REUTERS

CREDIT GROWTH in the Philippines could see a declining trend in the coming months, Bank of America (BofA) Global Research said on Monday.

BofA Global Research said in a report that while the Philippines has seen “faster recovery” in credit growth, it still shows a declining trend due to external factors.

Based on its Association of Southeast Asian Nations (ASEAN) Credit Growth Indicators, the Philippines was the only one to show a declining trend among five countries.

The indicators aim to “identify directional trends and key turning points for credit growth across each of the ASEAN-5 countries.” It also helps “gauge how banks’ loan growth is likely to shape up over the next one to two quarters.”

“Directional trend remains on a declining trend, unchanged due to decrease in import growth, auto sales and number of visitors. But actual credit growth has been recovering led by the return of capex (capital expenditures) spending,” it said.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed outstanding loans issued by big banks jumped by 9.4% in March from 8.6% in February.

Loans released by big banks rose to P11.8 trillion as of end-March from P10.8 trillion in the same period a year ago.

Meanwhile, the report showed that Singapore, Malaysia, Indonesia and Thailand all posted flat trends.

“This suggests that credit growth in these countries is likely to remain stable around current levels after seeing some recovery post-COVID,” it added.

BofA Global Research said it expects “tepid” credit growth in the region amid a weak economic environment.

“Our economists expect a bumpy road ahead in 2024: ASEAN-6 is forecast to grow its GDP (gross domestic product) at a below trend pace in 2024 on account of a patchy near-term exports outlook and uneven recovery in tourism,” it said.

The Philippine government is targeting 6-7% GDP growth this year. In the first quarter, the economy grew by 5.7%, better than the 5.5% a quarter prior but slower than the 6.4% in the year earlier.

BofA Global Research also noted upside risks to inflation in the region, such as high food and energy costs, imported inflation and subsidy removals.

In the Philippines, headline inflation accelerated for a third straight month to 3.8% in April.

The BSP expects inflation to settle at 3.5% this year. — Luisa Maria Jacinta C. Jocson

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