Dec bank lending, M3 growth eases

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GROWTH in bank lending and money supply eased in December but levels remained supportive of economic growth, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.

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Domestic liquidity or M3 expanded at a slower pace of 8.3 percent in December, from November’s revised 9.4 percent, to P8.340 trillion. Month-on-month and seasonally adjusted, M3 growth decreased by 0.2 percent.

“Money supply continued to expand due largely to sustained demand for credit,” the central bank said in a statement, adding that the liquidity level remains adequate to support economic growth.

Domestic claims grew by 10.8 percent, down from the revised 11.8 percent posted in November.

The bulk of the bank loans went into real estate; electricity, gas, steam and air-conditioning supplies; wholesale and retail trade and repair of motor vehicles and motorcycles; financial and insurance activities; and information and communication.
Lending to the public sector rose by 12 percent, faster than the 10.5 percent recorded in the preceding month.

Net foreign assets (NFA) in peso terms grew by 6.4 percent from November’s revised 8.9 percent, the central bank said, but noted that its own NFA position continued to expand due to robust foreign exchange inflows, coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts.

The NFA of banks also decreased as their foreign liabilities grew faster on higher deposits made by foreign banks.

ING Bank Manila senior economist Joey Cuyegkeng said liquidity growth continued to support economic activity as reflected by the 6.3-percent gross domestic product expansion in the fourth quarter of last year.

“For now, it seems that economic activity would remain strong even with a relatively slower growth of M3,” he said.

Bank lending

Bank lending, meanwhile, also grew at a slightly slower pace of 13.1 percent in December as loans for production activities moderated amid a sustained expansion in household consumption.

November’s bank lending growth was revised upward to 13.9 percent a month.

Including reverse repurchase placements (RRPs) with the central bank, lending growth on a year-on-year basis also eased to 12.2 percent in December compared to the 13.5 percent recorded the previous month.

Month-on-month and seasonally-adjusted, commercial bank lending increased by 1.2 percent for loans net of RRPs and by 1.1 percent for loans inclusive of RRPs.

Lending for production activities, which comprised over 80 percent of the aggregate loan portfolio, grew by 13.3 percent from November’s revised 14.4 percent.

This was driven primarily by real estate activities, which accounted for 18.8 percent, followed by electricity, gas, steam and air-conditioning supply (27.2 percent); wholesale and retail trade, and repair of motor vehicles and motorcycles (12.2 percent); financial and insurance activities (11.8 percent); and information and communication (26.1 percent).

“Bank lending to other sectors likewise expanded during the month except for administrative and support services activities, and other community social and personal activities, which declined by 5.5 percent and 4.7 percent, respectively,” the central bank said.

Loans for household consumption, meanwhile, grew by 14.2 percent, up from 13.3 percent in November, “due to the increase of credit card loans as well as sustained expansion in motor vehicle loans and salary-based general purpose loans.”

“Going forward, the BSP will continue to ensure that domestic credit and liquidity conditions will keep pace with overall economic growth while remaining consistent with its price and financial stability objectives,” the central bank said.

It also said that it would “continue to monitor monetary conditions to ensure that liquidity dynamics remain in line with maintaining price and financial stability.”

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