Bank lending jumps 10% in April, fastest in 2 years

BANK lending jumped 10% in April, reflecting the rebound in economic activity as restrictions were eased alongside a steady decline in coronavirus disease 2019 (COVID-19) cases.

This is the fastest growth in bank loans in 23 months, since 11.2% in May 2020.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed outstanding loans from major banks rose 10.1% to 9.9 trillion pesos in April from 8.99 trillion pesos in the same month. of 2021.

Bank loan growth was faster than the 8.9% seen in March.

On a seasonally adjusted monthly basis, bank lending net of reverse repurchase agreements (RRPs) with the BSP edged up 0.9%.

Including RRP placements with the BSP, bank lending rose 9.8% in April.

“Credit conditions continue to improve as economic activity rebounds amid a manageable domestic COVID-19 workload,” the BSP said in a statement.

Borrowing for production activities jumped 10.3% to 8,740 billion pesos in April, fueled by a double-digit expansion in loans for housing (18.7%), manufacturing (12.4%); and information and communication (26.9%).

Consumer loans also increased by 6.7% to P879.39 billion, a faster pace than the 3.6% seen in March.

Credit card loans rose 16% in April, while payroll-based general purpose consumer loans rose 2.2%. Auto loans fell 3.1%.

“A steady improvement in overall credit activity and stable conditions in financial markets have enabled the BSP to continue to reduce its pandemic-induced liquidity interventions,” the central bank said.

The BSP said it would closely monitor “evolving credit and liquidity conditions to ensure that an appropriate level of liquidity is available to fuel the momentum of the economic recovery, while containing pressures. inflationary”.

The continued expansion of bank lending in April likely reflected some borrowers’ rush to secure financing given rising long-term interest rates locally and globally amid high inflation, the government said. Chief Economist of Rizal Commercial Banking Corp. Michael L. Ricafort in an e-mail.

The central bank is expected to raise its policy rate by another 25 basis points (bp) at its next policy meeting in June.

The BSP made its first interest rate hike since November 2018, when it raised its benchmark interest rates by 25 basis points on May 19, as it tried to temper mounting inflationary pressures.

The Monetary Board will conduct its next policy review on June 23.

As lending rose, the BSP said M3 – which is considered the broadest measure of liquidity in an economy – rose 7.3% to 15.3 trillion pesos in April. That was slower than March’s revised 7.7% growth.

On a seasonally adjusted monthly basis, the BSP said M3 was “broadly unchanged.”

“The continued expansion of domestic liquidity indicates that liquidity remains sufficient to support the economy on a firm recovery path. A strong rebound in economic activity has also allowed the BSP to gradually withdraw its extraordinary liquidity intervention” , the central bank said in a statement.

The BSP said domestic claims rose 9% in April, above the revised 8.1% in March, on the back of improved bank lending to the private sector and an increase in net claims on government. central.

“Claims on the private sector increased by 6.5% in April against 5.6% in March with an increase in bank loans to private non-financial corporations and households,” the central bank said.

“Meanwhile, net claims on central government increased by 17.6% in April from 16.3% (revised) in March due to sustained borrowing by the national government.”

Net foreign assets (NFA) in pesos increased by 5.2% in April, against a revised 8.2% the previous month.

“The slower expansion of BSP’s NFA position reflects lower gross international reserves compared to the same period a year ago. Meanwhile, the NFA of banks continued to grow, albeit at a slower pace, due to higher investments in marketable debt securities as well as loans and receivables with non-resident banks,” said the BSP. — Keisha B. Ta-asan

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