MANILA, Philippines (UPDATE) - Lending by the country's biggest banks picked up in June on more demand for production and consumer loans.
Data released by the Bangko Sentral ng Pilipinas (BSP) showed that bank lending, excluding reverse repurchase placements with the central bank, grew 9.6% in June to P2.2 trillion, compared to the previous month's expansion of 8.1%.
Including central bank placements, loans extended by banks grew 5.5% to P2.4 trillion, slowing from May's 7.7% growth.
The growth of loans for production activities, which comprised more than four-fifths of the total loan portfolio, accelerated to 9.3% in June from 7.9% a month ago. Similarly, consumption loans, such as credit card debt and auto loans, rose at a faser annual pace of 13% in June against 10.3% in May.
The BSP said in a statement that continued credit growth reflects improvement in domestic economic activity. It added it will ensure that credit and liquidity are supportive of broad-based economic growth, while promoting low and stable inflation.
Domestic liquidity or money supply (M3) growth slowed to 10.3% in June from 10.7% in May, the BSP also reported.
Month on month, M3 was up 0.3% after a revised 2.2 % rise in May.
M3 is the broader measure of money circulating in the system. The BSP looks at M3 when setting monetary policy because of its impact on inflation.
The central bank has held its policy rate at a record low of 4% since July 2009. It is among the handful in Asia that are yet to lift interest rates after the global financial crisis.
Policymakers have said they do not see an urgent need to raise the interest rate, with inflation on track to meet the government's targets of 3.5% to 5.5% in 2010, and 3% to 5% in 2011.
The central bank has twice cut its 2010 and 2011 inflation forecasts given the benign inflation outlook. It now expects inflation to average 4% in 2010, and 3% in 2011.
The Philippines' inflation rate held at its 2010 low of 3.9% in July, pushing out the timing of any rise in interest rates as benign price pressures allow policymakers to pursue growth. With Reuters