Published: December 4, 2013 | Updated: November 6, 2019 | Posted by: Moneymax | Loans
The Central Bank of the Philippines reported that outstanding loans of universal and commercial banks grew by 13.6% in October 2013. This is a slowdown from the 16.2% growth recorded in September.
Looking at the data inclusive of reverse repurchase placements show that the October figure was at 13.5% compared to 14.9% in September.
Loans for production activities grew by 12.3% in October, also a drop from the 15.3% recorded in September. This sector comprises more than four-fifths of the aggregate loan portfolio of banks. This growth was driven by increases in construction (which grew by 44.1%) electricity, gas and water (26.4%) and real estate, renting, and business services (20.1%). Transportation, storage, and communication loans accounted for the highest decrease for October (-3.6%) followed by agriculture, hunting, and forestry (-1.6%).
Credit card and auto loans also saw an increase for this period. The 10.1% growth credit card loans and the 14.9% growth in auto loans helped drive the 11.2% consumer loans growth recorded in October from 10.7% in September.
The Central Bank also reported that Universal and commercial banks were able to keep their gross non-performing loans (NPLs) low. These banks were able to keep this figure low at 2.6% of total loan portfolio for September in 2013.
Universal and commercial banks in the Philippines posted P 102.09 billion in NPLs in September of this year. This figure is lower than the P103.42 billion they posted last year. The total loan portfolio of banks for September of this year increased to P3.92 trillion compared to P3.44 trillion in September last year.
These banks have also been prudent to create reserves to cover potential credit losses as these banks have set aside 128.8% of their gross NPLs for the month.
Last October, the Monetary Board decided to maintain the central bank’s policy to maintain interest rates at 3.5% for the overnight RRP (borrowing) rate and 5.5% for the overnight RP (lending) rate. The board made the same decision in its September meeting.
The board made the decision to keep interest rates based on their assessment of a benign inflation environment. The board is forecasting inflation to remain within the range of 4% in 2013-2014. They also noted that inflation risks remain unchanged. The board is set to have a meeting again on December 12.
Whether the board will decide to keep the interest rates steady after considering the effects of typhoon Yolanda has yet to be seen. The Philippine Star reported that inflation could increase to 3.6% for November from 2.9% in October due to typhoon Santi, which hit Luzon, and typhoon Yolanda, which hit Eastern Visayas.
BSP Governor Amando M. Tetango Jr. said the damage to agricultural production will likely push up prices. Inflation has averaged 2.8% as of October.
The latest report from the National Disaster Risk Coordination Center says that the total cost of damages brought on by typhoon Yolanda is pegged at P34.36 billion. Damage to crops almost reached P7 billion while damage to fisheries almost reached P6 billion. Damage to infrastructure stood at P14.5 billion while damage to schools was pegged at P2.309 billion.
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