Bangko Sentral ng Pilipinas (File photo / Philippine Daily Inquirer)
Bank lending and money supply growth — both indicators of inflationary cash in the local financial system — eased during the month of August, raising hopes that the central bank’s efforts to rein in consumer prices may be starting to work.
In a press statement, the Bangko Sentral ng Pilipinas (BSP) said that the outstanding loans of commercial banks grew at a lower rate at 18.9 percent in August from 19.6 percent in July.
Including banks’ short term deposits with the central bank, the growth in bank lending also slowed down at 18.4 percent in August from 18.7 percent in the previous month. On a month-on-month seasonally-adjusted basis, commercial bank loans net and inclusive of these deposits increased by 1.2 percent and 0.6 percent, respectively.
The central bank has been tightening monetary policy in response to rising inflation which has been on an uptrend since January. It hiked interest rates by 25 basis points in May and again in June, followed by a 50-basis point hike in August, then again last week. All told, regulators have raised rates by 150 basis points this year, thus draining billions of inflationary idle cash from circulation.
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Loans for production activities—which comprised 88.6 percent of banks’ aggregate loan portfolio, net of central bank placements — expanded at a slightly lower rate at 19.1 percent in August from 19.7 percent in the previous month.
The growth in production loans was driven primarily by increased lending to the following sectors: wholesale and retail trade, repair of motor vehicles and motorcycles (24.5 percent); financial and insurance activities (37.2 percent); real estate activities (15.6 percent); manufacturing (19.9 percent); electricity, gas, steam and airconditioning supply (12.0 percent); and, construction (36.9 percent). Bank lending to other sectors also increased during the month except in agriculture, forestry and fishing (-25.2 percent).
