BSP: Loan activities seen to ramp up in second half
MANILA – Loan activities could ramp up in the second half of the year and hit double-digit rates again as the economy accelerates, Bangko Sentral ng Pilipinas governor Amando M. Tetangco Jr. said.
Bank loans have languished in single-digit levels since June 2009 and has never pushed past 9.9 percent which the industry last posted in December last year.
Tetangco said both corporate and household borrowers were notable performers the past several months and their borrowing activities could strengthen along with the buildup of economic momentum.
“Corporate and consumer credit are both strong,” he said.
Consumer loans in the form of credit card purchases, auto as well as personal loans have grown above 10 percent since December 2009 but production-related loans obtained by the corporate sector, in part, because of the global financial downturn, did not perform as much although it continued to post positive growth.
Consumer loan growth rates accelerated from less than five percent in March this year to 6.4 percent in April, 7.9 percent in May and finally to 9.3 percent in June.
Tetangco said it should be possible for bank loan growth to post double-digit rates in the second half given the strong performance of the economy which accelerated to 7.9 percent in terms of the gross domestic product in the second quarter from 7.8 percent in the first quarter.
Accelerated growth had also been possible because borrowers tapped not just the banks which have been their traditional source of funding but other sources as well.
Tetangco said those requiring capital raised their requirements also from the debt and equities markets which are becoming more and more reliable alternative financing sources.
According to him, while corporate bond sales have become more frequent in recent months, the activities could accelerate in the coming months.
“If you look at the size of the bond issues, these are going up in 2010 and it will continue to grow. You have better indication that there is quality improvement in the financial markets. There are more options now open to corporates and other borrowers,” Tetangco said.
He also said the increased debt and equities markets activities were an indication of sufficient liquidity in the system in which players freely move in and out of the market, alternately buying and selling financial instruments at will.
Finance Secretary Cesar Purisima had earlier said these more recent activities bode well for the domestic capital market where while transactions do not happen as often as regulators like, could change for the better in the coming months as government lead in introducing more financial instruments such as zero-coupon bonds, for example.
Purisima had said government will lead by example via the sale of more financial instruments than are presently available.*PNA
