MANILA, Philippines—Philippine bank lending contracted for the eighth consecutive month in July as borrowers and lenders continued to shy away from the debt market, but the central bank held out hope that the trend would be reversed as rate of decline in lending was slowing.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said preliminary data showed that outstanding loans of universal and commercial banks, excluding banks’ short term deposits with the regulator, declined by 0.7 percent year-on-year in July after falling by 2 percent in June.
On a month-on-month seasonally-adjusted basis, outstanding universal and commercial bank loans, net of short term bank deposits, rose by 0.5 percent.
Outstanding loans to residents declined marginally by 0.1 percent following a 1.4-percent decrease in June. Meanwhile, outstanding loans to nonresidents declined by 17.4 percent after falling by 19.7 percent in June, as a new wave of COVID-19 cases due to the more contagious Delta variant continued to dampen economic prospects and temper market sentiment.
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Consumer loans to residents went down by 8.2 percent in July from an 8.7-percent decline in June due mainly to the continued contraction in motor vehicle loans.
All this occurred amid the continued rise in liquidity levels in the financial system brought about by the central bank’s ultra-loose monetary policy, with prime interest rates at their lowest levels in the country’s history.
