20% rise in consumer loans spurred growth in bank lending in October

According to Bangko Sentral ng Pilipinas (BSP), bank lending posted double-digit growth in October, driven by growth in consumer loans, which jumped more than 20 percent over the period.

BSP data showed that bank lending rose 13.9% to 10.555 trillion pesos in October from 9.267 trillion pesos in October 2021.

On a seasonally adjusted monthly basis, outstanding universal and commercial bank loans, net of repurchase rates (RRP), rose 1.1% from 10.497 trillion pesos in September.

“Sustained growth in lending activity and ample liquidity will continue to support the recovery in economic activity and domestic demand,” BSP said in a statement.

“Looking to the future, BSP will continue to take all necessary measures to ensure that liquidity and bank lending conditions are in line with promoting price and financial stability,” he added.

While 87.4 percent of outstanding net RRP consisted of loans to residents for various economic activities, in October they showed an increase of only 12.5 percent to 9.229 trillion pesos.

Consumer loans, which accounted for 9.4 percent of RRP outstanding, rose 22.6 percent, faster than the 20.6 percent recorded in September. The total volume of consumer loans in October amounted to 987.1 billion pesos.

credit card, car

According to consumer loans, “wage-based general purpose consumer loans” rose 62.8 percent to 122.247 billion pesos in October 2022. This was even faster than the 57.2 percent growth recorded in September 2022.

Credit card loans also rose 26.8 percent and auto loans rose 6.6 percent in October. In September, credit card loans rose 26.1 percent and auto loans rose 4.3 percent.

“Consumer loans to residents in October increased by 22.6 percent from 20.6 percent. [revised] in the previous month, mainly due to a year-on-year increase in credit card loans, auto loans, and payroll-based general purpose consumer loans,” BSP said in a statement.

Outstanding loans to non-residents rose 33 percent in October, compared with a 26.6 percent increase in September.

Meanwhile, outstanding loans to residents, excluding RRP, also rose 13.4 percent in October after rising 13.1 percent in the previous month.

Outstanding business loans rose 12.5% ​​in October from 12.3% in September, driven primarily by a 14% increase in loans to key industries such as real estate.

BSP data also showed that loans to manufacturing rose by 17.7%; wholesale and retail trade, repair of cars and motorcycles – 11.5%; financial and insurance activities – 12.8 percent; information and communication – 25 percent; supply of electricity, gas, steam and air conditioning – 10.9 percent.

M3 growth

BSP data showed that domestic liquidity or M3 rose 5.4% year on year to 15.4 trillion pesos in October 2022 from 14.65 trillion pesos in October 2021.

On a monthly basis, M3 is up just 0.4% from the 15.38 trillion pesos registered in September 2022, according to BSP.

“Looking to the future, BSP will ensure that liquidity conditions continue to support domestic demand and economic activity in line with its price and financial stability goals,” BSP said in a statement.

The data showed that domestic claims rose 11 percent year-on-year in October from 11.2 percent the previous month due to continued improvement in bank lending to the private sector.

Claims on the private sector rose 10.4 percent in October from 10.3 percent in September due to expansion of bank lending to non-financial private corporations and households.

Meanwhile, net claims on the central government rose 14.7 percent in October from 16.5 percent (revised) in September due to robust borrowing from the national government.

Net foreign assets (NFA) in pesos fell 1.4% in October, compared with a 2.1% (revised) decline in September.

Banks’ NFA declined mainly due to an increase in accounts payable. Similarly, BSP’s position in the NFA declined 0.5% in October.