RP lending rate third lowest in Asia

RP lending rate third lowest in Asia

The Philippines' real lending rate is the third lowest among
10 countries in Asia, including Japan and India, the central bank
said Sunday.

Real lending rate refers to the difference between the
country's inflation rate and the average lending rate of banks.

In a statement, central bank Governor Rafael Buenaventura said
the low lending rate level was bolstering expectations of a
stronger economic activity in the coming months.

"This implies a relatively lower cost of capital for business
which should augur well for economic activity in the near term,"
Buenaventura said.

Based on a July 15 survey, the central bank said Japan had the
lowest real lending rate of 3 percent, followed by South Korea
with 4.1 percent.

The Philippines and Malaysia ranked third with 4.98 per cent,
followed by Singapore with 5.7 percent and Indonesia with 6.53
percent.

Hong Kong had the highest real lending rate of 8.23 percent,
followed by Taiwan with 7.84 percent.

Despite the modest rates, bank lending has not yet picked up
in the Philippines with the level of loans extended by banks
dropped by 1.8 percent as of May compared to last year.

"Banks are still hesitant to lend to individuals and small
companies who need the money while the big borrowers see no room
yet for expansion and thus no need for free loans," an official
noted.

The central bank said the country's overnight borrowing rate
of 7 percent and overnight lending rate of 9.25 percent were the
lowest level in 10 years.

The rates were not expected to rise in the coming months, with
the country's inflation averaging at 3.5 percent in the first six
months of the year, Buenaventura said. --DPA