Friday, 9 April 2010

Bank lending grows 6.1%

Jun Vallecera
Business Mirror

THE banks proved more than willing to extend loans in February when their portfolios grew 6.1 percent to P2.084 trillion, the Bangko Sentral ng Pilipinas (BSP) said on Thursday.

The central bank said continuing improvements in domestic economic activity have driven the growth in bank lending. The growth does not include those made by the BSP to banks on overnight basis at its reverse repurchase or borrowing window.

The numbers corroborate what is happening on the ground as what witness Home Guarantee Corp. president Gonzalo Benjamin Bongolan said, that banks “remain willing to deploy more loans, particularly to the real estate sector.”

On a month-on-month seasonally adjusted basis, commercial bank lending in February grew by 1.2 percent for loans inclusive of RRPs, and by 1.1 percent for loans net of RRPs, BSP Governor Amando Tetangco Jr. said in a statement. So-called production loans, which make up 80 percent of total loans, grew by 5.8 percent in February from 4.4 percent a month ago.

“This was driven mainly by lending to the following sectors: real estate, renting and business services [which expanded by 17.3 percent]; transportation, storage, and communication [34.0 percent], and agriculture, hunting and forestry [9.3 percent]. Other sectors that contributed to the growth in lending were wholesale and retail trade
[8.8 percent]; hotels and restaurants [46.6 percent]; public administration and defense [9.65 percent]; mining and quarrying [63.3 percent]; electricity, gas and water [2.0 percent],  and health and social work [11.2 percent],” said Tetangco.

Loans to the manufacturing sector, he added, contracted at a slower rate of 6.4 percent from 15.5 percent in the previous month. Similarly, the contraction in construction loans decelerated to 1.4 percent from 3.7 percent in January.

Loans for household consumption grew at a broadly steady pace of 12 percent at end-February from 12.5 percent in the previous month. This reflected the relative stability in the expansion of credit card and auto loans.

He added that banks could take advantage of the improved financial-market conditions to further strengthen their capital base, and in the process increase their capacity to extend credit to support a self-sustaining and durable economic growth.

The still-expanding deployment of bank loans was noted in the same period that peso liquidity growth, or M3, rose 9.9 percent year-on-year in February from 8.1 percent in January.

On a monthly basis, seasonally adjusted M3 expanded by 0.8 percent in February from a 0.2-percent decline posted in the previous month. This, Tetangco said, was driven by the growth in both net foreign assets (NFA) and net domestic assets (NDA).

NFA grew at a slower pace of 14 percent from 23.2 percent in the previous month. The expansion in the NFA of the BSP decelerated to 15 percent from 19.7 percent due to the slowdown in the growth of foreign assets and the continued decline in foreign liabilities.

Similarly, Tetangco added, there was a reduction in the pace of growth in the NFA of banks to 9.1 percent from 45.2 percent in the previous month, as the growth in foreign assets slowed down while that of foreign liabilities reversed to positive territory.

NDA growth, on the other hand, increased 5.9 percent, reversing the 2.9-percent decline in the previous month. “This developed following the double-digit growth in credit extended to the public sector by 13.8 percent on the back of increased lending to the national Government, which mostly took the form of investments in government securities. Credit to the private sector also continued to increase by 10.1 percent in February from 7.2 percent a month ago, consistent with the continued growth of bank lending.”

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