January sees increase in bank lending pace

Despite elevated interest rates, bank lending growth climbed to an eight-month high of 7.8 percent in January, amid the continued recovery of the economy.

Preliminary data released by the Bangko Sentral ng Pilipinas (BSP) showed loans disbursed by universal and commercial banks reached P11.54 trillion in January, 7.8 percent higher compared to the P10.71 trillion recorded a year ago.

The January growth rate was faster than the revised 7.1 percent expansion seen in December 2023, and marked the second straight month that credit growth accelerated. It was also the highest since the 9.4 percent growth rate recorded in May last year.

Analysts believe the improvement in bank loans may be due to the further pickup and recovery of the economy. The Philippine economy expanded by 5.6 percent in 2023, slower than the 7.6 percent in 2022, but still one of the fastest-growing economies in the region.

Bank lending growth in the Philippines has remained steady and robust, even amid aggressive interest rate hikes by the Monetary Board, as businesses and consumers continue to borrow to cope with high prices.

Data showed loans to production activities increased by 5.9 percent to P9.92 trillion in January from P9.37 trillion a year ago. The growth in loans for production activities was driven by various industries such as real estate activities, wholesale and retail trade, transportation, and construction.

Consumer loans also jumped by 25.2 percent to P1.29 trillion in January, with credit card loans, auto loans, and salary-based general-purpose consumption loans all showing increases.

BSP Governor Eli Remolona Jr. stated that the central bank will ensure that liquidity and bank lending conditions remain in line with its price and financial stability objectives.

Separate BSP data showed that domestic liquidity (M3) grew slower by six percent to P17 trillion in January, with domestic claims quickening and net claims on the government climbing by 15.9 percent.

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