Rise in bank loans slows in July: Philippines

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The increase in loans disbursed by big banks slowed for the fourth straight month in July amid high borrowing costs after a series of aggressive interest rate hikes, according to the Bangko Sentral ng Pilipinas (BSP).

Preliminary data released by the central bank over the weekend showed the credit growth of universal and commercial banks eased anew to 7.7 percent in July, the slowest since December 2021, from 7.8 percent in June.

'The growth in bank lending has continued to ease in line with the prevailing tight monetary policy stance of the BSP,' the central bank said in a statement.

The BSP raised key policy rates by 425 basis points between May last year and March this year, making it the most aggressive central bank in the region, to fight inflation and stabilize the peso that hit an all-time low of 59 to $1 in October last year.

The inflation downtrend and stable local currency, however, allowed the BSP to maintain a hawkish pause since May when it kept interest rates steady for four consecutive rate-setting meetings.

Looking ahead, the BSP said it would continue to ensure that domestic liquidity and credit dynamics remain consistent with its price and financial stability objectives.

From a double-digit credit growth of 10.2 percent in March, the increase in bank lending slowed to 9.7 percent in April, 9.4 percent in May, 7.8 percent in June and further to 7.7 percent in July due to the lagged impact of the aggressive rate hikes delivered by monetary authorities.

Data showed total loans released by big banks reached P11 trillion in end-July, P786.18 billion higher than the P10.21 trillion disbursed in the same period last year.

For July, the rise in loan releases to production activities slowed slightly to 6.2 percent from 6.3 percent in June to reach P9.54 trillion from P8.98 trillion in the same month last year and accounted 84 percent of the total disbursements.

The rise in disbursements to the volatile real estate sector quickened to five percent in July from 3.8 percent with P2.19 trillion , followed by the wholesale and retail trade, repair of motor vehicles and motorcycles with a slower increase of 9.4 percent to P1.27 trillion.

The growth in loans extended to the electricity, gas, steam and air-conditioning supply sector also slowed to 10.6 percent with P1.23 trillion.

On the other hand, loans to the manufacturing sector slipped slightly to P1.16 trillion.

Likewise, consumer lending also booked a slower growth of 22.7 percent to P1.16 trillion in end-July this year from P934.71 billion a year ago.

Credit card loans soared by 29.8 percent to P618.61 billion from P487 billion even if the BSP decided to maintain the cap on interest rate charges to three percent per month or 36 percent per year.

Auto loans went up by 8.7 percent to P354.4 billion from P325.89 billion, while salary-based general-purpose consumption loans grew by 24.5 percent to P131.83 billion from P105.91 billion.

The BSP also reported that the growth in domestic liquidity also slowed to 5.7 percent in July from 5.9 percent in June. Money supply stood at P16.2 trillion as of end-July