The banking industry's total outstanding loans grew 14.9 percent to P2.95 trillion at the end of the first semester, faster than the pace of growth recorded in May, the Bangko Sentral ng Pilipinas (BSP) said in a monthly report.
Including reverse repurchase (RRP) placements of banks with the BSP, lending activities slowed during the period, increasing 12.2 percent from 13.6 percent in the previous month. With RRP, total lending reached P3.17 trillion.
BSP Deputy Governor Nestor A. Espenilla Jr. said that while he does not expect bank lending to grow as robust as the past two years, he thinks the industry's 10 percent to 15 percent average growth for bank loans this year is "reasonable." However as a bank regulator, he would rather not give a forecast at the moment, saying only that 10 percent to 15 percent is a "good projection" range for this year.
The low interest rate environment is one of the concerns for the banking community and its impact on lending rate. The BSP overnight borrowing rate is now below four percent at 3.75 percent and 5.75 percent for overnight lending. Rates on term deposits and placements were also reduced.
At the of June, BSP reported that loans for production activities comprising bulk of total outstanding loans, expanded 15.1 percent to P2.714 trillion compared to the 14.7 percent growth in May.
Consumer loans, in the meantime, recorded a growth of 15.8 percent in June, slower compared to what was reported the previous month of 16.8 percent. In total value, consumer loans under household consumption category amounted to P238.48 billion. These are credit card, automotive loans and "other" loans, totaling P136 billion, P76.66 billion and P25.76 billion, respectively.
In the statement, the central bank said the growth in production loans was pushed by increased lending in the wholesale and retail trade which grew by 42.4 percent to P413.97 billion, real estate, renting, and business services that rose 27.1 percent to P508.2 billion and manufacturing which went up by 25.1 percent to P524.37 billion.
Loans for financial intermediation, on the other hand, increased 24.4 percent to P282.5 billion while transportation, storage, and communication loans grew 31.2 percent to P226.18 billion.
According to the BSP, "the continued growth in bank lending underpins the (central bank's) view that domestic demand remains firm and would lend support to the economy amid weakening global economic conditions."
"The BSP will continue to monitor liquidity conditions to ensure that credit activity remains supportive of overall economic growth while remaining consistent with the BSP's price stability objective," it added.