BSP reports steady credit growth, stronger liquidity expansion in July

The country’s banking sector continued to post solid credit and liquidity growth in July, with lending supporting both businesses and households and domestic liquidity expanding at a faster pace, according to the Bangko Sentral ng Pilipinas (BSP).

Data showed bank lending by universal and commercial banks rose by 11.8 percent year-on-year in July, reflecting steady demand for credit. Adjusted for seasonal factors, outstanding loans also grew by 0.7 percent month-on-month. Lending to residents expanded by 12.4 percent, while loans to non-residents eased slightly.

Several key industries registered higher lending activity, including real estate (10.7 percent), electricity and utilities (30.3 percent), wholesale and retail trade (8.5 percent), financial and insurance activities (13.1 percent), and information and communication (8.5 percent). Consumer lending also remained robust, growing by 23.6 percent. Motor vehicle loans rose to 19.4 percent from 18.4 percent in June, while credit card lending sustained growth at 29.2 percent.

Meanwhile, domestic liquidity (M3) grew by 6.2 percent year-on-year in July to %u20B118.6 trillion, faster than the 5.9 percent increase in June. On a seasonally adjusted basis, M3 increased by 0.9 percent month-on-month. The BSP said liquidity expansion continues to be driven by claims on the domestic sector, which rose by 10.5 percent. Private sector claims alone grew 11 percent, supported by lending to corporations and households.

While the banking system’s non-performing loan (NPL) ratio averaged 3.4 percent in July, analysts noted that the ratio remains manageable and could stabilize toward yearend as rate cuts filter through the economy and consumer confidence strengthens.

“The BSP monitors bank loans because they are a key transmission channel of monetary policy. Looking ahead, the BSP will ensure that domestic liquidity and bank lending conditions remain aligned with its price and financial stability objectives,” the central bank said.