• Liquidity rises amid slower bank lending


    Money supply growth picked up in January amid a moderation in bank lending, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday.

    Domestic liquidity or M3 expanded by 12.8 percent year on year, up from December’s 11.9 percent, to P10.58 trillion. Month-on-month and seasonally adjusted, M3 increased by 2 percent.

    “The growth in M3 is consistent with the BSP’s prevailing outlook for inflation and economic activity,” the central bank said in a statement.

    Domestic claims growth, meanwhile, slowed to 13.5 percent from December’s revised 13.7 percent as bank lending eased.

    “Growth in bank loans continued to be driven by lending to key production sectors such as real estate activities; electricity, gas, steam and air-conditioning supply; wholesale and retail trade, repair of motor vehicles and motorcycles; manufacturing; information and communication; and financial and insurance activities,” the BSP said.

    Net claims on the central government grew at a faster pace of 3.1 percent from 2 percent as a result of increased borrowings.

    Net foreign assets (NFA) in peso terms, meanwhile, grew by 4.1 percent from the previous month’s revised 2.2 percent.

    The central bank said its own NFA position increased in January, reflecting foreign exchange inflows coming mainly from overseas Filipinos’ remittances, business process outsourcing receipts and foreign portfolio investments.

    The NFA of banks, meanwhile, also expanded at a faster pace as growth in banks’ foreign assets increased on account of higher loans and investments in marketable debt securities.

    Lending moderates

    Bank lending growth, meanwhile, moderated to 19.1 percent from December’s revised 19.4 percent.

    Including reverse repurchase placements (RRPs) with the central bank, growth decelerated to 18.3 percent from the revised 18.4 percent in the previous month. Month-on-month and seasonally-adjusted, commercial bank lending for loans net of RRPs and for loans inclusive of RRPs both increased by 1.3 percent.

    Lending for production activities, which accounted for 88.4 percent of the aggregate loan portfolio, grew by 18.1 percent in January.

    This was driven by real estate activities (18 percent); electricity, gas, steam and air-conditioning supply (24.8 percent); wholesale and retail trade; repair of motor vehicles and motorcycles (13.2 percent); manufacturing (11.9 percent); information and communication (52.6 percent); and financial and insurance activities (15 percent).

    Bank lending to other sectors also increased except in agriculture, forestry and fishing (down 11.6 percent), and administrative and support services activities (down 43.2 percent).

    Household consumption loan growth decelerated to 20.3 percent from December’s revised 20.8 percent.

    “The slower increase in motor vehicles and salary-based general purpose loans and other types of household loans offset the faster expansion in credit card loans in January,” the central bank said.


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