Consumers borrowing more

Credit card use, auto loans rise amid weak business credit take-up

BANKS extended loans to the business sector at a slower pace in September, but an uptick in borrowings by households kept overall lending growth steady from August. In a statement, the Bangko Sentral ng Pilipinas (BSP) said the outstanding loans of universal and commercial banks, net of their overnight transactions with the central bank, grew at 5.9 percent in September, or the same as in August.

“Increasing signs of global economic recovery along with ample liquidity conditions should provide support to credit activity going forward,” BSP Governor Amando Tetangco Jr. said.

Loans to the production sector, however, grew at a slower 5.2 percent from 5.7 percent in August. The total outstanding loans to this sector stood at P1.765 trillion. The manufacturing industry remained the top debtor at 18 percent of the total, but borrowing 20-percent less in September.

Other top borrowers—the real estate and business services, agriculture, and trade industries—also tapped less bank credit, while the electricity and gas, and transportation and communication industries took up more loans.

In contrast, borrowings by households grew at a faster 6.9 percent in September from the 5.3 percent the previous month. This was led by the 29.1-percent surge in auto loans, up from 21.2 percent the month before.

The bulk of the P169 billion in household borrowings, however, comprised of credit card receivables at P110 billion, which had grown by a faster 7.1 percent from 3.1 percent previously.

The BSP earlier said loan growth is expected to reach 10 percent this year despite the recent calamities.

Modest credit growth resulted in slower domestic liquidity or M3 expansion at 11.6 percent in September from 13.4 percent in August. Public and private sector credit grew 8.8 percent and 10.8 percent, respectively.

Tetangco said credit activity would depend on global economic recovery and ample liquidity conditions.

Third-ranked lender Bank of the Philippine Islands earlier downgraded its lending growth forecast to 5 percent from the previous 8 percent, citing companies’ preference for fund-raising in the capital markets. –Manila Times