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Bank lending tempers contraction in July

September 01, 2021 - Wednesday 5:09 PM by GDM

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Bank lending posted a softer decline in July, giving the Bangko Sentral ng Pilipinas a good news amid its efforts to help the economy recover.

BSP data showed outstanding loans granted by big and commercial banks — excluding their lending to each other — declined 0.7% year-on-year in July.

That was milder compared with the 2.0% annual slump posted in June. Month-on-month, credit rose by 0.5%.

Broken down, the BSP said outstanding loans to Filipino borrowers slipped 0.1% year-on-year in July, slower than the 1.4% drop in June.

However, lending to foreigners declined 17.4% on-year in July, smaller than 19.7% collapse in the preceding month.

Bank lending remains in the negative territory “as a new wave of COVID-19 infections owing to more virulent virus strains continue to dampen economic prospects and temper market sentiment,” the BSP said.

By type of loans, consumer loans went down 8.2% on-year due to continued contraction in motor vehicle loans.

Meanwhile, loans to companies expanded 0.8%, reversing a 0.6% contraction posted a month ago.

“Looking ahead, the BSP will continue to prioritize monetary policy support in order to ensure the continued momentum of economic recovery. At the same time, the National Government’s targeted fiscal initiatives and health interventions will be crucial in boosting domestic demand and strengthening the recovery,” the central bank said.

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