M3 at P8.7T, just 0.3% higher than May; loan expansion slows by 0.1%
GROWTH in money supply and bank lending both lost some pace in June from the previous month, but maintained a healthy rate on a year-to-year basis, the Bangko Sentral ng Pilipinas (BSP) said on Friday.
Domestic liquidity or M3 expanded by 12.4 percent in June from a year earlier—lower than May’s 13.5 percent growth—to P8.7 trillion. Month-on-month and seasonally adjusted, M3 growth was 0.3 percent.
“Money supply continued to expand due largely to sustained demand for credit,” the central bank said in a statement, adding that the continued expansion of M3 indicates that money supply “remains adequate to support economic growth.”
Domestic claims grew by 16.9 percent, down from the 18.7 percent posted in May.
The bulk of bank loans during the month went into real estate activities; electricity, gas, steam and air-conditioning supply, and wholesale and retail trade, and repair of motor vehicles and motorcycles.
Lending to the public sector also moderated by 25.6 percent, slower than the 35 percent growth recorded in the preceding month.
Net foreign assets (NFA) in peso terms, meanwhile, increased by 11 percent to P4.2 trillion from May’s revised 9 percent growth, 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 and interbank loans, while banks’ foreign liabilities grew mainly on account of higher deposits made by foreign banks,” it added.
Lending growth slows slightly
Bank lending growth slowed just slightly in June, expanding at a 17.6-percent pace year-on-year from May’s growth rate of 17.7 percent.
Including reverse repurchase placements (RRPs) with the central bank, lending growth on a year-on-year basis rose 16.6 percent in June, the same rate posted the previous month.
Month-on-month and seasonally-adjusted, commercial bank lending increased by 1.2 percent for both loans net of RRPs and loans inclusive of RRPs.
Lending for production activities, which accounted for over 80 percent of the aggregate loan portfolio, grew by 17.7 percent, slightly slower than April’s 17.9 percent.
This was driven by real estate activities, which increased by 20.7 percent, electricity, gas, steam and air conditioning supply (30 percent); wholesale and retail trade, repair of motor vehicles and motorcycles (15.3 percent); financial and insurance activities (19.4 percent); manufacturing (9.3 percent); and information and communication (35.5 percent).
“Bank lending to other sectors likewise expanded during the month, except for professional, scientific and technical activities (-7.8 percent), and public administration and defense, and compulsory social security (-5.9 percent),” the central bank said.
Loans for household consumption accelerated, expanding by 18.8 percent compared with the 17.4 percent growth rate in May, on the increase in motor vehicle loans and salary-based general-purpose loans and sustained growth in credit card 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.