Growth in money supply, lending slows further in Dec

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MONEY supply and bank lending continued to grow but at a slower pace in December from November as domestic claims and production-related loans moderated, data released by the Bangko Sentral ng Pilipinas (BSP) on Tuesday showed.

Domestic liquidity, or M3, expanded by 12.4 percent year-on-year to P9.5 trillion in December. “Demand for credit remains the principal driver of money supply growth,” the central bank said.

“Growth in M3 remains manageable and consistent with the BSP’s current outlook on inflation and economic activity,” it added.

The expansion was slower than the 12.7-percent rise recorded in November.


Domestic claims rose by 16.7 percent from the revised 17 percent “due largely to sustained growth in credit to the private sector,” the BSP said.

Net claims against the government rose by 27.6 percent as a result of continued deposit withdrawals by the national government from the BSP.

Net foreign assets (NFA) increased by 7.4 percent, compared with a 9.2 percent growth. The central bank’s own NFA position continued to expand on the back of robust foreign exchange inflows from remittances and business process outsourcing receipts.

Banks’ net foreign assets expanded on the back of higher interbank loans, deposits with other banks and investment in marketable debt securities.

Bank lending also lost pace in December as it expanded by 17.2 percent, compared with 18.6 percent in November. Including reverse repurchase placements (RRPs) with the central bank, lending grew by 16 percent in the same comparable period.

Lending for production activities accounted for over 89 percent of the aggregate loan portfolio and expanded by 16.8 percent from 18.1 percent in November.

Primarily fueled by credit card, auto and salary loans, household consumption loans increased by 22.8 percent in December and helped offset the decline in other types of household loans.

“Going forward, the BSP will continue to ensure that the expansion in domestic credit and liquidity conditions proceeds in line with overall economic growth while remaining consistent with the BSP’s price and financial
stability objectives,” the BSP said.

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