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Bank lending expands 16.4% in 2013

The Bangko Sentral ng Pilipinas (BSP) yesterday reported that bank lending grew 16.4 percent year-on-year at the end of 2013 to P4.048 trillion – this includes both residents and non-residents’ outstanding loans.

The total loans were only a bit higher compared to end-2012 lending growth of 16.2 percent. Compared to the previous month, bank credit showed significant increase from 14.8 percent in November 2013.

Inclusive of reverse repurchase placements or RRPs with the BSP – these are loans from the banks to the central bank – the total outstanding loans rose 16.3 percent as of end-December from 13.8 percent in November.

The BSP said the sustained expansion in bank lending is expected to support the continued positive outlook of the domestic economy for the year ahead. “The BSP will ensure that credit and liquidity conditions will keep at pace with overall economic growth while remaining consistent with its price and financial stability objectives.”

At the end of 2013, the financial system’s domestic liquidity growth eased to 32.7 percent year-on-year to P6.936 trillion. This was a slower pace of growth compared to the previous month’s 36.5 percent.

The BSP said this is an expected slowing down in money supply as liquidity normalizes over the next months following the operational adjustments implemented last year on the BSP’s special deposit account facility. Non-pooled investments funds were purged from the facility in tranches last year with the last batch exiting after November 30, releasing over P1 trillion of liquidity into the system.

The central bank said it will continue to assess monetary conditions closely to “ensure that liquidity dynamics stay supportive of economic activity.”

“The BSP also stands ready to deploy appropriate measures as needed to ensure that liquidity conditions remain in line with the BSP’s price and financial stability objectives,” it added.

In December, loans for production activities went up by 15.3 percent to P3.415 trillion. This was a faster pace of loan growth compared to November’s 13.2 percent.

Loans for household consumption, in the meantime, grew 8.3 percent from nine percent in the previous month as auto loans and other types of consumer loans such as personal and salary loans also declined. In total, household consumption lending amounted to P278.829 billion.

The BSP does not issue projections of bank lending growth or domestic liquidity numbers, but BSP officials maintain that an above 10 percent lending growth is consistent with their expectations while money supply is considered manageable if pace of growth will not cause inflationary pressures.