Bank lending slows in January

Posted at 03/09/12 6:59 PM

MANILA, Philippines - Bank lending growth eased slightly in January from the previous month, the Bangko Sentral ng Pilipinas (BSP) reported Friday.

Outstanding loans extended by the country's universal and commercial banks rose 19.1% in January to P2.76 trillion, after a 19.3% growth in December.

Bulk or P2.5 trillion of the loans went to corporations.

Loans to corporate entities grew 19.7%, while loans to individuals went up 19.9%.

Meanwhile, money supply (M3) during the month also rose 7.2% to P4.5 trillion, thanks to foreign exchange inflows from remittances and portfolio investments. The growth was faster than December's 6.3%.

M3 or domestic liquidity is a measure of money circulating in the economy. It is one of the indicators the central bank reviews when setting monetary policy because of its impact on inflation.

"Steady credit growth, together with expected ample liquidity and lower market interest rates, are seen to support the domestic economy in the midst of a weaker global economic outlook,” the BSP said.

Annual inflation in the Philippines eased to its lowest in over two years in February, giving the central bank room to cuts its policy rates. The central bank has slashed its main policy rate by 25 basis points to a record low of 4%.