The Bangko Sentral ng Pilipinas (BSP) said bank lending – net of banks' reverse repurchase (RRP) placements – grew by 8.7 percent in July.

This is slower compared to the 14.3 percent expansion in the previous month.

BSP said outstanding loans of commercial banks, including RRPs, also rose by 2.9 percent from 11.1 percent to reach P2.1 trillion at end July. On a month-on-month seasonally-adjusted basis, commercial banks' lending declined by 5.5 percent (for loans inclusive of RRPs) and 3.1 percent (net of RRPs) in July.

BSP said loans for production activities moderated to 8.1 percent in July from 14.4 percent in June. Production loans continued to contribute significantly to the expansion in total bank lending, even as lending to most sectors either slowed down or contracted, the BSP said. As for consumption loans expanded at a slightly faster rate of 8.2 percent from 7.2 percent in the previous month, following the marked rise in auto loans and the continued growth in credit card lending.

BSP Governor Amando M. Tetangco Jr. said banking lending slowed year-on-year but credit growth remained positive and continued to be directed towards the productive sectors of the economy. He said that the BSP remains committed to provide the appropriate monetary conditions for continued credit expansion, while remaining mindful of its primary mandate of maintaining price stability.

As of July, BSP said banks' non-performing loans (NPL) ratio increased to 3.49 percent in July, up by 0.13 percentage point from June's 3.36 percent but still better by 0.51 percentage point compared to the same period in 2008. BSP data show that this is the tenth consecutive month that the NPL ratio has been below four percent.BSP said the month-on-month increase in the NPL ratio occurred as the 2.06 percent decline in NPLs was outweighed by the 5.64 percent cut in total loan portfolio (TLP). NPLs dropped to P82.88 billion from June's P84.62 billion. On the other hand, TLP declined to P2.376 trillion from P2.518 trillion.