"The moderate expansion in bank lending for the months of July and August could be indicative of moderate growth in real sector activity for the third quarter," BSP Governor Amando M. Tetangco Jr. said.

Tetangco added: "Bank lending should pick up as asset quality improves, leading to more robust domestic savings mobilization and sustainable economic growth." He said the BSP would continue to help banks offload their non-performing loans and clean up their balance sheets.

The central bank said loans outstanding of commercial banks continued their steady rise, however compared to July’s level of P1.545 trillion loans grew by 0.8 percent, a reversal from three percent drop month-on-month registered in the same comparable month.

The BSP said loans to financial institutions, real estate and business services sector or FIREBS remained the main driver of the growth in commercial bank lending, contributing more than half or 2.52 percentage points of the 3.3 percent growth of total lending worth P421 billion.

Sectors that also saw growth in lending are the community, social & personal services sector of P238 billion (1.0 percentage point), transportation, storage & communication of P78 billion (0.49 percentage point), agriculture, fisheries & forestry of P71 billion (0.45 percentage point) and manufacturing activities of P420 billion (0.33 percentage point).

The strong lending to the FIREBS sector, according to the BSP, may be attributed to the growth in loans to the Financial Intermediation sector, as only minimal growth was registered in loans classified as Real Estate Renting and Business Services.

In the meantime, loans classified as Private Households with Employed Persons fuelled the growth in Community, Social & Personal Services.

Also in the same period, loans to the following sectors contracted from yearago levels: wholesale & retail trade (0.68 percentage point); construction (0.17 percentage point); electricity, gas & water and mining and quarrying (both 0.13 percentage point).