Philippine bank loans grow 16.8% to $155.85b in November

This represents a slower growth rate compared to October.

Philippine bank loans expanded at a slower pace of 16.8% in November to $155.85b (PHP8.13t) from 18.1% in October amidst the rising interest rate environment, according to central bank data.

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Loans for production activities, which constituted 88.7% of banks’ aggregate loan portfolio, also rose at a slower pace of 17.2% in November from 18.7% in November. Construction drove lending gains after accounting for 38.1% of production loans followed by financial and insurance activities (29.4%), wholesale and retail trade, repair of motor vehicles and motorcycles (19.7%); manufacturing (16%); real estate activities (12.5%); electricity, gas, steam and airconditioning supply (11%).

Similarly, loans for household consumption slowed to 13.8% in November from 14.6% in the previous month due to a weaker expansion in credit card loans, motor vehicle loans and salary-based general purpose consumption loans.

Banks in the Philippines have been booking double-digit growth in loans over the past months in line with the government’s ongoing infrastructure drive. As a result, however, capital ratios are set to decline amids the banking sector’s rapid lending activities. “Capital ratios will decline due to fast loan growth, but the banks’ ability to raise external capital will limit capital erosion,” Moody’s Investors Service said in an earlier statement.