Economic activity leads to faster lending growth

Bank lending grew faster in February from a month earlier, driven by borrowings from productive sectors of the economy, the central bank said on Thursday. Lending by commercial banks picked up by 6.1 percent in February from 5 percent in January. Including bank-to-bank loans, the growth rate was a point slower at 5.9 percent to P2.3 trillion from a month earlier. "Improving domestic economic activity contributed to the pickup in bank lending," the Bangko Sentral ng Pilipinas (BSP) said, adding that banks should take advantage of improved financial conditions to further strengthen their capital base so they can lend more to support economic growth. Loans to production activities, which made up 80 percent of banks' total loan portfolio, grew by 5.8 percent in February from 4.4 percent a month earlier. Specifically, lending to real estate, rental and business services expanded by 17.3 percent, while loans to transportation, storage and communications went up by 34 percent, the central bank said. Lending to agriculture, hunting and forestry also advanced by 9.3 percent. Other sectors that contributed to loan growth were wholesale and retail trade (8.8 percent); hotels and restaurants (46.6 percent); public administration and defense (9.6 percent); mining and quarrying (63.3 percent); electricity, gas and water (2 percent); and health and social work (11.2 percent). Meanwhile, loans to the manufacturing sector declined at a slower rate of 6.4 percent from 15.5 percent in January, the BSP said. "Similarly, the contraction in construction loans decelerated to 1.4 percent from 3.7 percent in January," it added. Lending growth to households was steady at 12 percent in February from 12.5 percent in January. "This reflected the relative stability in the expansion of credit card and auto loans," the central bank said. The central bank earlier said lending growth would continue this year, but the uptick would likely be tempered by the availability of alternative funding sources. While lending will stay healthy, it was unlikely to hit double-digit growth as more companies raise funds via the stock market or by issuing bonds. — N.P. Aquino, GMANews.TV