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Moody’s sees 5% credit growth in Philippines
Moody’s Investors Service forecasts a 5-percent credit growth in the Philippines this year but warned that further lockdowns are a key downside risk.
Moody’s analyst Joyce Ong said in a virtual briefing on Tuesday that credit growth in the country will likely remain moderated below pre-pandemic levels as businesses postpone expansion plans due to Covid-19 pandemic.
“In terms of credit growth prospects, it really depends on how quickly Philippines returned to a state of normalcy. And, at least for this year, we put out a report that we are expecting about 5 percent by the end of 2021,” she noted.
“But with the renewed lockdown in Metro Manila, I think there’s a high chance that the credit growth rate, at least for this year, will be below 5 percent perhaps flattish.”
In an effort to contain the highly transmissible Delta strain of Covid-19, the government last Friday announced a stricter lockdown or enhanced community quarantine in Metro Manila starting August 6 until August 20.
Ong went on to say that although credit growth has improved in recent months it still needs to be monitored to see if it can be sustained.
“We still need to monitor if people are basically normalized and go back to getting used to this kind of lockdown kind of day-to-day life, and whether if this will result in a higher level of spending and also high level of investments by the businesses themselves,” she pointed out.
Latest Bangko Sentral ng Pilipinas data showed a 2-percent drop in bank lending in June, down from a 4-percent plunge a month earlier. In contrast, commercial bank loans climbed by 1.1 percent month-on-month and seasonally adjusted.
Net of reverse repurchase, loans to locals fell by 1.4 percent while outstanding loans to nonresidents were lower by 19.7 percent.
The central bank said “concerns over the spread of new coronavirus variants continued to temper market sentiment and the outlook for economic recovery.”
Following a 9.2-percent reduction in May, consumer loans to residents slid by 8.6 percent in June as motor vehicle loans and salary-based consumption loans slipped even further.
Lending for production activities eased by 0.6 percent from the 2.9-percent contraction as outstanding loans to these sectors continued to drop: wholesale and retail trade and repair of motor vehicles and motorcycles (-6.2 percent) and manufacturing (-5.8 percent).
Meanwhile, the central bank said a rise in loans to key production sectors, such as real estate (4.8 percent), information and communication (9.1 percent), electricity, gas, steam, and air-conditioning supply (2.2 percent), and transportation and storage (6.8 percent), helped to offset the decline.
Source: https://www.manilatimes.net/2021/08/04/business/top-business/moodys-sees-5-credit-growth-in-ph/1809637