MANILA - Outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the Bangko Sentral ng Pilipinas, declined by 5 percent year-on-year in April following a 4.5 percent contraction in March, the BSP said Monday.

On a month-on-month seasonally-adjusted basis, bank lending fell by 0.30 percent, the central bank said in a statement.

Outstanding loans to residents, net of RRPs, decreased by 4.5 percent while outstanding loans to non-residents declined by 20.2 percent, the central bank said.

"Bank lending remained weak as measures to contain the resurgence in COVID-19 cases constrained domestic economic activity and continued to dampen market sentiment," the BSP said.

Consumer loans decreased by 10.2 percent in April after declining 9.9 percent in March "due mainly to the continued drop in credit card and motor vehicle loans," it said.

Outstanding loans to key industries fell, specifically wholesale and retail trade, and repair of motor vehicles and motorcycles, manufacturing, and financial and insurance activities tempered by growth in loans to professional, scientific and technical activities, real estate, and human and social work activities, data showed.

Overall outstanding loans for production activities, net of RRPs, fell 3.9 percent in April, following a 3.2 percent decline the previous month.

"Going forward, the BSP's key priority is to preserve policy support to facilitate the recovery of the domestic economy," it said.

The BSP in May kept key interest rate at its record low of 2 percent to support the economy. Further adjustments could be done when the economy is on its way to sustainable recovery, BSP Governor Benjamin Diokno on Monday told ANC.

The Philippines has just enacted a measure that would allow banks to offload bad loans.

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