Alerts

   John Martin Luciano, CFA

Loans of universal and commercial banks grew at a slower pace of 10.5% y/y in August from 11.1% y/y in the previous month. Broken down, loans for production activities expanded at a slower rate of 9.0% y/y (vs 9.8% y/y in July). The growth was driven primarily by lending to the following sectors: real estate activities (+17.7% y/y); financial and insurance activities (+16.3% y/y); electricity, gas, steam, and air conditioning supply (+11.2% y/y), construction (+39.2% y/y); and wholesale and retail trade, repair of motor vehicles and motorcycle (+3.7% y/y). In contrast, loans for household consumption grew by 25.4% y/y (vs 23.0% y/y in July) largely due to faster growth in motor vehicle, credit card, and salary-based general purpose consumption loans.

   John Martin Luciano, CFA

The BSP expects September inflation to settle within 0.6% to 1.4%. The central bank noted that the continued decline in rice prices as well as the downward adjustment in electricity rates could be offset by the recent increase in fuel prices and higher prices of selected food items due to weather disturbances

   John Martin Luciano, CFA

Data from the Bureau of Treasury showed that the national government’s outstanding debt as of end-August increased to Php7.9Tril, 11.8% higher compared to the Php7.1Tril recorded in August last year. External debt rose 4.4% to Php2.67Tril due to the effect of local and third-currency fluctuations and the issuance of yen-denominated bonds in the Japanese market. Meanwhile, domestic debt climbed by 0.4% to Php5.27Tril as a result of the net issuance of government securities and impact of peso depreciation on onshore dollar bonds. Note that according to the DBM, the national government’s outstanding debt is projected to grow to Php7.85 Tril by the end of 2019, and continue to increase to Php8.77 Tril by the end of 2020.

   John Martin Luciano, CFA

The BSP announced a 100 bps reduction in banks’ reserve requirement ratio (RRR) effective at the start of November. The cut will bring down the RRR for universal and commercial banks, thrift banks and rural banks to 15%, 5%, and 3%, respectively. Economists estimate that the latest cut will inject ~Php90 to Php110Bil additional liquidity into the financial system. Meanwhile, the BSP said that this decision is in line with the central bank’s broad financial sector reform agenda to promote a more efficient financial system by lowering financial intermediation costs. (Source: BSP, Businessworld)

   Richard Lañeda, CFA

   Richard Lañeda, CFA

   Richard Lañeda, CFA

   Richard Lañeda, CFA

   Richard Lañeda, CFA

   Richard Lañeda, CFA