Big banks’ outstanding loans expanded by 8.5 percent year-on-year in January, a significant leap from December’s 4.8 percent lending growth, the Bangko Sentral ng Pilipinas (BSP) said.

This was the sixth month in a row that the banking sector reported bank lending growth, net of reverse repurchase (RRP) placements with the BSP.

“Bank lending improved further as easing COVID-19 restrictions and the continuous vaccine rollout supported market sentiment and demand,” said the BSP on Monday, Feb. 28.

In peso value, total outstanding loans to residents net of RRPs amounted to P9.44 trillion in January and P9.74 trillion gross of RRPs.

On a month-on-month seasonally-adjusted basis, the outstanding loans net of RRPs of the big banks or the universal and commercial banks increased by three percent year-on-year.

The BSP said the outstanding loans to residents net of RRPs grew by 8.7 percent in January from 4.8 percent in December due to higher loans for production activities which rose by 9.6 percent year-on-year to P8.58 trillion during the period. In January 2021, these productivity loans only grew by six percent.

The BSP said the expansion in credit activity for real estate activities, financial and insurance activities, as well as information/communication and manufacturing boosted the loans for production activities.

Loans to real estate sector grew by 16.8 percent year-on-year in January to P2.05 trillion while lending to financial and insurance activities increased by 17.1 percent to P953.80 billion. Bank releases to the information and communication, and manufacturing sectors went up by 31.4 percent and 11.5 percent, respectively, to P484.80 billion and P1.07 trillion.

“Similarly, consumer loans to residents increased marginally by 0.1 percent in January after a 5.9-percent decline (revised) in the previous month, driven mainly by the year-on-year rise in credit card loans,” said the BSP.

It also noted that this was the “first time household loans posted growth since December 2020.” The outstanding loans to non-residents also rose by 2.8 percent in January from 2.5 percent in December, the BSP added.

Consumer loans totalled P858.60 billion in January, up a small 0.1 percent year-on-year. Credit card loans were up by 6.8 percent year-on-year to P431.61 billion but motor vehicle loans were down by 5.4 percent to P340 billion.

“The BSP continues to prioritize policy support for the economy in order to sustain the recovery in credit activity amid the continued uncertainty in the growth outlook. Nevertheless, stronger signs of recovery in overall economic activity will allow the BSP to carefully plan for the eventual normalization of its pandemic-related interventions when conditions warrant, in line with its price and financial stability mandates,” said the BSP.

It was in December 2020 when, for the first time since September 2006, big banks’ outstanding loans declined by 0.7 percent year-on-year because of the pandemic which pulled the economy into a recession and stalled business activities.

Bank lending only reverted back to positive territory last August 2021.