Bank lending grows by 10.5%, slowest pace in 14 months

PHILIPPINE BANKS’ lending in September grew to its slowest pace in 14 months amid fewer loans to both residents and nonresidents, the Bangko Sentral ng Pilipinas (BSP) said.

Based on preliminary BSP data released late on Wednesday, universal and commercial banks’ outstanding loans, net of reverse repurchase agreements, stood at P13.704 trillion in September, rising by 10.5% from P12.401 trillion a year earlier.

This eased from the 11.2% growth in August and was the slowest in 14 months or since the 10.4% seen in July 2024.

Month on month, big banks’ loans went up by 0.3% on a seasonally adjusted basis.

Outstanding loans to residents amounted to P13.389 trillion in September, up by 10.9% year on year from P12.076 trillion. This was slower than the 11.6% expansion recorded in August.

Meanwhile, loans to nonresidents, which accounted for loans by big banks’ foreign currency deposit units, fell by an annual 2.9% to P315.214 billion in September. This was an improvement from the 5.9% decline posted in August.

Bank lending for production activities rose by 9.1% to P11.568 trillion in September, slightly slower than the 9.9% growth in August. This comprised the bulk or 84.4% of the overall loans during the month.

Broken down, loans extended to the electricity, gas, steam, and air-conditioning supply sector climbed by 27.1% year on year, followed by transportation and storage (15.4%); real estate activities (9.2%); wholesale and retail trade, repair of motor vehicles and motorcycles (9.1%); financial and insurance activities (8.8%); and information and communication (8.6%).

On the other hand, consumer loans to residents jumped by 23.5% to P1.82 trillion in September, slightly slower than the 23.9% in August.

Credit card loans jumped by 29.5% to P1.094 trillion, easing from 29.7% growth in the previous month. Loans for motor vehicles rose by 18.5% to P516.317 billion, slightly weaker than the 19.4% growth in August.

“The BSP monitors bank loans because they are a key transmission channel of monetary policy,” the central bank said in a statement. “Looking ahead, the BSP will ensure that domestic liquidity and bank lending conditions remain aligned with its price and financial stability objectives.”

9-MONTH HIGH MONEY SUPPLY
Meanwhile, domestic liquidity (M3) rose by 7.3% in September, the highest in nine months or since the 7.7% seen in December last year. This was also faster than the 6.6% growth in August.

Separate BSP data showed that M3 — a measure of the amount of money in the economy that includes currencies in circulation, bank deposits, and other financial assets easily convertible to cash — stood at P18.874 trillion in September.

On a seasonally adjusted basis, M3 expanded by 1.2% month on month.

Domestic claims increased by 10.3% year on year to P21.421 trillion, faster than the 9.8% growth in August.

Claims on the private sector grew by 10.3% to P13.786 trillion, slowing from 11.1% in August, “driven by the continued expansion in bank lending to nonfinancial private corporations and households.”

Meanwhile, higher borrowings drove net claims on the central government 10% higher to P5.679 trillion in September, picking up from 6.1% in August.

Claims on a sector refer to that sector’s liabilities to depository corporations such as banks and the central bank.

BSP data also showed that net foreign assets (NFA) in peso terms went up by an annual 3.3% year on year in September, slowing from the 4.8% logged in August.

NFAs reflect the difference between depository corporations’ claims and liabilities to nonresidents.

Broken down, the central bank’s NFA inched down by 0.1%, a reversal from the 0.7% growth in August.

On the other hand, banks’ NFA climbed by 40.1% year on year in September as it held more foreign currency-denominated debt instruments. However, growth was slightly slower than 45.1% in August.

“The BSP will continue to ensure that domestic liquidity conditions remain consistent with its price and financial stability objectives,” the central bank said. — K. K. Chan