According to preliminary data released today by the Bangko Sentral ng Pilipinas (BSP), despite a slight moderation from the previous month, the Philippine banking sector continued its strong lending performance in March, with outstanding loans from universal and commercial banks (U/KBs) expanding by a significant 11.8 percent year-on-year.
Facade shot of the BSP office in Manila
This growth, net of reverse repurchase (RRP) placements with the Bangko Sentral ng Pilipinas (BSP), underscores the sustained demand for credit and ongoing economic activity within the country.
On a month-on-month basis, lending also showed positive momentum, rising by 0.9 percent after seasonal adjustments, indicating a steady flow of credit into the economy.
While the overall growth remains robust, the data reveals a nuanced picture across different sectors. Loans extended to key industries, which are crucial drivers of economic expansion, experienced a slightly slower pace of growth in March.
These sectors include real estate activities (9.6 percent), wholesale and retail trade (11.6 percent), information and communication (8.9 percent), and construction (1.8 percent). This moderation in lending to production-related activities warrants close monitoring for its potential implications on future economic growth.
BSP to monitor as consumer lending surges while NRLs dip
Conversely, consumer lending to residents continued its strong upward trajectory, surging by 23.6 percent in March, slightly lower than February’s 24.1 percent. This robust expansion was fueled by increased demand for credit card loans, motor vehicle financing, and salary-based general-purpose consumption loans, reflecting sustained consumer confidence and spending.
Interestingly, outstanding loans to non-residents saw a notable decrease of 5.6 percent in March, following a 3.2-percent decline in February. This development, which includes loans by UKB’s foreign currency deposit units (FCDUs) to non-residents, could be influenced by various global economic factors and warrants further analysis.
Looking forward, the BSP affirmed its commitment to ensuring that domestic liquidity and bank lending conditions align with its overarching goals of price and financial stability. This proactive stance suggests that the central bank will continue to monitor lending trends closely and implement measures as needed to support sustainable economic growth while safeguarding the financial system.
Here are some of the key takeaways from the report:
- Overall bank lending in the Philippines grew by a strong 11.8 percent year-on-year in March.
- Lending to key production sectors saw a slight moderation in growth.
- Consumer lending remained robust, driven by credit cards, auto loans, and personal loans.
- Loans to non-residents decreased for the second consecutive month.
- The BSP is committed to maintaining stable liquidity and lending conditions.
This data provides valuable insights into the current state of the Philippine economy, highlighting both areas of continued strength and sectors where growth is showing signs of moderating. The BSP’s vigilance will be crucial in navigating the evolving economic landscape and ensuring sustained and balanced growth.