Philippine bank lending growth hits four-month high of 11.4% in September

Philippine bank lending growth accelerated to an 11.4 per cent year-on-year increase in September, the fastest in four months, driven by sustained demand from businesses and consumers. The Bangko Sentral ng Pilipinas reported total outstanding loans reached P15.265 trillion, with notable gains in cr

Philippine bank lending growth accelerated to a four-month high in September, with universal and commercial banks' total outstanding loans rising by 11.4 per cent year on year to P15.265 trillion, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP). This marked the fastest expansion since the 12.1 per cent recorded in May, up from 11 per cent in August.

Lending to residents climbed 11.7 per cent to P14.952 trillion, accounting for the bulk of total loans. Production activity loans rose 11 per cent to P12.837 trillion, driven by key sectors including electricity, gas, steam and air-conditioning supply; manufacturing; real estate activities; transportation and storage; wholesale and retail trade; and financial and insurance activities.

Consumer loans to residents, which exclude residential real estate loans, grew 16.2 per cent to P2.115 trillion, matching the pace seen in August. Credit card loans surged 22.8 per cent to P1.344 trillion, while motor vehicle loans increased 5 per cent to P542.032 billion, though both eased from the prior month's growth rates. Salary loans rose 17.5 per cent to P193.804 billion, outpacing August's 11.6 per cent expansion.

Lending to nonresidents slipped 0.6 per cent to P313.394 billion, a softer decline than the 1.5 per cent drop in August. Month on month, total loans to residents and nonresidents rose about 1 per cent from P15.121 trillion.

Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said the data indicates credit demand remains resilient despite elevated inflation and a weaker peso. He noted that bank lending may ease in the fourth quarter as borrowers turn cautious due to the uncertain macroeconomic backdrop, but expects growth to stay in double digits. Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said credit growth should continue to support the economy as inflation and interest rates ease next year.

Separately, domestic liquidity (M3) rose 9.3 per cent year on year to P20.702 trillion in September, slowing from the 10.8 per cent growth in August. Borrowings by the private and public sectors grew 12 per cent, supporting the expansion in money supply. Domestic claims on the private sector increased 12.4 per cent to P15.561 trillion, while claims on the central government rose 14.2 per cent to P6.5 trillion. The BSP noted that a decline in net foreign assets, which fell 6.4 per cent to P6.724 trillion, offset some of the gains from domestic claims.