Bank Lending Growth Moderates in August; Domestic Liquidity Expands Faster

The Bangko Sentral ng Pilipinas (BSP) reported that bank lending in the country continued to expand in August, although at a slightly slower pace compared to July. According to preliminary data, loans from universal and commercial banks (U/KBs) to businesses and consumers grew by 11.2 percent year-on-year, slower than the 11.8 percent recorded in the previous month. The total outstanding loans reached PHP13.61 trillion during the period.

Loans to residents increased by 11.6 percent in August, while loans to non-residents recorded a smaller contraction of 5.9 percent, compared to the 8.1 percent decline in July. Business-related loans also moderated, growing by 9.9 percent versus 10.8 percent in the prior month. Key industries that benefited from increased lending include real estate, utilities, trade, finance, and communication services.

Meanwhile, consumer loans to residents—including credit card, auto, and salary loans—grew by 23.9 percent, showing strong demand in the household sector. On the monetary side, domestic liquidity (M3), which measures the amount of money circulating in the economy, rose by 6.6 percent to approximately PHP18.6 trillion in August, outpacing July’s 6.2 percent growth rate.

The BSP attributed the expansion of money supply mainly to higher claims on the domestic sector, which increased by 9.8 percent, supported by sustained bank lending to private corporations and households. Claims on the government rose by 6.1 percent due to increased borrowings. Meanwhile, net foreign assets (NFA) in peso terms rose by 4.8 percent year-on-year, reversing the 0.6 percent decline in July, as both the BSP’s and banks’ NFA improved.

The central bank emphasized that it will continue to monitor liquidity and credit conditions to ensure they remain consistent with its goals of maintaining price stability and supporting sustainable economic growth.