BANK lending and money supply growth both accelerated in May, the Bangko Sentral ng Pilipinas (BSP) reported on Friday, despite elevated interest rates.

The outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the BSP, grew by 10.1 percent from 9.6 percent in March.

It was the sixth consecutive monthly gain and was also the highest since March 2023's 10.2 percent.

Month on month and seasonally adjusted, the expansion was at 1.1 percent.

Domestic liquidity or M3, meanwhile, expanded by 6.5 percent to P17.4 trillion, an improvement from April's 5.6 percent.

It was also up 1.1 percent month on month and seasonally adjusted.

Robert Dan Roces, chief economist at Security Bank Corp., said the latest data indicated rising loan demand.

"Despite high interest rates, consumer loans remained strong, on pent-up demand or essential spending needs," Roces said.

The BSP's benchmark rate — used by banks to set their own lending rates — currently stands at 6.5 percent, the highest since 2007.

"This continued growth suggests some optimism in the outlook for Philippine consumer spending," Roces added.

Outstanding loans to residents net of RRPs grew by 10.2 percent in May from 9.6 percent in the previous month. Those granted to nonresidents, however, slowed to 8.1 percent from 10.8 percent.

Loans for production activities grew by 8.4 percent from 7.8 percent.

The BSP said this was largely due to an expansion in lending for real estate activities (13.2 percent), wholesale and retail trade, and repair of motor vehicles and motorcycles (11.1 percent), manufacturing (10.1 percent), transportation and storage (26.7 percent), and electricity, gas, steam and air-conditioning supply (7.7 percent).

Consumer loans to residents grew by 25.6 percent, slightly higher than April's 25.3 percent, given a continued increase in credit card, motor vehicle and salary-based general purpose consumption loans.

As for money supply, domestic claims growth stayed at 10.7 percent in May, unchanged from April's revised figure.

Claims on the private sector, in particular, grew by 11.6 percent from revised 10.9 percent amid a "sustained expansion in bank lending to nonfinancial private corporations and households," the BSP said.

Net claims on the central government, meanwhile, slowed to 12.2 percent from April's 13.9 percent amid sustained borrowings.

In peso terms, net foreign assets (NFA) expanded by 4.9 percent from April's 2.1 percent.

The central bank's NFA position grew 8.6 percent, while that of banks was said to have contracted "account of higher bills and bonds payable."

The central bank said that it would continue to "ensure that domestic liquidity conditions remain consistent with the prevailing stance of monetary policy, in line with its price and financial stability objectives."

It will also "ensure that domestic liquidity and credit conditions remain in line with its price and financial stability objectives."