Lending activity at the country’s largest banks increased for the second consecutive month in September, giving credence to the central bank’s claim that the financial system has turned a corner after being ravaged by the pandemic of coronavirus.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said preliminary data showed that outstanding loans from universal and commercial banks, net of their short term loans to the regulator, increased 2.7% year-on-year. annual in September.
This was faster than the 1.3% expansion in August and marked the second month of growth since the eight straight months of lending squeezes that began in December 2020, with borrowers and lenders turning away from credit in because of the uncertainties associated with the pandemic.
The central bank said that the observed increase in outstanding loans from universal and commercial banks “reflects the modest recovery in overall bank lending attitudes as well as improving economic prospects due to the gradual lifting of loans. pandemic containment measures “.
Outstanding loans to residents, net of banks’ short-term investments with the BSP, increased by 3.2% in September against 2% the previous month, driven by a resumption of credits to production activities.
Outstanding loans to production activities increased by 4.4% in September against 3.1% in August, driven mainly by the expansion of loans to real estate activities (7.2%); information and communication (26.6%); financial and insurance activities (6.0%); and manufacturing (4.4 percent).
However, the drop in outstanding loans to other sectors such as agriculture, forestry and fishing (-11.9%); activities of households as employers, undifferentiated goods and services (-23.3%); and wholesale and retail trade and repair of motor vehicles and motorcycles (-1.7 percent) moderated the overall increase in outstanding production loans.
At the same time, consumer loans to residents fell at a slower rate of 7.8% in September, down from 8.4% in August due to the smaller year-on-year contraction. other credit card, motor vehicle and general purpose salary-based loans.
At the same time, outstanding loans to non-residents declined at a slower pace of 12% after falling 16.6% in August.
“Along with the national government’s fiscal and health measures, keeping a firm hand on the BSP’s monetary policy levers should continue to help boost domestic demand and market confidence,” the agency said.
“In the future, the BSP will continue to provide the appropriate monetary policy support to allow the economic recovery to gain more ground, in line with the BSP’s price stability and financial stability mandates,” he added. .
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