GROWTH in money supply accelerated in March but expansion in bank lending lost pace as loans for production activities slowed, the Bangko Sentral ng Pilipinas (BSP) said on Friday.
Domestic liquidity or M3 expanded by 11.7 percent in March, from February’s revised 11.2 percent uptick, to P8.5 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 money supply “remains sufficient to support economic growth.”
Domestic claims grew by 15.3 percent, down from the 16.1 percent posted in February.
The bulk of bank loans during the month went into electricity, gas, steam and air-conditioning supplies; 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 33.4 percent, faster than the 28.9 percent revised growth recorded in the preceding month.
Net foreign assets (NFA) in peso terms grew by 5.9 percent from February’s 9.3 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, business process outsourcing receipts, and portfolio investments.
The NFA of banks also increased as their foreign assets surged due to growth in their investments in marketable debt securities.
Lending lose pace
Bank lending, meanwhile, expanded at a slower pace of 14.8 percent in March as loans for production activities moderated despite acceleration in household consumption. February’s bank lending growth was at 16.9 percent.
Including reverse repurchase placements (RRPs) with the central bank, lending growth on a year-on-year basis rose to 13.5 percent in March, slower compared to the 15.7 percent recorded the previous month.
Month-on-month and seasonally-adjusted, commercial bank lending increased by 0.3 percent for loans net of RRPs, and by 0.1 percent for loans inclusive of RRPs.
Lending for production activities, which accounted for over 80 percent of the aggregate loan portfolio, grew by 15 percent from February’s 17.4 percent.
This was driven by real estate activities, which increased by 20.2 percent, electricity, gas, steam and air-conditioning supply (31.8 percent); wholesale and retail trade, and repair of motor vehicles and motorcycles (13.6 percent); financial and insurance activities (10.6 percent); and information and communication (28 percent).
“Bank lending to other sectors likewise expanded during the month except for professional, scientific and technical activities which declined by 9.6 percent,” the central bank said.
Loans for household consumption, meanwhile, grew by 15.9 percent compared with 15.7 percent in February, on the growth across all types of consumer loans such as credit card loans, motor vehicle loans, and 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 domestic liquidity dynamics to ensure that monetary conditions remain in line with price and financial stability.”