GROWTH in bank lending and money circulating in the economy both slowed in June, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.
Outstanding loans of universal and commercial banks expanded by 9.8 percent, preliminary central bank data showed, down from May’s 12.1 percent and marking a four-month low since February’s 9.6 percent.
Domestic liquidity, meanwhile, expanded by 10.6 percent to P20.5 trillion in June, easing from the 12.8-percent growth recorded in May.
Loans for business activities also grew at a slower 9.2 percent from 11.7 percent, which the BSP said was a reflection of weaker growth in borrowing by sectors such as construction, education and other service activities.
Consumer loans to residents also slowed to 17.8 percent from 19.0 percent due to an easing in credit card and motor vehicle loans.
The BSP said this suggested “a more measured pace of household borrowing.”
Reyes Tacandong & Co. senior adviser Jonathan Ravelas said the moderation in bank lending growth suggested that both businesses and consumers are becoming more cautious and selective about taking on new debt.
“Companies appear to be adopting a wait-and-see approach amid global uncertainties, focusing more on managing cash flow and improving operational efficiency rather than aggressively expanding,” he said.
“On the consumer side, while inflation has eased, many households remain mindful of their finances and are prioritizing essential spending over new borrowing.”
Still, Ravelas said loan growth “remains healthy and positive, indicating that the economy is still expanding, albeit at a more measured and sustainable pace.”
As for liquidity, or M3, domestic claims expanded by 10.9 percent in June, slower than the 13.3 percent recorded in May.
Private sector claims, in particular, posted slower growth of 11.7 percent from 13.2 percent, while claims on the central government also slid to 12.9 percent from 16.2 percent in May.
“Borrowings by both the private and public sectors remained the main drivers of M3 growth,” the BSP said.
“The national government’s issuance of debt securities and withdrawal of deposits from the BSP and banks to finance spending also supported domestic liquidity growth,” it added.
Higher net foreign assets ( A) also contributed, with the BSP’s growing by 6.1 percent while banks recorded a contraction due to higher foreign exchange-denominated bills payable.
The central bank said it would continue to ensure that both domestic liquidity and bank lending conditions “remain consistent with its price and financial stability” objectives.
