PH bank lending and liquidity rise in April 2024

By Francis Allan L. Angelo

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) indicates a significant growth in bank lending and domestic liquidity in April, reflecting a positive trend in the country’s financial sector.

Outstanding loans of universal and commercial banks (U/KBs), excluding reverse repurchase (RRP) placements, expanded by 9.6 percent year-on-year in April, slightly up from 9.4 percent in March.

On a month-on-month seasonally-adjusted basis, these loans increased by 0.9 percent.

Loans to residents, net of RRPs, grew by 9.6 percent in April, marginally higher than the 9.5 percent growth in March. Loans to non-residents* surged by 10.8 percent, up from 9.1 percent in the previous month.

Loans for production activities rose by 7.8 percent in April, driven by increased lending to key sectors.

Notable increases were seen in real estate activities (11.0 percent), electricity, gas, steam, and air-conditioning supply (9.2 percent), wholesale and retail trade and repair of motor vehicles and motorcycles (7.6 percent), transportation and storage (21.8 percent), and construction (15.1 percent).

Consumer loans to residents continued their upward trend, growing by 25.3 percent in April, slightly down from 25.4 percent in March. This increase was largely due to higher credit card, motor vehicle, and salary-based general-purpose consumption loans.

Meanwhile, domestic liquidity (M3) grew by 5.6 percent year-on-year in April, reaching approximately ₱17.2 trillion, compared to a 5.7 percent increase in March.

On a month-on-month seasonally-adjusted basis, M3 increased by about 0.5 percent.

Domestic claims expanded by 10.6 percent year-on-year in April, down from a revised 10.9 percent in March.

Claims on the private sector grew by 10.8 percent, slightly lower than the revised 11.0 percent in March, driven by sustained bank lending to non-financial private corporations and households.

Net claims on the central government expanded by 13.9 percent, a decrease from the revised 15.1 percent, partly due to the decline in National Government deposits with the BSP.

Net foreign assets (NFA) in peso terms rose by 2.1 percent year-on-year in April, compared to 5.0 percent in March. The BSP’s NFA grew by 4.6 percent, while the NFA of banks contracted due to higher bills and bonds payable.

The growth in bank lending and liquidity highlights the resilience and ongoing recovery of the Philippine financial sector amid global economic uncertainties. The BSP’s monetary policies and initiatives have facilitated this expansion, supporting various sectors of the economy and enhancing overall financial stability.

The increase in lending to key industries and the rise in consumer loans reflect robust economic activity and consumer confidence. Meanwhile, the growth in domestic liquidity indicates adequate money supply to support economic activities, which is crucial for sustaining economic growth.

The BSP’s continued monitoring and adjustments to its monetary policies will be essential in maintaining financial stability and promoting sustainable economic growth in the coming months.

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*Outstanding loans to non-residents include loans by UKB’s foreign currency deposit units (FCDUs) to non-residents.