Saturday, 4 July 2009

Philippine bank lending and domestic liquidity up in May

Bangko Sentral
Media Releases
Bank Lending Continues to Grow in May
07.03.2009
http://www.bsp.gov.ph/publications/media.asp?id=2106

Outstanding loans of commercial banks including reverse repurchase agreements (RRPs) reached P2.1 trillion as it grew by 10.2 percent year-on-year in May, lower than the 13.4 percent increase registered in April. Net of RRP placements with the BSP, bank lending at P2.0 trillion also grew at a slower pace of 17.3 percent in May from 19.0 percent in the previous month. On a month-on-month basis, seasonally-adjusted data on commercial banks’ lending grew by 0.6 percent (for loans inclusive of RRP) and 0.4 percent (net of RRP) in May.

Preliminary data indicated that loans for production activities expanded year-on-year by 17.1 percent in May, slightly lower than the 18.1 percent growth reported in the previous month. Loans extended to the following productive sectors, which comprised nearly half of total loans, were major contributors to lending growth: agriculture, hunting, and forestry (which grew by 42.0 percent); real estate, renting and business services (26.5 percent); financial intermediation (32.4 percent); transportation, storage & communication (45.9 percent); and electricity, gas and water (35.5 percent). Loans to the following sectors likewise expanded, albeit marginally: other community, social and personal services; public administration and defense; health and social work; wholesale and retail trade; fishing; and mining and quarrying. Meanwhile, bank lending to manufacturing, construction, and education registered contractions during the month. In particular, manufacturing loans—which account for 16.3 percent of total loans—contracted by 32.8 percent.

Growth in consumption loans also moderated to 9.6 percent this month from 13.5 percent in the previous month, following the slower growth in auto loans and credit card lending, and the contraction in other types of loans.

BSP Governor Amando M. Tetangco, Jr. noted that bank lending growth has remained healthy despite indications that banks have tightened their credit standards and that more firms may have turned to the bond market for funding. The Governor affirmed the BSP’s commitment to ensure that liquidity conditions are supportive of the spending and investment needs of firms and households, while keeping a watchful eye on price stability.

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Domestic Liquidity Continues to Expand in May
07.03.2009
http://www.bsp.gov.ph/publications/media.asp?id=2107

Domestic liquidity or M3 continued to post double-digit growth in May 2009 as it rose by 15.0 percent year-on-year, higher than the 13.7 percent recorded in the previous month. On a monthly basis, seasonally-adjusted M3 rose by 1.0 percent in May, a reversal of the 0.4 percent (revised) contraction in April.

The robust expansion in net foreign assets (NFA) at 19.8 percent in May continued to drive liquidity growth. This can be attributed primarily to the sustained growth in the NFA position of the BSP as well as of banks at 15.7 percent and 42.5 percent, respectively. Net foreign assets rose as the BSP continued to build up its international reserves, while banks reduced their foreign liabilities possibly as they paid off maturing obligations.

The growth in net domestic assets (NDA) also contributed to the expansion in domestic liquidity. NDA growth year-on-year accelerated to 8.4 percent in May from 4.2 percent in April as net domestic credits expanded by 18.3 percent. Growth in credits extended to the private sector remained strong at 18.2 percent, broadly similar to the 19.0 percent expansion posted in the preceding month. Meanwhile, growth in credits extended to the public sector accelerated to 18.7 percent from 11.3 percent, reflecting the double-digit growth in both lending to the National Government (18.7 percent) and to local government units and other public entities (18.5 percent).

BSP Governor Amando M. Tetangco, Jr. assured that the BSP remains committed to maintaining an appropriate level of liquidity to ensure the orderly functioning of the financial system and support the economy’s growth requirements, while guarding against any build-up in price pressures.

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