• M3, bank lending growth accelerates

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    GROWTH in bank lending and money supply accelerated at the start of the year and remained supportive of economic growth, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

    Domestic liquidity or M3 expanded by 11.5 percent in January, from December’s revised 9.4 percent uptick, to P8.349 trillion. Month-on-month and seasonally adjusted, M3
    growth was 2.6 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 14.4 percent, up from the revised 11.4 percent posted in December.

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

    Lending to the public sector, meanwhile, expanded by 22.5 percent, faster than the 12.9-percent revised growth recorded in the preceding month.

    Net foreign assets (NFA) in peso terms grew by 7.9 percent from December’s revised 6.6 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 also increased as their foreign assets surged due to growth in their investments in marketable debt securities.

    Bank lending
    Bank lending, meanwhile, also expanded at a faster pace of 15.8 percent in January as loans for production activities accelerated in line with a sustained expansion in household consumption.

    December’s bank lending growth was revised upward to 13.6 percent.

    Including reverse repurchase placements (RRPs) with the central bank, lending growth on a year-on-year basis rose to 15.6 percent in January compared to the revised 12.7 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 1.8 percent for loans inclusive of RRPs.

    Lending for production activities, which comprised over 80 percent of the aggregate loan portfolio, grew by 16 percent from December’s revised 13.7 percent.

    This was driven primarily by real estate activities, which accounted for 23.4 percent, followed by electricity, gas, steam and air-conditioning supply (35.7 percent); wholesale and retail trade, and repair of motor vehicles and motorcycles (13.7 percent); manufacturing (5.5 percent); and information and communication (27.3 percent).

    “Bank lending to other sectors likewise expanded during the month except for other community, social and personal activities, which declined by 7.2 percent,” the central bank said.

    Loans for household consumption, meanwhile, grew by 16.3 percent, up from 15.1 percent in Dcember, “due to the expansion of credit card loans and auto loans as well as sustained expansion in 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 monetary authorities would “continue to monitor liquidity and credit dynamics to ensure that monetary conditions remain consistent with maintaining price and financial stability.”

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