Pandemic-related factors continue to drive the weaker growth in bank lending, but a ranking Bangko Sentral ng Pilipinas (BSP) official said an improvement has been noted on business-related loans since last July.
In a virtual briefing on Friday, BSP Senior Assistant Governor Illuminda T. Sicat said bank lending data as of last July showed that amount of loans remains weak “but the contraction is diminishing.”
“In other words, there are already increases in the volume of loans being borrowed by the business sector,” she said.
BSP data show that outstanding loans of universal and commercial banks (U/KBs), excluding placements in the central bank’s reverse repurchase (RRP) facility last July declined by 0.7 percent year-on-year from a 2 percent decline in the previous month.
On a month-on-month basis, U/KBs’ outstanding loans inched up by 0.5 percent.
During the same period, consumer loans dropped by 8.2 percent last July from a month ago’s 8.7 percent.
Sicat said the drop in bank lending is understandable given the impact of the pandemic both on businesses and households.
“But if you look at the data on the amount of loans granted by commercial banks, it remains to be negative although at decelerating pace,” she added.
Relatively, the pandemic continues to impact sentiments, with results of the 2021 third-quarter business expectations survey (BES) turning negative at -5.6 percent from the 1.4 percent in the previous quarter.
Respondents cited as factors for their pessimism the impact of the pandemic; the re-imposition of the enhanced community quarantine (ECQ) in the National Capital Region (NCR) last August; the drop in sales, orders, and income; concerns on government policies regarding the pandemic; and higher prices of raw materials.
They also expect the peso to become weaker against the US dollar during the quarter and for inflation to rise until end-2021.
On the other hand, consumer confidence remained negative but the index improved from -30.9 percent in the second quarter of this year to -19.3 percent.
This development was attributed to the increase in the number of family members who have jobs; additional/higher income, and effective government policies and programs on the pandemic.