Bank lending grows 11.8% as liquidity rises in July

Outstanding loans from universal and commercial banks (U/KBs) to businesses and consumers expanded by 11.8 percent year-on-year in July, slower than the 12.1 percent growth recorded in June, according to preliminary Bangko Sentral ng Pilipinas (BSP) data.

After adjusting for seasonal factors, outstanding loans grew by 0.7 percent month-on-month in July.

Loans to residents increased by 12.4 percent in July from 12.6 percent in June, while loans to non-residents fell further by 8.1 percent compared with a 6.4-percent decline in June.

Lending to businesses rose by 10.8 percent in July from 11.1 percent in June, with growth recorded in real estate activities (10.7 percent), electricity, gas, steam, and air-conditioning supply (30.3 percent), wholesale and retail trade and repair of motor vehicles and motorcycles (8.5 percent), financial and insurance activities (13.1 percent), and information and communication (8.5 percent).

Consumer loans to residents, which include credit card, motor vehicle, and salary loans, expanded by 23.6 percent in July, slightly slower than the 24.0 percent growth in June.

The BSP said it monitors bank lending as a key channel of monetary policy and will ensure that liquidity and credit conditions remain consistent with its goals of price and financial stability.

Domestic liquidity, or M3, which measures the total money circulating in the economy, rose by 6.2 percent year-on-year to about PHP 18.6 trillion in July, faster than the revised 5.9 percent growth in June.

On a seasonally adjusted basis, M3 increased by 0.9 percent month-on-month in July.

Claims on the domestic sector, which include lending to both private firms and the government, grew by 10.5 percent in July from a revised 10.8 percent in June.

Private sector claims rose by 11.0 percent from 11.4 percent in the previous month, supported by continued bank lending to corporations and households.

Net claims on the central government increased by 7.1 percent from 7.7 percent in June as a result of higher state borrowings.

Net foreign assets in peso terms contracted by 0.6 percent in July from a 1.7 percent decline in June, as BSP reserves fell, though banks’ holdings of foreign currency debt instruments rose.

For ordinary Filipinos, higher lending activity means more access to credit for buying homes, vehicles, or starting businesses, while increased loans to industries help create jobs and sustain economic growth.

Growth in domestic liquidity ensures that money continues to circulate through the economy, keeping businesses funded and households supported, but the BSP must balance this with inflation control to prevent rising prices from eroding purchasing power.