Bank lending growth slows in February

Bank lending growth slowed in February, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

Outstanding loans of universal and commercial banks rose by 12.2% year-on-year to PHP 13.03 trillion in February from PHP 11.61 trillion in the same period in 2024. This was slower than the 12.8% expansion in January, which was the fastest in two years.

Year on year, the growth in lending was faster than the 8.7% increase in February 2024.

On a seasonally adjusted basis, big banks’ outstanding loans inched up by 0.6% month on month.

Central bank data showed outstanding loans to residents climbed by 12.6% to PHP 12.7 trillion in February, slower than the 13.3% growth in January.

Meanwhile, loans to nonresidents declined by 3.2% to PHP 324.82 billion in February, slightly better than the 3.5% decline in the previous month.

Outstanding loans to residents for production activities expanded by 11.2% to PHP 11.08 trillion last month, slower than 11.8% in January.

“The growth was driven largely by increased lending to key industries such as electricity, gas, steam and air-conditioning supply (21.5%); wholesale and retail trade, repair of motor vehicles and motorcycles (13.7%); manufacturing (0.9%); construction (12.7 %); and transportation and storage (20.6%),” the BSP said.

On the other hand, consumer loans jumped by 24.1% in February to PHP 1.62 trillion, slightly slower than 24.4% in the previous month.

BSP data showed credit card loans rose by an annual 28.9% to PHP 950.97 billion in February.

Loans for motor vehicles went up by 19.2% to PHP 470.13 billion in February, while salary-based general purpose consumption loans rose by 11.5% to PHP 158.16 billion.

“Loan growth still grew on a month-on-month basis. The year-on-year growth is still among the fastest in more than two years and also more than twice faster than GDP (gross domestic product) growth,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Bank lending’s continued expansion in February was also supported by lower borrowing costs, he added.

Since August last year, the central bank has brought down benchmark interest rates by a total of 75 basis points (bps) to 5.75%.

The Monetary Board kept benchmark rates unchanged at its Feb. 13 meeting.

For the next few months, Mr. Ricafort said the BSP’s further easing could lift demand for loans.

BSP Governor Eli M. Remolona, Jr. said last week that there is a “good chance” that the Monetary Board will cut rates by 25 bps at their April 10 review.

He said the BSP remains on an easing cycle and could reduce borrowing costs by as much as 75 bps this year, depending on data.

MONEY SUPPLY

Meanwhile, domestic liquidity (M3) grew by 6.3% in February, slower than the 6.8% expansion in January, preliminary BSP data showed.

M3 — which is considered as the broadest measure of liquidity in an economy — increased to PHP 17.98 trillion from PHP 16.92 trillion a year earlier.

Month on month, M3 dipped by 0.3% on a seasonally adjusted basis.

Data from the BSP showed domestic claims increased by 10.1% during the month, slower than 10.9% in January.

“Claims on the private sector grew by 12.3% in February from 13.1% in the previous month, driven by continued expansion in bank lending to nonfinancial private corporations and households,” the BSP said.

The growth in net claims on the central government eased to 5.9% in February from 7.4% in the previous month due to lower National Government borrowings.

Meanwhile, growth in net foreign assets (NFA) in peso terms quickened to 5.8% last month from 2.6% in January.

“The BSP’s NFA expanded by 8.9%, reflecting the increase in gross international reserves. Meanwhile, the NFA of banks declined, largely due to higher foreign currency-denominated bills and bonds payable,” it added. — Aaron Michael C. Sy, Reporter