BSP: November loan growth at a standstill as pandemic continues to dampen risk appetites

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MANILA, Philippines—Bank lending growth slowed to a near standstill during the second to the last month of 2020 because of weak appetite for new loans from both borrowers and lenders, according to new central bank data.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said initial data indicated that the growth of outstanding loans of universal and commercial banks, net of short term deposits with BSP, declined further to 0.3 percent in November from 1.8 percent in October.

On a month-on-month seasonally-adjusted basis, outstanding universal and commercial bank loans, net of short term deposits with the central bank, contracted by 0.3 percent.

“Bank lending growth waned during the month as the COVID-19 crisis continued to dampen consumer spending and business activity,” the agency said of the downtrend, which continued for eight consecutive months.

Loans for production activities, net of bank deposits with the BSP, grew by 0.5 percent in November from 2 percent in October as outstanding loans for key industries declined further, particularly wholesale and retail trade (negative 6 percent) and repair of motor vehicles and motorcycles (negative 4.2 percent).

But the banking system saw overall increases in loans for real estate (5.2 percent); electricity, gas, steam and air conditioning supply (2.7 percent); human health and social work (45.3 percent); transportation and storage (8.1 percent)and information and communication (6.5 percent).

Similarly, consumer loans grew at a lower rate of 7.1 percent in November from 7.9 percent in October due largely to the slowdown in credit card loans and the continued contraction in motor vehicle loans during the month.

The BSP said its accommodative monetary policy stance, along with sustained fiscal initiatives to safeguard public welfare, “should continue to support the economy’s gradual recovery in the coming months.”

“Looking ahead, the BSP reassures the public of its commitment to deploy its full range of instruments as necessary to ensure sufficient liquidity and credit, in line with its mandate to promote non-inflationary and sustainable growth,” the BSP said.

The central bank also said that the amount of cash and near-cash items circulating in the local economy expanded by 10.5 percent year-on-year to about ₱13.7 trillion in November.

This broad measure of domestic liquidity, also known as “M3” in economic jargon, grew slower than the 11.6-percent expansion in October. On a month-on-month seasonally-adjusted basis, M3 increased by 0.5 percent.

TSB


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