Preliminary data show that growth in outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the BSP, eased to 4.7 percent in August from 6.7 percent in July. On a month-on-month seasonally-adjusted basis, outstanding universal and commercial bank loans, net of RRPs, decreased by 1.1 percent. Bank lending growth continued to moderate as a result of weaker corporate sector performance, declining loan demand, and risk aversion among banks.
Loans for production activities, net of RRPs, grew by 4.2 percent in August from 5.9 percent in July. Except for education, and human health and social work activities, loans across all types of production activities slowed down. Loans to key sectors, including manufacturing activities (-1.6 percent) as well as wholesale and retail trade and repair of motor vehicles and motorcycles (-2.1 percent) declined further in August. Meanwhile, the following sectors contributed to the overall growth in production loans: real estate activities (9.8 percent); information and communication (15.1 percent); financial and insurance activities (3.6 percent); electricity, gas, steam, and air conditioning supply (3.2 percent); and human health and social work activities (45.9 percent).
Similarly, loans to households expanded at a slower pace of 12.9 percent in August from 17.2 percent (revised) in July following the continued slowdown in credit card, motor vehicle, and salary-based general purpose consumption loans during the month.
Looking ahead, sustained efforts from monetary and fiscal authorities to shore up market confidence will be critical in supporting bank lending activity. The BSP reassures the public of its commitment to deploy its full range of instruments as necessary to ensure that domestic liquidity and credit remain adequate amid significant economic disruptions due to the ongoing health crisis.
Source: Bangko Sentral ng Pilipinas (BSP)