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April 24, 2024

Philippine bank lending picks up steam in January

The Philippines witnessed a notable upswing in bank lending activity, signaling positive economic momentum.

Major banks reported a 7.8% surge in outstanding loans compared to the previous year, marking the second consecutive month of growth. This encouraging trend follows a period of decline observed from July to September 2023.

The expansion in loans was propelled by both production and consumer sectors. Production-related activities, encompassing real estate, wholesale and retail trade, transportation, construction, and utilities, collectively saw a 5.9% upswing.

Consumer lending soared by 25.2%, driven by increased usage of credit cards, motor vehicle loans, and general-purpose loans tied to salaries.

While acknowledging this positive trajectory, the Bangko Sentral ng Pilipinas (BSP) underscored its commitment to maintaining “price and financial stability objectives.” This implies a readiness to employ monetary policy tools to sustain controlled growth and prevent inflation.

Despite the growth in bank lending, the growth rate of domestic liquidity (M3) inched slightly lower at 6% compared to December 2023 (6.2%). Nevertheless, the BSP assures that liquidity conditions remain consistent with their monetary policy stance.