The Bangko Sentral ng Pilipinas (BSP) reported that loans outstanding of universal and commercial banks (UKbs), net of reverse repurchase placements (RRP), grew by 10.4% year-on-year (YoY) to P12.1 trillion in July 2024, which is a slight acceleration
from the 10.1% YoY growth achieved in June 2024. This is also the 8th straight month that loan growth has accelerated, signaling a recovery in overall credit demand in anticipation of a monetary easing cycle.<\/p>\n\n\n\n
Consumer lending remains strong (and is outpacing the corporate segment) as it posted a growth rate of 24.3% YoY. There were encouraging signs across all product lines as credit cards were higher by 28.2% YoY on the back of sustained household
spending, while auto loans grew by 19.9% YoY.<\/p>\n\n\n\n
Most banks will likely see an improvement in loan growth momentum on the back of the BSP\u2019s rate cut cycle as well as easing inflation. We forecast systemwide loan growth to reach 12-13% in 2024-2025. <\/p>\n\n\n\n
For consumer loans, lowering of mortgage rates can support a recovery in residential loans, which has underperformed in recent quarters (relative to credit cards and auto) amid tepid residential presales growth. <\/p>\n\n\n\n
For corporate lending, banks are already seeing some demand for capex and project, financing, which can further accelerate as rate cuts come through.<\/p>\n\n\n\n
We maintain our overweight recommendation on these banks: MBT, BDO, and BPI.<\/strong><\/p>\n\n\n\n