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Philippines: Credit growth slows in May
MANILA, Philippines — Credit growth slowed down for the second straight month in May as the government extended the enhanced community quarantine to limit the spread of COVID-19, according to the Bangko Sentral ng Pilipinas (BSP).
BSP Governor Benjamin Diokno said preliminary data showed loans extended by universal and commercial banks increased by 11.6 percent in May, slower than the 12.7 percent recorded in April.
“The deceleration reflects in part constrained economic activity following the imposition of quarantine measures to contain the COVID-19 outbreak,” Diokno said.
Malacañang placed the entire Luzon under enhanced community quarantine in the middle of March but was extended several times or until the end of May. The lockdown was eased starting June as the National Capital Region (NCR) shifted to general community quarantine to help jumpstart the economy.
“Amid the challenge of keeping credit flowing to affected businesses and households, the BSP has adopted a range of measures to support bank lending, including a further reduction of the policy rate to complement the various liquidity-enhancing and regulatory measures by the BSP,” Diokno said.
The BSP has undertaken COVID-19 measures including slashing interest rates by 175 basis points to a record low of 2.25 percent, including the surprise 50 basis points cut on June 25.
The central bank also lowered the reserve requirement ratio for big banks by 200 basis points to 12 percent on March 30 as part of Diokno’s commitment to bring down the level of deposits banks are required to keep with the BSP to single digit levels by 2023.
Preliminary data released yesterday showed loan disbursements of big banks amounted to P9.39 trillion as of end-May or about P950 billion higher than the P8.44 trillion a year ago.
Lending for production activities slowed to a single-digit level of 9.8 percent to P8.17 trillion in May from P7.44 trillion in the same month last year. The sector accounted for 87.1 percent of the total loans disbursed by big banks.
Source: https://www.philstar.com/business/2020/07/08/2026326/credit-growth-slows-may