Banks still get to boost lending Michelle Remo Philippine Daily Inquirer
July 04, 2009
MANILA, Philippines — Banks still managed to boost lending despite the ongoing crisis, although the growth in their loan portfolios slowed down in May as loan officers continued to exercise caution to prevent increase in defaults.
The Bangko Sentral ng Pilipinas (BSP) reported Friday that outstanding loans granted by commercial banks amounted to P2.13 trillion as of end-May, registering an annual growth rate of 10.2 percent.
The expansion was slower than the 13.4 percent in April and 18.9 percent in March. This prompted projections that bank lending will grow by only 10 percent or below this year, pale if compared with the over 20 percent recorded last year.
But BSP Governor Amando Tetangco Jr. said the fact that bank lending was still growing meant that the country was far from experiencing the credit crunch gripping advanced economies.
Banks are awash in cash, partly because of the central bank’s policy to inject liquidity into the financial system, allowing banks to have enough resources to lend to the public, he said.
“It seems logically intuitive that without the monetary policy easing of the BSP since December 2008 … and other liquidity-enhancing measures, bank lending may not have grown as fast,” Tetangco said.
As of December, the BSP had cut its key policy rates by a total of 175 basis points. The overnight borrowing and lending rates are now at 4.25 and 6.25 percent.
Monetary officials said tempered growth in bank lending was expected this year because of the recession in the United States and other advanced economies.
So far, banks exposure to bad debts remains minimal, with the nonperforming loans (NPL) ratio standing at around 3.5 percent. NPL ratio is the proportion of bad debts to total outstanding loan portfolio of banks.
