Phl bank lending remains solid – Nomura

Nomura Securities Ltd. said credit growth in the Philippine remained solid on the back of higher real disposable incomes arising from the government’s tax reform program.

In a research note titled “Philippine: Credit growth remains solid,” Nomura said private consumption brought about by lower personal income tax rates under Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law continues to fuel credit growth.

“By contrast, whole and retail trade loan growth continued to climb, in line with our view that private consumption is holding up as real disposable household incomes are rising this year, with the income tax cuts under TRAIN offsetting higher inflation,” the investment bank said.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed credit growth picked up to 19.6 percent in end-July from 19.1 percent in end-July last year amid the tighter monetary conditions in the country,

Loans extended by banks reached to P7.75 trillion in end-July, P1.27 trillion higher than the P6.48 trillion released in end-July last year.

Lending to the manufacturing sector picked up to 19 percent to P1.02 trillion accounting for 13.2 percent of the total loans, while loans to the wholesale and retail trade as well as repair of motor vehicles and motorcycles increased faster at 25.6 percent to P1.07 trillion for a 13.9 percent share

On the other hand, the growth in lending to the real estate sector eased 15.9 percent to P1.31 trillion for a 16.9 percent share, while the amount disbursed to the electricity, gas, steam and airconditioning supply eased anew to 9.7 percent to P853.76 billion for an 11 percent share.

Furthermore, the BSP chief said the increase in loans for household consumption further slowed down to 16.9 percent in July as releases reached P615.35 billion from a year-ago level of P526.6 billion.