Domestic liquidity (M3) in April increased by 13.2 percent year-on-year to reach P5.2 trillion, the Bangko Sentral ng Pilipinas (BSP) said on Friday.
In a statement, the BSP said that the growth was “nearly unchanged” to the 13.3 percent revised expansion recorded in the previous month.
On a monthly basis, seasonally adjusted M3 also expanded by at a faster pace of 3.2 percent, compared to the 1.7 percent growth in March.
The central bank added that the growth of money supply was driven largely by the sustained expansion in net domestic assets, which increased by 19.7 percent in April because of the continued increase in credits to the private sector, reflecting the robust lending activity of commercial banks.
Meanwhile, it also reported that claims on the private sector increased by 14.3 percent in April, while claims on the public sector grew by 11.9 percent in April.
However, the BSP noted that net foreign assets (NFA) increased by 2.7 percent year-on-year in April, reversing the declined growth in March.
“The BSP’s NFA position increased by 6 percent, on the back of steady foreign exchange in flows from overseas Filipino’s remittances, portfolio investments, and BPO [business process outsourcing]receipts,” it explained.
The central bank noted that the NFA of banks declined further as banks’ foreign liabilities continued to increase because of higher placements and deposits made by foreign banks with their local branches and other banks, while foreign assets continued to decrease because of the line in their loan receivables.
“The continued expansion in domestic liquidity during the month indicates sufficient liquidity to support economic growth. Going forward, the BSP will continue to monitor monetary conditions closely to ensure that liquidity in the financial system remains consistent with the BSP’s price and financial stability objectives,” it stated.
Bank lending expands
On the other hand, the BSP also reported that the total outstanding loans of commercial banks, net of banks’ reverse repurchase (RRP) placements with the BSP, continued to expand but at a slower pace in April at 12 percent relative to the growth of 14.2 percent in March.
However, bank lending inclusive of RRPs decelerated to 13.7 percent from 14.7 percent in the previous month.
On a month-on-month seasonally adjusted basis, commercial bank lending in April also decreased by 0.1 percent for loans net of RRPs but loans inclusive of RRPs rose by 0.1 percent.
Loans for production activities—which comprised more than four-fifths of banks’ aggregate loan portfolio—grew at a slower pace of by 12 percent in April from 14.2 percent in March.
On the other hand, the BSP said that the growth of consumer loans rose to 11.5 percent in April from 10.8 percent, because of the expansion in credit card receivables and auto loans.
“The expansion in production loans was driven by increased lending to following sectors: real estate, renting and business services [22.5 percent]; wholesale and retail trade [10 percent]; financial intermediation [15.9 percent]; electricity, gas and water [12.9 percent]; and transportation, storage and communication [13 percent],” it added.
Meanwhile, lending to agriculture, hunting and forestry continued to decline at -5.6 percent.