Bank lending declines in December

Preliminary data show that outstanding loans of universal and commercial banks (U/KBs), net of reverse repurchase (RRP) placements with the Bangko Sentral ng Pilipinas (BSP), declined by 0.7% in December after increasing by 0.5% in November.

On a month-on-month seasonally-adjusted basis, outstanding universal and commercial bank loans, net of RRPs, was broadly steady at about 0.1%.

Loans to residents, net of RRPs, registered a marginal increase.

However, this was more than offset by the 20.3% drop in outstanding loans to non-residents. Overall, lending remained tepid as banks continued to be risk-averse amid the ongoing pandemic.

Under loans to residents, consumer loans grew at slower a rate of 4.4% in December from 7.1% in November due to the slowdown in credit card loans, motor vehicle loans, and salary-based consumption loans during the month.

Meanwhile, loans to some major production sectors expanded, particularly to real estate activities (5.3%), electricity, gas, steam, and air conditioning supply (3.8%), human health and social work activities (49.2%), information and communication (5.3%), and transportation and storage (5.0%).

However, outstanding loans to key sectors continued to decrease, especially to wholesale and retail trade and repair of motor vehicles and motorcycles (-6.8%), manufacturing (-5.2%), as well as financial and insurance activities (-4.6%).

On balance, outstanding loans for production activities, net of RRPs, went down by 0.4% in December following the 0.7% growth in November.

The BSP’s monetary policy stance remains accommodative in support of credit demand as a complement to fiscal initiatives which remain crucial in ensuring public welfare and directly supporting spending by firms and households.

Looking ahead, the BSP reassures the public of its commitment to deploy its full range of monetary instruments as necessary to ensure ample liquidity and credit, in line with its mandate to maintain price and financial stability.