Preliminary data show that outstanding loans of universal and commercial banks (U/KBs), net of reverse repurchase (RRP) placements with the BSP, increased by 1.3 percent year-on-year in August following a 0.7-percent decline in July.
This is the first reported expansion in outstanding loans of U/KBs after eight consecutive months of contractions amid improvements in sentiment brought about by the continued rollout of COVID-19 vaccines and the gradual easing of quarantine restrictions.
On a month-on-month seasonally-adjusted basis, outstanding universal and commercial bank loans, net of RRPs, increased by 1.1 percent.
Contributing to the improvement in the total bank credit in August was the increase in outstanding loans for production activities which grew by 3.1 percent in August from 0.8 percent in the previous month. The expansion was driven by the growth in loans for real estate activities (7.2 percent); information and communication (20.3 percent); manufacturing (3.0 percent); professional, scientific and technical activities (89.8 percent); and transportation and storage (9.5 percent). However, the decrease in outstanding loans to other industries such as agriculture, forestry and fishing (-6.8 percent); wholesale and retail trade and repair of motor vehicles and motorcycles (-2.0 percent); and activities of households as employers, undifferentiated goods and services (-25.5 percent) tempered the overall expansion in outstanding loans for production activities.
By contrast, consumer loans to residents remained subdued, contracting by 8.1 percent in August from an 8.2-percent decrease in July largely due to the continued decline in motor vehicle and credit card loans.
As a result, outstanding loans to residents, net of RRPs, rose by 2.0 percent in August after decreasing by 0.1 percent in July. Meanwhile, outstanding loans to non-residents fell at a softer rate of 16.6 percent.
Meanwhile, omestic liquidity (M3) expanded by 6.9 percent year-on-year to about ₱14.4 trillion in August 2021.
This was faster than the 5.9-percent growth posted in July. On a month-on-month seasonally-adjusted basis, M3 increased by 1.2 percent.
Domestic claims grew by 6.7 percent year-on-year in August from 4.5 percent in the previous month due to the expansion in net claims on the central government as well as the continued improvement in bank lending to the private sector.