Preliminary data show that outstanding loans of universal and commercial banks (U/KBs), net of reverse repurchase (RRP) placements with the BSP, decreased by 4.5 percent year-on-year in March following a 2.7-percent fall in February. On a month-on-month seasonally adjusted basis, outstanding universal and commercial bank loans, net of RRPs, declined by 0.12 percent.
Outstanding loans to residents, net of RRPs, went down by 3.9 percent while outstanding loans to non-residents1 contracted by 20.4 percent. Credit activity remained tepid on banks’ tighter lending standards as a resurgence in coronavirus cases dampened the domestic economic outlook.
Consumer loans to residents dropped by 9.9 percent in March after an 8.3-percent contraction in February due to the decline in credit card and motor vehicle loans.
Similarly, outstanding loans to major industries decreased, particularly to wholesale and retail trade and repair of motor vehicles and motorcycles (-9.7 percent), manufacturing (-5.5 percent), and financial and insurance activities (-5.1 percent). These declines were partially tempered by the expansion in loans to some key production sectors such as electricity, gas, steam, and air-conditioning supply (2.9 percent), real estate activities (1.5 percent), and human health and social work activities (11.6 percent). Overall outstanding loans for production activities, net of RRPs, fell by 3.2 percent in March after a 1.3-percent decline in the previous month.
Going forward, the BSP will continue to keep its monetary policy stance supportive of the government’s initiatives to address the pandemic. The BSP stands ready to take appropriate measures as needed to ensure ample liquidity and credit in the financial system, consistent with its price and financial stability objectives.
