Bank Lending Continues to Grow in March 2020

May 13, 2020 – Outstanding loans of banks, net of reverse repurchase placements with the Bangko Sentral ng Pilipinas (BSP), grew by 12.9% in March 2020. The figure is higher than that of February 2020 and a direct effect of fiscal measures afforded by the Central Bank during the Enhanced Community Quarantine (ECQ).

Production-related loans expanded by 12%, driven primarily by lending of the following sectors:

• real estate activities (12.8%)
• financial and insurance activities (17.2%)
• wholesale and retail trade, repair of motor vehicles and motorcycles (6.8%)
• electricity, gas, steam, and air conditioning supply (7.7%)
• information and communication (20.8%)

Only loans to manufacturing (-0.4%) and mining and quarrying (-5.3%) sectors decreased during the month.

Household consumption loans decreased to 22.9% from 37.7% last February. This is because of decreased expansion in credit card and motor loans during the month.

Enhanced Community Quarantine (ECQ) was declared on March 16, 2020. This reduced the mobility of people as well the ability of banks to cater fully to customers. Hence the decreased in the number of households that banks extend credit to.

Since March 16, the following measures have been taken by the BSP to stabilize credit and liquidity

• a policy rate cut (125 basis points since February 2020)
• reduction of the reserve requirements ratios of banks and non-bank financial  institutions by 200 basis points
• conduct of asset-purchase activities in the market
• easing of lending to micro, small, and medium enterprise
• increase of the single borrower’s limit for loans granted by banks and quasi banks
• other measures to increase credit and domestic liquidity

This article is published on BitPinas: [BSP] Bank Lending Continues to Grow in March 2020