The country's credit growth is seen declining over the next two quarters, compared to its Association of Southeast Asian Nations (ASEAN) peers, Bank of America (BofA) Global Research said in a report.

'The Philippines has seen a faster recovery in credit growth to around nine to 10 percent but the latest reading of the BofA ASEAN Credit Growth Indicator shows a declining trend led by external factors,' according to the report written by BofA research analyst Anand Swaminathan and equity strategist Ritesh Samadhiya.

This even as the research firm said four out of five ASEAN countries showed a flat trend of credit growth, except for the Philippines.

According to BofA, the ASEAN credit growth indicators aim to identify the directional trends and key turning points for credit growth across each of the ASEAN-5 countries, namely Singapore, Malaysia, Indonesia, Thailand and the Philippines.

'We believe this will help gauge how banks' loan growth is likely to shape up over the next few quarters, with lead times ranging from three to 12 months,' it said.

BofA said it has five country indicators each based on an aggregation of equally-weighted macroeconomic or market variables that are related with the growth cycles of system credit demand.

These variables are system liquidity, business or retail expectations, foreign exchange and interest rates, consumer prices as well as external factors.

'The Indicators are not designed to forecast or produce scored values for system credit growth, but rather our focus is on the overall directionality to gauge how system credit growth may shape up over the next one to two quarters,' BofA said.

The credit growth PH Indicator showed a 0.70 correlation with historical credit growth as well as a directional trend declining over the next two quarters.

'Directional trend remains on a declining trend, unchanged due to decrease in import growth, auto sales and number of visitors. But actual credit growth has been recovering led by the return of capex (capital expenditures) spending,' it said.

Based on the latest data from the Bangko Sentral ng Pilipinas (BSP), credit growth accelerated to an 11-month high in March fueled by higher production and consumer loans.

Loans disbursed by universal and commercial banks grew by 9.4 percent in March from 8.6 percent in February. It marked the fourth straight month of faster bank lending.

Loans released by big banks amounted to P11.79 trillion as of end-March, P1.01 trillion higher than the P10.78 trillion disbursed in the same period in 2023. The March growth pace was also the fastest in 11 months or since the 9.7 percent posted in April 2023.

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