BANK lending jumped by 10% in April, reflecting the rebound in economic activity as restrictions were eased alongside the steady decline in coronavirus disease 2019 (COVID-19) cases.
This was the fastest growth in bank lending in 23 months, or since the 11.2% in May 2020.
Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed outstanding loans of big banks expanded by 10.1% to P9.9 trillion in April from P8.99 trillion in the same month of 2021.
The growth in bank lending was faster than the 8.9% seen in March.
On a month-on-month seasonally adjusted basis, bank lending net of reverse repurchase (RRP) placements with the BSP inched up 0.9%.
Inclusive of RRP placements with the BSP, bank lending was 9.8% up in April.
“Credit conditions continue to improve as economic activity rebounds amid a manageable domestic COVID-19 caseload,” the BSP said in a statement.
Borrowings for production activities jumped by 10.3% to P8.74 trillion in April, fueled by double-digit expansion in loans for real estate (18.7%), manufacturing (12.4%); and information and communication (26.9%).
Consumer loans also rose by 6.7% to P879.39 billion, a faster pace than the 3.6% seen in March.
Credit card loans expanded by 16% in April, while salary-based general purpose consumption loans went up 2.2%. Motor vehicle loans dropped 3.1%.
“A steady improvement in overall credit activity and stable financial market conditions have allowed the BSP to continue rolling back its pandemic-induced liquidity interventions,” the central bank said.
The BSP said it will keep a close watch on “evolving credit and liquidity conditions to ensure that appropriate level of liquidity is available to nurture the momentum of economic recovery, while containing inflation pressures.”
The continued expansion of bank lending in April likely reflected some borrowers’ rush to secure financing in view of the increase in long-term interest rates locally and globally amid elevated inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail.
The central bank is likely to raise its key interest rate by another 25 basis points (bps) at its next policy meeting in June.
The BSP delivered its first interest rate hike since November 2018 when it raised its benchmark interest rates by 25 bps on May 19 as it tries to temper rising inflationary pressures.
The Monetary Board will have its next policy review on June 23.
MONEY SUPPLYAs lending increased, the BSP said M3 — which is considered as the broadest measure of liquidity in an economy — grew by 7.3% to P15.3 trillion in April. This was slower than the revised 7.7% growth in March.
On a month-on-month seasonally adjusted basis, the BSP said M3 was “broadly unchanged.”
“The continued expansion in domestic liquidity indicates that liquidity remains sufficient to sustain the economy on a firm recovery path. A strong rebound in economic activity has also allowed the BSP to gradually withdraw its extraordinary liquidity intervention,” the central bank said in a statement.
The BSP said domestic claims rose by 9% in April, higher than the revised 8.1% in March, thanks to improved bank lending to the private sector and increase in net claims on the central government.
“Claims on the private sector grew by 6.5% in April from 5.6% in March with increased bank lending to non-financial private corporations and households,” the central bank said.
“Meanwhile, net claims on the central government rose by 17.6% in April from 16.3% (revised) in March owing to the sustained borrowings by the National Government.”
Net foreign assets (NFA) in peso terms rose by 5.2% in April, from the revised 8.2% in the prior month.
“The slower expansion in the BSP’s NFA position reflected the decline in gross international reserves relative to the same period a year ago. Meanwhile, the NFA of banks continued to expand, albeit at a slower pace, on account of higher investments in marketable debt securities as well as loans and receivables with nonresident banks,” the BSP said. — Keisha B. Ta-asan