Money supply, bank lending rise in May

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GROWTH in money supply and bank lending both surged in May as loans for production activities continued to expand, the Bangko Sentral ng Pilipinas (BSP) said on Thursday.

Domestic liquidity or M3 expanded by 13.5 percent in May, from April’s revised 12.8 percent growth, to P8.7 trillion. Month-on-month and seasonally adjusted, M3 growth was 1.4 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 18.7 percent, up from the 18.4 percent posted in April.


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

Lending to the public sector, on the other hand, rose by 35 percent, slower than the revised 41.9 percent revised growth recorded in the preceding month.

Net foreign assets (NFA) in peso terms increased by 9 percent from April’s revised 8 percent, the central bank said, noting that its own NFA position continued to expand on the back of robust foreign exchange inflows coming mainly from overseas Filipinos’ remittances, business process outsourcing receipts, and portfolio investments.

The NFA of banks increased as their foreign assets expanded at a faster pace relative to that of their foreign liabilities.

“Banks’ foreign assets increased due largely to the growth in their investments in marketable debt securities, while banks’ foreign liabilities grew mainly on account of higher deposits made by foreign banks,” it added.

Lending expands

Bank lending, meanwhile, expanded by 17.7 percent in May as loans for production activities increased. April’s bank lending growth was at 15.6 percent.

Including reverse repurchase placements (RRPs) with the central bank, lending growth on a year-on-year basis rose 16.6 percent in May, faster than the 14.8 percent recorded the previous month.

Month-on-month and seasonally-adjusted, commercial bank lending increased by 2.2 percent for loans net of RRPs, and by 2.5 percent for loans inclusive of RRPs.

Lending for production activities, which accounted for over 80 percent of the aggregate loan portfolio, grew by 17.9 percent from April’s 15.6 percent.

This was driven by real estate activities, which increased by 22.3 percent, electricity, gas, steam and air conditioning supply (29.3 percent); wholesale and retail trade, repair of motor vehicles and motorcycles (18.3 percent); financial and insurance activities (21.1 percent); and information and communication (43.0 percent).

“Bank lending to other sectors likewise expanded during the month, except for professional, scientific and technical activities (-3.3 percent), and public administration and defense, and compulsory social security (-6.7 percent),” the central bank said.

Loans for household consumption, meanwhile, grew by 17.4 percent compared with the 16.8 percent growth rate in April, 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.

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