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Big banks’ outstanding loans expanded to a 28-month high of 12.2 percent year-on-year in December 2024 on sustained loan demand and liquidity as the market anticipates the gradual easing of borrowing rates.
Based on Bangko Sentral ng Pilipinas (BSP) data, bank lending grew further in December, up from November’s 11.1 percent. In December 2023, lending went up by 7.1 percent year-on-year.
The last time bank lending was at the 12.2-percent level was August 2022, from 12 percent in July of the same year.
The universal and commercial banks’ outstanding loans amounted to P13.138 trillion net of reverse repurchase (RRP) placements with the BSP in December.
With RRP, gross value totaled P13.518 trillion. RRPs which are open to big banks, thrift banks and non-banks, are BSP monetary instruments where the BSP sells government securities from a bank with a commitment to buy them back at a later date.
The BSP also reported that in December, the financial system’s domestic liquidity or M3 was steady at P18.786 trillion, it grew by 7.7 percent year-on-year. It is the same growth recorded in November.
On a month-on-month seasonally-adjusted basis, the outstanding big banks’ loans -- net of RRPs – went up by 1.4 percent. M3 slightly rose by 0.2 percent on a month-on-month seasonally-adjusted basis.
The BSP in a statement said it “will ensure that domestic liquidity and bank lending conditions remain consistent with its price and financial stability objectives.”
Based on the latest data, loans for production activities increased by 10.8 percent versus 9.8 percent in November. This amounted to P11.216 trillion in December.
The BSP noted the sustained increase in lending to several key sectors including wholesale and retail trade, repair of motor vehicles and motorcycles which grew by 10.1 percent to P1.509 trillion; electricity, gas, steam and air-conditioning supply, up 14.2 percent to P1.454 trillion; manufacturing grew by 7.4 percent to P1.365 trillion; financial and insurance activities were also up by 7.4 percent to P1.06 trillion; and construction grew 12.6 percent to P554.41 billion.
Consumer loans likewise expanded by 25 percent in December compared to 23.3 percent in November. The peso value was at P1.591 trillion.
During the period, credit card loans rose by 29.4 percent to P934.55 billion; motor vehicle loans grew 19.5 percent to P454.365 billion; and salary-based general purpose consumption loans increased 16.5 percent to P157.942 billion.
Meanwhile, the BSP said it will “continue to ensure that domestic liquidity conditions remain consistent with the prevailing stance of monetary policy.”
After reducing the policy rate by a combined 75 basis points (bps) in 2024 amid a moderating inflation path, the BSP is maintaining a measured approach in gradually reducing the target reverse repurchase rate to support economic growth and employment. The benchmark interest rate is currently at 5.75 percent.
The BSP said in a report that the easing cycle will continue to boost bank lending and encourage borrowing this year and in 2026.
Under M3 in December, domestic claims grew by 10.4 percent year-on-year versus 10.8 percent in November.
The BSP noted that claims on the private sector went up by 12.2 percent, a faster pace of growth than November’s 11.7 percent. The growth was attributed to the continued expansion in bank lending to non-financial private corporations and households.
Net claims on the central government also expanded by 7.2 percent compared to 9.2 percent in November because of the higher government borrowings during the period.
As for net foreign assets (NFA), this grew by six percent year-on-year in December from 9.8 percent in November.
The BSP said its NFA rose by 6.8 percent “reflecting the increase in gross international reserves relative to a year ago” while the NFA of banks declined due to higher bills and bonds payable.
