Big banks’ outstanding loans grew by 8.6 percent year-on-year in February, the highest in the last nine months amid sustained demand in both household and business loans, according to Bangko Sentral ng Pilipinas (BSP) data.
Preliminary data showed that the country’s universal and commercial banks, net of reverse repurchase (RRP) placements with the BSP, registered a higher bank lending growth in February compared to January of 7.8 percent.
The latest bank lending data of 8.6 percent is, however, lower compared to same period last year of 10 percent growth. The last time bank lending growth was near this level was in May 2023 at 9.4 percent.
On a month-on-month seasonally-adjusted basis, outstanding universal and commercial bank loans, net of RRPs, rose by 0.7 percent, said the BSP.
In a separate data, the financial system’s domestic liquidity or M3 grew by five percent year-on-year to P16.914 trillion in February. On a month-on-month seasonally-adjusted basis, M3 decreased by 0.2 percent.
Meanwhile, outstanding loans for production activities went up by 6.8 percent to P9.969 trillion in February from 5.9 percent in January.
The BSP said this was driven by the increase in lending to key sectors such as real estate activities which increased by 11.6 percent to P2.377 trillion; electricity, gas, steam, and airconditioning supply, up by 11.2 percent to P1.278 trillion; wholesale and retail trade, and repair of motor vehicles and motorcycles which grew by 7.1 percent to P1.305 trillion; transportation and storage, 21.1 percent to P406 billion; and manufacturing, up 5.9 percent to P1.239 trillion.
Data also showed that consumer loans continued to expand by 25.2 percent to P1.305 trillion in February, the same rate as in January, on the back of higher credit card and motor vehicle loans.
Credit card loans grew by 30.1 percent to P737.934 billion; motor vehicle loans increased by 19.1 percent to P394.401 billion; while salary-based general purpose consumption loan grew by 16 percent to P141.870 billion.
The BSP said it will “ensure that liquidity and bank lending conditions remain consistent with its price and financial stability objectives.”
As for money supply, the central bank said domestic claims went up by 9.5 percent year-on-year in February, lower compared to 9.9 percent in January.
The BSP also reported that that claims on the private sector grew by 10.1 percent from 8.9 in January with the sustained expansion in bank lending to non-financial private corporations and households.
Net claims on the central government, on the other hand, rose by 12.1 percent compared to 15.8 percent in January “due in part to the sustained borrowings of the National Government.”
Net foreign assets (NFA) in peso terms rose by 3.6 percent year-on-year in February from 4.4 percent in January. “The BSP’s NFA grew by 5.9 percent. (while) NFA of banks contracted on account of lower interbank loans receivables,” said the BSP.
The BSP said it will strive to keep domestic liquidity conditions “consistent with the prevailing stance of monetary policy.”
Based on the most recent Senior Bank Loan Officers’ Survey (SLOS) of the BSP, banks’ lending standards have not changed because of the stable economic outlook.
For the fourth quarter 2023 survey, about 88 percent of the 61 surveyed banks did not amend or change their lending standards for loans to enterprises.
For the first quarter this year, the central bank said that using both the modal and diffusion index methods, banks expect a generally unchanged credit standards for enterprises because of their continued “sustained tolerance for risk and stable outlook for the overall economy as well as for industries and firms, along with the steady profiles of borrowers.”
The survey said 70.6 percent of surveyed banks also kept their lending standards unchanged for household loans.
For the first quarter this year, banks do not expect to make changes in their credit standards for households due to expectations of improved profitability of their portfolios, higher risk tolerance, and more favorable economic outlook.