MANILA - Loans, which have been lagging for the last few months, could start growing positively again by the third quarter as the government's vaccination drive gains ground, Bangko Sentral ng Pilipinas Governor Benjamin Diokno on Monday said.
The COVID-19 pandemic caused risk-averse banks to tighten requirements for loans while demand from cash-strapped Filipinos declined due to uncertainties, Diokno told ANC.
"As we open up the economy, I think there’s growing confidence. Consumer and business confidence point to a more optimistic outlook in the next few quarters," Diokno said.
"There’s a lot of liquidity in the market. There’s risk aversion on the part of the banks but I think confidence is coming back, largely because of the vaccine, for me that’s the game-changer here, the vaccination program," he added.
The Philippines started its inoculation drive last March.
Due to the pandemic, many companies held off expansion plans which usually drive lending growth. Consumers, who lost their jobs or had their incomes reduced, also refrained from borrowing.
The usually conservative local government units, meanwhile, have been borrowing more with a total of P60 billion in 2020. There could be more borrowing this year, or the year before an election year, Diokno said.