Bank lending expands 19.5%; money supply stands at 110.7 trillion in Feb.

The central bank said big banks’ outstanding loans in February grew by 19.5 percent year-on-year, more than January’s 19 percent increase.

In peso value, bank lending amounted to R7.22 trillion, minus banks’ reverse repurchase (RRP) placements with the central bank. With RRP, it is R7.43 trillion. “Loans for production activities — which comprised 88.4 percent of banks' aggregate loan portfolio, net of RRP — grew by 18.6 percent in February from 18.0 percent (revised) in the previous month,” according to the Bangko Sentral ng Pilipinas (BSP).

In the meantime, domestic liquidity or M3 expanded by 13.5 percent to R 10.7 trillion in the same period, higher than 12.8 percent in the previous month.

The BSP said in a statement that domestic claims rose by 13.8 percent on the sustained growth in bank lending, primarily to key production sectors such as real estate activities, electricity/gas/steam and air-conditioning supply, wholesale and retail trade, repair of motor vehicles and motorcycles, manufacturing, financial and insurance activities, and information and communication.

The central government’s net claims also grew steady at 3.7 percent in February due to borrowings by the National Government, said the BSP. The BSP said it will “continue to ensure that the expansion in domestic credit and liquidity proceeds in line with overall economic growth while remaining consistent with the BSP's price and financial stability objectives.”

In managing money supply, it said the “growth in M3 remains consistent with the BSP's prevailing outlook for inflation and economic activity.”

The growth in production loans was boosted by the 18.1 percent increase in lending for real estate activities which totaled R1.25 trillion. It is the biggest lending share in the overall R6.28 trillion for production loans.

Lending to the electricity/gas/ steam and air-conditioning supply also increased by 28.5 percent, while wholesale and retail trade, repair of motor vehicles and motorcycles went up by 18.5 percent. The manufacturing loans were up 10.7 percent, financial and insurance activities by 15.3 percent, and lending to the information and communication sector increased by 28.8 percent.

“Growth in loans for household consumption slowed down to 19.9 percent in February from 20.2 percent (revised) in January,” the BSP said. The slower increase in motor vehicle loans and contraction in other types of household loans offset the faster expansion in credit card loans and salary-based general purpose loans in February, it added. Lending to household consumption sector amounted to R587.59 billion.