NextGen Day

The slower increase in bank lending is still being driven by pandemic-related issues, but a senior Bangko Sentral ng Pilipinas (BSP) official stated that business-related loans have improved since last July.

BSP Senior Assistant Governor Illuminda T. Sicat stated in a video briefing on Friday, September 24, 2021, that bank lending statistics as of late July indicated that the number of loans remained poor “although the shrinkage is decreasing.”

“In other words, the amount of loans borrowed by the corporate sector is already increasing,” she added.

According to BSP statistics, outstanding loans of universal and commercial banks (U/KBs), excluding placements in the central bank’s reverse repurchase (RRP) facility, fell by 0.7 percent year over year in July, down from a 2 percent drop the month before.

U/KBs outstanding loans increased by 0.5 percent month over month.

Consumer loans fell by 8.2 percent in July, compared to 8.7 percent a month earlier.

The decrease in bank lending, according to Sicat, is reasonable considering the pandemic’s effect on both companies and families.

“However, the statistics on the number of loans issued by commercial banks continue to be negative, although at a slower rate,” she said.

In terms of mood, the pandemic continues to have an effect, with the third-quarter business expectations survey (BES) for 2021 becoming negative at -5.6 percent, down from 1.4 percent the previous quarter.

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 about government policies regarding the pandemic, and higher raw material prices were all cited as reasons for respondents’ pessimism.

They also anticipate the peso to weaken against the US dollar this quarter, with inflation rising through the end of 2021.

Consumer confidence, on the other hand, remained low, although improved from -30.9 percent in the second quarter to -19.3 percent.

This trend was linked to an increase in the number of working family members, additional/increased money, and successful government pandemic policies and programs.

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