Lower double-digit bank lending still possible for ’09 – BSP

October 7, 2009 10:39 am 

MANILA, Oct. 7 -– An official of the Bangko Sentral ng Pilipinas (BSP) remains positive that a lower double- digit growth for bank lending is achievable this year amid the slowdown of the domestic economy.

“I expect credit growth to remain positive (this year). A 10 percent increase is still doable,” said BSP Deputy Governor Nestor Espenilla Jr.

Monetary officials earlier projected bank lending to remain robust and post a double-digit growth this year but it has been decelerating due to the global economic crisis.

Last July, bank lending as net of reverse repurchase agreement (RRP) with the central bank stood at 8.7 percent, a drop from the previous months’ 14.3 percent.

Bank lending has been decelerating in the past few months with banks’ outstanding loans including RRPs registering a 2.9 percent growth last July from the previous month’s 11.1 percent.

Espenilla said the drop in bank lending is commensurate with the path of the domestic economy, which slowed to 0.4 percent in the first quarter this year but rebounded to 1.5 percent in end-June bringing the first half growth to one percent.

“(It) was in line with the moderation of economic growth,” he pointed out.

The BSP official explained that “normally credit tracks the growth of nominal gross domestic product."

“Credit is on the right spot given the underlying economy,” Espenilla said, adding that it is a business decision of banks to be cautious in their lending business due to the current economic situation.

In December 2008, bank lending including RRP expanded by 17.5 percent year-on-year while excluding RRP placements the growth stood at 20.5 percent, both of which are lower against the previous month’s 22.9 percent and 21.3 percent, respectively. (PNA)

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