MANILA – Philippine Savings Bank expects to achieve its 20 percent loan growth goal for 2012, given the across-the-board increase in all its loan products as well as the further drop in interest rate in the country, a government press release said.

PSBank president Pascual Garcia III said he expected a bright outlook on the bank’s loan growth because of the higher confidence in the country's economy.

“Local businessmen are more active and the Bangko Sentral (ng Pilipinas) has done its share of bringing down interest rate and help stoke demand,” he said.

Garcia said the hike in minimum wage as well as the improvement in government spending were among the drivers of loan growth.

In the first half this year, PSBank's loan grew 14 percent to P67 billion with double-digit growth both from consumer loans and large enterprise group.

Recently, central bank’s policy-making Monetary Board implemented another 25 basis point cut in the BSP rates, the third for this year after the same level of cut last January and March.

To date, the central bank’s overnight borrowing or reverse repurchase rate is at record-low of 3.75 percent and the overnight lending or repurchase rate is at 5.75 percent.

Garcia said this was a negative development vis-à-vis bank earnings per se but said that it was a “positive sign” for growth because it would encourage more people to borrow from banks.

Meanwhile, Garcia expects the domestic economy to continue expanding after a higher-than-expected 6.4 percent growth of the domestic economy in the first quarter this year.

Garcia said the government’s fiscal position was “showing such a dramatic improvement” due to the increase in public spending and below-target budget gap.

To date, both Fitch Ratings and Standard and Poor’s rate the country one notch below investment grade while Moody’s Investors Service rates the country two notches below investment grade.*PNA

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