rate to 4.25 percent from an all-time low of two percent.
Medalla stressed the need for the central bank to match the aggressive rate hikes of the US Federal Reserve point by point due to the current inflation and foreign exchange situation.
The BSP chief signaled that the rate-setting body might deliver another huge 75-basis-point increase on Nov. 17, matching the increase of 75 basis points during a surprise off-cycle meeting last July 14.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said that the strong credit growth has become one of the bright spots in the Philippine economy and also fundamentally supports faster gross domestic product expansion going forward.
Source: https://www.philstar.com/business/2022/11/01/2220588/credit-growth-picks-134-september