Bank lending surges to highest level since 2022

Bank lending in the Philippines surged by nearly 13 percent in January, marking its highest growth rate since December 2022, while domestic liquidity also continued to expand, according to data from the Bangko Sentral ng Pilipinas (BSP).

Preliminary BSP data released Thursday showed that loans extended by universal and commercial banks (U/KBs) grew by 12.8 percent in January, surpassing the 12.2 percent increase recorded in December 2023. 

This was the fastest growth rate since the 13.7 percent logged in December 2022. Outstanding loans from U/KBs reached P13.01 trillion in January, up from P11.54 trillion a year earlier.

Credit to production activities rose by 11.8 percent, compared to 10.8 percent in December, driven by sustained lending to key industries. 

The BSP noted significant increases in loans for real estate (9.8 percent); electricity, gas, steam, and air-conditioning supply (23.6 percent); wholesale and retail trade, repair of motor vehicles and motorcycles (13.9 percent); transportation and storage (21.4 percent); and manufacturing (4.6 percent).

Consumer loans to residents also grew by 24.4 percent, slightly lower than the 25 percent rise recorded in December. The BSP attributed this to increased credit card and motor vehicle loans.

In a separate statement, the central bank reported that domestic liquidity (M3), which measures the money supply in the local economy, expanded by 6.8 percent to PHP18.1 trillion in January. 

This, however, was slower than the 7.7 percent increase seen in December 2023. M3 includes currency in circulation, demand and savings deposits, time deposits, and deposit substitutes such as promissory notes and commercial papers.

The BSP said domestic claims grew by 10.9 percent in January from 10.4 percent in the previous month, with claims on the private sector rising by 13.1 percent from 12.2 percent. 

This was attributed to the continued expansion of bank lending to non-financial private corporations and households. Net claims on the central government also rose by 7.4 percent from 7.2 percent due to higher borrowings by the national government.

Meanwhile, net foreign assets (NFA) in peso terms increased by 2.6 percent, with the BSP’s NFA expanding by 4.2 percent. However, the NFA of banks declined, mainly due to higher foreign currency-denominated bills and bonds payable.

“The BSP will continue to ensure that domestic liquidity conditions remain consistent with the prevailing stance of monetary policy, in line with its price and financial stability objectives,” the central bank said.