Philippine bank lending surges 19.4% in May

Lending to wholesale and retail trade drove monthly loan growth.

Lending by Philippine banks maintained their positive momentum after rising 19.4% YoY in May, according to central bank data.

“Growth in bank loans continued to be driven by lending to key production sectors such as wholesale and retail trade, repair of motor vehicles and motorcycles; real estate activities; financial and insurance activities; manufacturing; and electricity, gas, steam and airconditioning supply,” the Bangko Sentral ng Pilipinas (BSP) said in a statement.

Also read: E-wallets to snap up 6% of Philippine payments by 2022

Credit rating agency Moody’s is similarly bullish on the future growth prospects country’s banking system with the expectation that loan growth may clock in between mid to high single digit by year-end.

“I think what has changed from last year is that loan growth continues to be strong. Secondly, we do think the banks will benefit from rising interest rates environment,” Moody’s vice president, senior analyst Simon Chen told local media. "There’s a lot of space for banks to grow. Growth opportunity is there."

Lending for production activities continued to account for a lion’s share of Philippine bank loans at 88.5%. With the exclusion of reverse repurchase placements, lending hit to $125.15b (PHP6.68t).

Loans for the wholesale and retail trade, repair of motor vehicles and motorcycles surged 23.4% to $19.3b (PHP1.03t) whilst lending for real estate activities similarly rose 15.7% to $23.79b (PHP1.27t). Lending to financial and insurance activities; manufacturing; and electricity, gas, steam and air conditioning supply also went up 31.3%, 17.7% and 11.6% respectively. 

On the other hand, loans for household consumption slowed to 18.4% in May to $11.37b (PHP606.62b). Bank lending also fell in agriculture, forestry and fishing by 8.3%.

“The slower increase in motor vehicle loans and salary-based general purpose consumption loans as well as the contraction in other types of household loans offset the faster expansion in credit card loans in May,” the BSP added.