M3 up 12.8% in Oct despite moderate bank lending

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MONEY supply grew in October amid a slight moderation in bank lending, Bangko Sentral ng Pilipinas (BSP) data showed Tuesday.

Domestic liquidity or M3 expanded by 12.8 percent to P8.9 trillion in October from a year earlier, slightly higher compared with a 12.7-percent expansion in September. Month-on-month, M3 increased by 1.2 percent.

The “demand for credit remains the principal driver of money supply growth,” the central bank noted.

Domestic claims grew by 16.7 percent from 16.2 percent “due largely to sustained growth in credits to the private sector,” the central bank said.

Net claims on the central government rose by 24.8 percent as a result of deposit withdrawals by the national government from the BSP, “in line with continued efforts t raise fiscal spending.

Net foreign assets (NFA) in peso terms increased by 8.7 percent from 13.6 percent, the central bank said. Its own NFA position continued to expand on the back of robust foreign exchange inflows from remittances, business process outsourcing receipts, and portfolio investment.

The NFA of banks increased as foreign assets expanded in the deposits with other banks and investment in marketable debt securities.

“The expansion in M3 remains manageable and consistent with the BSP’s current outlook on inflation and economic activity,” the central bank said.

Lending slows
Bank lending moderated slightly in October, expanding by 17.7 percent from 17.8 percent in September.

Including reverse repurchase placements (RRPs) with the central bank, lending grew by 16.2 percent in the same comparable period.

Lending for production activities, which accounted for over 80 percent of the aggregate loan portfolio, grew steady at 17.4 percent.

“Bank lending to other sectors likewise expanded during the month, except for public administration and defense and compulsory social security which declined by 5.8 percent.

Loans for household consumption rose by 22.2 percent, albeit slower than the 22.3 percent in September.

 

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