• M3, bank lending accelerate in April

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    GROWTH in money supply and bank lending both accelerated in April as loans for production activities expanded, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.

    Domestic liquidity or M3 expanded by 12.7 percent in April, from March’s 11.7 percent uptick, to P8.6 trillion. Month-on-month and seasonally adjusted, M3 growth was 1.7 percent.

    “Money supply continued to expand due largely to sustained demand for credit,” the central bank said in a statement, adding that the sustained expansion of money supply indicates that it “remains sufficient to support economic growth.”

    Domestic claims grew by 18.4 percent, down from the revised 15.4 percent posted in March.

    The bulk of bank loans during the month went into real estate activities; electricity, gas, steam and air-conditioning supply; wholesale and retail trade and the repair of motor vehicles and motorcycles; financial and insurance activities; and information and communication.

    Lending to the public sector, meanwhile, expanded by 42 percent, faster than the revised 33.6 percent revised growth recorded in the preceding month.

    Net foreign assets (NFA) in peso terms grew by 8 percent from March’s revised 5.8 percent, the central bank said, noting 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 decreased as their foreign assets expanded at a slower pace relative to that of their foreign liabilities.

    Lending expands

    Bank lending, meanwhile, expanded by 15.6 percent in April as loans for production activities increased. March’s bank lending growth was at 14.8 percent.

    Including reverse repurchase placements (RRPs) with the central bank, lending growth on a year-on-year basis rose to 14.8 percent in April, faster compared to the 13.5 percent recorded the previous month.

    Month-on-month and seasonally-adjusted, commercial bank lending increased by 1.5 percent for loans net of RRPs, and by 1.7 percent for loans inclusive of RRPs.

    Lending for production activities, which accounted for over 80 percent of the aggregate loan portfolio, grew by 15.6 percent from March’s 15 percent.

    This was driven by real estate activities, which increased by 20.5 percent, electricity, gas, steam and air-conditioning supply (30.6 percent); wholesale and retail trade, and repair of motor vehicles and motorcycles (15.5 percent); financial and insurance activities (18.5 percent); and information and communication (31.2 percent).

    “Bank lending to other sectors likewise expanded during the month except for professional, scientific and technical activities (-0.5 percent); water supply, sewerage waste management and remediation activities (-1.3 percent); and public administration and defense, compulsory social security (-7.3 percent),” the central bank said.

    Loans for household consumption, meanwhile, grew by 16.8 percent compared with 15.9 percent in March, on the expansion in motor vehicle loans and sustained growth in credit card loans, and salary-based general purpose loans, which offset the decline in other types of household 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 monetary authorities would “continue to monitor monetary conditions closely to ensure that liquidity growth remains consistent with the BSP’s price and financial stability objectives.

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