Bank lending grew at its slowest pace in three months in October, with demand for business loans showing moderation amid a still elevated interest rate environment as the easing moves of the Bangko Sentral ng Pilipinas (BSP) take time to be felt.

Outstanding loans of big banks, excluding their placements with the BSP, expanded by 10.6 percent year-on-year in October to P12.5 trillion, according to preliminary figures released on Friday.

That was slower than the 11-percent annualized expansion recorded in September. Figures showed the October reading was also the lowest since the 10.4-percent increase back in July.

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Broken down, loans for businesses to bankroll various production activities grew by 9.1 percent last month to P10.6 trillion, easing from the 9.8-percent increase in September.

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The BSP said companies engaged in real estate (+11.3 percent), wholesale and retail trade (+7.2 percent) and manufacturing (+8.8 percent) had posted the highest credit growth in October.

Meanwhile, consumer loans surged by 23.6 percent in October to P1.5 trillion from 23.4 percent in September, driven by credit card borrowings that spiked by 27.3 percent. Auto loans and salary-based debt both expanded by a little over 18 percent.

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Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the ongoing easing cycle of the BSP could help spur loan growth, although the “lag effects” of monetary policy—currently estimated at three to four quarters— could mean that the rate cuts would not be immediately felt by the local economy.

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“Easing inflation trends could justify further policy rate cuts,” Ricafort said in a commentary.

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Unlike in the United States where a slowing job market prompted the US Federal Reserve to deliver a jumbo 50-basis point (bp) cut in September, the BSP had entered its easing era in August with the traditional quarter-point reduction of the policy rate.

In October, the BSP cut the policy interest rate again by 25 bps to 6 percent, with Governor Eli Remolona Jr. dropping clear hints of additional—but gradual—easing moves.

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But Remolona last week floated the possibility of an easing pause at the Dec. 19 meeting of the Monetary Board, citing persistent price pressures. Overall, the BSP chief said cumulative rate cuts worth 100 bps are on the table next year.

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