Bank lending growth eases in April

Preliminary data show that outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the Bangko Sentral ng Pilipinas (BSP), managed to post a growth of 12.7 percent in April, though slower than the 13.6-percent (revised) expansion in March. On a month-on-month seasonally-adjusted basis, commercial bank loans net of RRPs grew by 0.7 percent.

The deceleration reflects in part constrained economic activity following the Luzon-wide lockdown to contain COVID-19 outbreak.

Loans for production activities net of RRPs expanded at a rate of 11.1 percent in April, lower than the reported growth in the previous month at 11.6 percent (revised). The sustained increase in production loans was driven primarily by lending to the following sectors: real estate activities (20.8 percent); financial and insurance activities (13.9 percent); electricity, gas, steam and air conditioning supply (11.2 percent); information and communication (29.4 percent); and transportation and storage (20.8 percent).

Bank lending to other sectors also increased during the month, except for mining and quarrying (-5.3 percent), professional, scientific, and technical services (-18.4 percent), and manufacturing (-1.3 percent).

Similarly, growth in loans for household consumption slowed down to 33.3 percent in April compared to 36.5 percent (revised) in March due to the slower expansion in credit card and motor vehicle loans during the month.

Domestic liquidity conditions have stabilized with the implementation of various liquidity-enhancing measures by the BSP. Moreover, the BSP’s various regulatory relief measures should help reinforce banks’ capacity for sustained lending, especially to affected households and businesses. The BSP expects credit activity to pick up in the coming months, as economic activity resumes with the gradual reopening of the economy.

Going forward, the BSP will remain vigilant in monitoring liquidity and credit dynamics amid significant disruptions to economic activity.

The BSP reassures the public of its commitment to deploy its full range of instruments to ensure that domestic liquidity and credit remain adequate amid the ongoing coronavirus pandemic. (BSP)