Friday, 16 January 2009

Philippine bank lending grew 21.3% in November

The Manila Bulletin

The banking industry’s outstanding loans net of reverse repurchase agreements (RRPs) grew 21.3 percent year-on-year to P1.932 trillion in November, the Bangko Sentral ng Pilipinas (BSP) yesterday reported.

Including RRPs, bank lending rose 22.9 percent in the same period.

BSP said loans for production activities fueled the increase in loans, up 18.4 percent in November to P1.725 trillion. Under this heading the real estate, renting and business services sector also reported growth in loans or up 32.6 percent to P271.667 billion while agriculture, hunting and forestry increased by 33.1 percent to P261.398 billion.

BSP also said that loans for the transportation, storage and communication sector grew by 91.4 percent to P115.839 billion while wholesale and retail trade expanded by 29.3 percent to P232.867 billion.

Consumption loans, in the meantime, rose 20.6 percent to P163.731 billion. Credit card receivables amounted to P105.44 billion while auto loans also increased by 12.6 percent to P36.248 billion.

BSP said they will have to keep an extra watch on maintaining an environment that will support credit and a low-interest rate regime.

Presently, officials see inflation and the peso-dollar trend maintaining its current trend, which will enable the BSP to keep a flexible monetary policy.

Bank lending is an important economic indicator because credit conditions reflect confidence in the economy, which in turn, is a key ingredient for the effective functioning of the markets.

To ensure that credit conditions are stable and that there will be no credit crunch, the BSP approved several measures for this. The level of domestic liquidity is an "important indicator of monetary conditions and future economic activity."

The Monetary Board in November approved several pre-emptive measures including a cut in banks’ statutory reserves by two-percentage point to release P60 billion into the system.

The BSP also increased the budget for the peso rediscounting facility from P20 billion to P40 billion effective immediately.

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