Bank lending growth eased slightly in October 2024, while domestic liquidity maintained a steady pace of expansion, according to Bangko Sentral ng Pilipinas (BSP) data.
Lending by universal and commercial banks (U/KBs), excluding placements in the BSP’s reverse repurchase (RRP) facility, grew by 10.7% year-on-year, slightly lower than the 11% growth recorded in September. Outstanding loans issued by U/KBs reached P12.5 trillion, up from P12.40 trillion in September and P11.30 trillion in October 2023.
Loans to residents, net of RRPs, expanded by 10.7%, decelerating from the 11.3% growth the previous month. Meanwhile, loans to non-residents rebounded with a 6.8% increase in October, reversing a 0.3% contraction in September.
Sectoral contributions
Production loans, which account for the bulk of bank lending, rose 9.1% in October, compared to 9.8% in September. Key industries driving this growth included:
- Real estate activities
- Wholesale and retail trade
- Motor vehicle and motorcycle repair
- Manufacturing
Consumer loans to residents surged by 23.6%, slightly higher than the 23.4% growth in September. The BSP attributed this uptick to increased credit card usage and motor vehicle loans.
Preliminary data showed domestic liquidity (M3) expanded by 5.5% year-on-year to P17.7 trillion in October, maintaining the same growth rate as in September.
Drivers of domestic liquidity growth
- Domestic Claims: Increased by 9.8%, up from 9.6% in September, supported by robust lending to non-financial private corporations and households.
- Private Sector Claims: Slowed to 11.5% from 12.5% in September.
- Central Government Claims: Rose by 8%, compared to 6.6% the previous month, driven by higher national government borrowings.
Net foreign assets
Net foreign assets grew by 11.2% in October, up from 8.6% in September. The BSP’s NFA expanded by 13.8%, reflecting higher gross international reserves. However, banks’ NFA declined due to increased bills and bonds payable.
The BSP reaffirmed its commitment to ensuring domestic liquidity conditions align with its monetary policy objectives.
“The BSP will continue to ensure that domestic liquidity conditions are consistent with the prevailing stance of monetary policy, in line with its price and financial stability objectives,” the central bank said.
The BSP’s approach emphasizes balancing economic growth with inflation management and financial stability amid evolving market conditions.
