By Luisa Maria Jacinta C. Jocson, A reporter
The PHILIPPINES appear to having the best view of credit growth within the Southeast Asian countries, Bank of America (BofA) Global Research said.
“The Philippines is the only country within ASEAN (Association of Southeast Asian Nations) that shows a ‘developing’ trend and has seen a rapid recovery in credit growth at 9-10%… The latest reading of the index means a slight improvement from current levels, ” it said. report.
Under its ASEAN Credit Growth Indicators index, BofA examines “indicative trends and key turning points” for credit growth in the ASEAN-5. It gauges how bank loan growth is likely to shape up over the next one to two quarters.
Compared to its neighbors, the Philippines was the only country with a “progressive” outlook. This was driven by “increased growth in imports and net sales index, part offset by low car sales.”
Meanwhile, Malaysia and Indonesia appear to have a “downward” outlook, while credit growth in Singapore and Malaysia. expected to be “flat”.
BofA said its overall outlook for credit growth in ASEAN is likely to remain “temperate and mixed.”
“Our ASEAN economic team highlights Indonesia’s growth picture in 2024, driven by soft manufacturing data and a weak textile industry, but believes growth will pick up. firmer in 2025, and a number of additional benefits from the downstream sector,” he said.
It also noted Malaysia’s “positive near-term growth outlook, boosted by robust external demand, healthy labor market conditions and the promotion of tourism.”
The latest data from the Bangko Sentral ng Pilipinas (BSP) showed bank lending jumped 11% year-on-year to P12.4 trillion in September. This was the fastest growth in loans since 13.7% posted in December 2022.
Credit growth appears to be continuing amid rising interest rates, Juan Paolo E. Colet, managing director at Chinabank Capital Corp., said.
“We expect healthy credit growth to continue thanks to loose monetary policy, stable employment, and continued economic expansion,” he said in a Viber message.
The central bank began its easing cycle in August with a 25-basis-point (bp) rate cut, its first reduction since November 2020. Since then, the BSP has lowered borrowing costs by a total of 50 bps, bringing the rate to a key 6%.
The last meeting of the Finance Board this year is scheduled for Dec. 19. BSP Governor Eli M. Remolona, Jr. hinted at the possibility of another 25-bp cut before the end of the year.
“The outlook for lending remains positive as companies are very optimistic about business and we see a strong desire to borrow from consumers. There is also a good program of programs that will require a lot of loan money,” said Mr. Colet.
The increase in credit activity appears to be continuing amid strong demand and strong macroeconomic fundamentals, the BSP said earlier in its latest report on the Philippines. ffinancial system.
Data from the report shows that total loans increased by 12.4% year-on-year to P14.3 trillion as of June. The bank’s credit to gross domestic product (GDP) ratio stood at 56.4%, improving from 54.9% last year.
On the other hand, Mr. Colet noted risks such as the Trump administration’s incoming and restrictive trade policies.
“Next year may pose some challenges given the potential impact of Trump 2.0, but we hope the Philippines can weather the potential difficulties given our strong economic foundations and special relationship with the US,” he added.
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