BANK lending slowed down in the country in May, reflecting constrained economic activity due to the nationwide coronavirus disease (Covid-19) restrictions during the month, the Bangko Sentral ng Pilipinas (BSP) reported.
Data showed that loans of universal and commercial banks grew by 11.3 percent in May, slower than the 12.7 percent expansion in April. “The deceleration reflects in part constrained economic activity following the imposition of quarantine measures to contain the Covid-19 outbreak,” the BSP said in a statement.
Loans for production activities grew by 9.8 percent in May from 11.1 percent in the previous month. The continued growth in production loans was driven primarily by lending to the following sectors: real-estate activities, which grew by 19.6 percent; financial and insurance activities with a 13.9-percent growth; electricity, gas, steam and air-conditioning supply at 8.6 percent; information and communication at 24.9 percent; and transportation and storage at 20.4 percent.
The BSP said lending to other sectors also increased during the month, except for mining and quarrying which contracted by 5.6 percent, professional, scientific, and technical services which declined by 23.4 percent, and manufacturing with a 3.2 percent decline.
For household loans, growth was also at a slower pace of 30.2 percent in May compared to 33.3 percent in April. The BSP traced this to the slowdown in credit card and motor vehicle loans during the period.
“Amid the challenge of keeping credit flowing to affected businesses and households, the BSP has adopted a range of measures to support bank lending, including a further reduction of the policy rate to complement the various liquidity-enhancing and regulatory measures by the BSP,” the BSP said in a statement.
“The BSP expects credit activity to pick up in the coming months, as economic activity resumes with the gradual reopening of the economy,” it added.
Despite the slowdown, overall cash circulating in the local economy continued to pick up during the month.
Domestic liquidity, which is broadly measured as M3, grew 16.6 percent to about P13.7 trillion in May.
“The continued stabilization of domestic liquidity conditions has given the BSP some room to gradually rescale its monetary operations while maintaining the accommodative stance of monetary policy. This will help the BSP’s earlier liquidity measures gain further traction by providing better guidance to short-term market interest rates,” the BSP said.
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