• March M3 slows amid faster lending

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    GROWTH in money circulating in the financial system remained in double-digit pace in March, but at a slower pace from a month earlier despite faster expansion in bank lending, the central bank said.

    Data released by the Bangko Sentral ng Pilipinas (BSP) on Tuesday showed that domestic liquidity, or M3, rose at a slower pace of 11.2 percent to P9.49 trillion in March from a 12.6-percent expansion in February.
    Accounting for seasonal adjustments, M3 grew 0.3 percent month on month.

    “Demand for credit remains the principal driver of money supply growth,” the central bank said in a statement released.

    “The growth in M3 remains consistent with the prevailing outlook on inflation and economic activity,” it added.

    The slowdown in M3 was attributed to domestic claims–the sum of net claims on central government and claims on other sectors–which rose 15.8 percent, but slightly down from the revised 15.9 percent in February.

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

    Lending to the public sector climbed 14 percent, “as a result of increased borrowings and the continued withdrawal by the national government (NG) of its deposits with the BSP as part of NG cash operations.”

    Net foreign assets in peso terms grew 5.3 percent, compared with a 7.2-percent increase in February, the central bank said, without detailing the factors behind the slowdown.

    It only said its own net foreign asset position continued to expand as a result of robust foreign exchange inflows, coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts.

    The net foreign assets of banks expanded as foreign assets grew faster on higher interbank loans, deposits with other banks, and investments in marketable debt securities, the central bank said.

    Lending for production up

    Growth in bank lending at 19.7 percent in March was supported by loans for production activities. It was faster than the comparative growth of 18.1 percent in February.

    Including reverse repurchase placements (RRPs) with the central bank, lending increased 18.4 percent in March from 17.5 percent the previous month.

    Seasonally adjusted, commercial bank lending rose 1.7 percent month on month for loans net of RRPs, and by 0.9 percent for loans that included RRPs.

    Lending for production activities, which accounted for 88.6 percent of the aggregate loan portfolio, grew 18.5 percent from 17.6 percent in February.

    This was driven primarily by real estate activities, which grew by 18.8 percent; manufacturing, up 16.4 percent; wholesale and retail trade, and repair of motor vehicles and motorcycles, up 14.3 percent; electricity, gas, steam and air-conditioning supply, up 15.4 percent; financial and insurance activities, up 17.3 percent; and information and communication, up 40.2 percent.

    “Bank lending to other sectors also increased during the month, except in the case of public administration and defense, compulsory social security (-10 percent) and water supply, sewerage, waste management ad remediation activities (-0.6 percent).” the central bank said.

    But loans for household consumption, which grew 23.6 percent, lost pace from 24.6 percent in February.

    Growth across all types of loans for household consumption, such as credit card loans, auto loans, salary-based general-purpose loans, and other household loans was cited as reasons for the year-on-year expansion despite the slowdown from the previous month.

    The BSP said it would continue to ensure that the expansion in domestic credit and liquidity conditions proceed in line with overall economic growth while remaining consistent with the BSP’s price and financial stability objectives.

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