LOANS DISBURSED by big banks slowed for a third consecutive month in February, reflecting the impact of rising borrowing costs and base effects.
Outstanding loans by big banks grew by 10% to P10.69 trillion in February from P9.72 trillion a year earlier, preliminary data from the Bangko Sentral ng Pilipinas (BSP) released late on Friday showed.
The loan growth in February is a tad weaker than the 10.4% growth in January. This is also the slowest credit growth in 11 months or since the 8.9% print in March 2022.
Month on month, outstanding universal and commercial bank loans, net of reverse repurchase placements (RRPs), eased slightly by 0.2%, the BSP said.
“Sustained credit and ample liquidity will continue to support robust domestic demand,” the central bank said in a statement.
Borrowings to residents, net of RRPs, jumped by 9.9% in February, slowing from the 10.2% growth in January.
Lending for production activities rose by 8.7% in February, slightly lower than the 9.2% expansion in the prior month.
This was driven by faster growth in loans for key sectors such real estate activities (3.8% in February from 3.5% in January), financial and insurance activities (12.5% from 5.6%), mining and quarrying (13.4% from 4.8%), and financial and insurance activities (12.5% from 5.6%).
Slower growth was seen in loans for manufacturing (8.3% in February from 10.5% in January), wholesale and retail trade, repair of motor vehicles and motorcycles (9.2% from 10.4%), information and communication (18.6% from 21.4%), and manufacturing (8.3% from 10.5%).
BSP data also showed a decline in loans for accommodation and food services (-3.4%), and education (-5.8%).
Meanwhile, consumer loans climbed by 21.2% in February, a tad faster than the 20.3% growth in January.
Credit card loans grew by 29.4% in February, slower than the 30.7% in January. On the other hand, salary-based general purpose consumption loans grew by 69.3%, faster than the 67% in the prior month.
Borrowings for motor vehicles contracted by -1.3%, improving from the -4.4% seen in January.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said slower lending growth may be due to the rising interest rates and higher inflation. As a result, consumers, businesses, and other institutions now face bigger borrowing costs.
To curb inflation, the central bank has raised borrowing costs by 425 basis points (bps) since May last year. This brought the benchmark rate to 6.25% — the highest in nearly 16 years.
Mr. Ricafort also noted the easing credit growth may be due to “some normalization of the base or denominator from lower base effects” in 2021.
M3 SLOWS FURTHER
Despite slower lending growth, money supply expanded by 6% year on year to P16.1 trillion in February from the revised 5.6% rise in January.
Money supply, or M3, is considered as the broadest measure of liquidity in an economy.
Month on month, M3 rose 0.7%, the BSP said in a separate statement.
In February, domestic claims rose 11.6%, slightly faster than the revised 11.4% in January.
Net borrowings of the central government expanded by 17.4%, quickening from the 16.5% rise in the prior month.
Net claims on the central government increased by 17.4% in February, faster than the 16.5% in January, Claims on the private sector jumped by 9.9%%, a tad quicker than January’s revised 10.7%.
Meanwhile, net foreign assets (NFA) declined by 3.1% in February, worsening from the 1% contraction in January.
“The NFA of banks declined mainly on account of higher bills payable. Similarly, the BSP’s NFA position fell by 2.3% in February,” the BSP said.
“Looking ahead, the BSP will continue to ensure that domestic liquidity conditions remain consistent with the prevailing stance of monetary policy in keeping with the BSP’s price and financial stability objectives.” — Keisha B. Ta-asan