Bank lending expands by 7.8 percent  in June 2023

Preliminary data indicated that outstanding loans of universal and commercial banks (U/KBs), net of reverse repurchase (RRP) placements with the Bangko Sentral ng Pilipinas (BSP), grew at a slower rate of 7.8 percent year-on-year in June from 9.4 percent in May.

On a month-on-month seasonally-adjusted basis, outstanding universal and commercial bank loans, net of RRPs, increased by 0.6 percent.

Outstanding loans to residents, net of RRPs, also increased at a softer pace of 7.9 percent from 9.3 percent in May.

Outstanding loans for production activities went up by 6.3 in June following a 7.9-percent expansion in the previous month, generally driven by the continued rise in lending to key sectors, particularly electricity, gas, steam, and airconditioning supply (11.8 percent); wholesale and retail trade, and repair of motor vehicles and motorcycles (9.7 percent); real estate activities (3.8 percent); financial and insurance activities (7.7 percent); and information and communication (11.2 percent).

Likewise, outstanding loans to non-residents[1] went up by 4.8 percent in June from 13.2 percent in the previous month.

Meanwhile, consumer loans to residents rose at a slightly faster rate of 23.7 percent in June from 22.7 percent in May given the increase in credit card and motor vehicle loans.

The slowdown in credit activity reflects the impact of monetary policy tightening which continues to work its way through the economy.

Looking ahead, the BSP remains prepared to ensure that domestic liquidity and lending dynamics are in line with its price and financial stability objectives.

[1] Outstanding loans to non-residents include loans by UKB’s foreign currency deposit units (FCDUs) to non-residents.