Bank lending slows down; M3 up at 111.3 T in November
Big banks’ outstanding loans increased by 16.8 percent year-on-year in November 2018, a slower growth compared to the previous month’s 18.1 percent, according to the Bangko Sentral ng Pilipinas (BSP).
Domestic liquidity (M3), in the meantime, expanded by 8.4 percent to 111.3 trillion in the same period, compared to 8.3 percent in October 2018.
Based on BSP data, bank lending with reverse repurchase (RRP) placements with the BSP grew by 15.4 percent in November from 17.9 percent in the previous month. On a month-on-month seasonallyadjusted basis, commercial bank loans net of RRPs increased by 0.3 percent while loans inclusive of RRPs declined by 0.1 percent, said the BSP.
In the two statements released by the central bank yesterday on lending and M3, it said that it will “continue to ensure that the expansion in domestic credit and liquidity (is) in line with overall economic growth while remaining consistent with the BSP’s price and financial stability objectives.”
As for money supply, the central bank said that domestic liquidity dynamics continue to be supportive of the “overall monetary conditions” for maintaining price and financial stability.
About 88.7 percent of total outstanding loans were for production activities which grew by 17.2 percent year-on-year in November to 17.21 trillion.
Lending to the wholesale and retail trade, repair of motor vehicles and motorcycles went up by 19.7 percent year-on-year to 11.13 trillion in November while financial and insurance activities as well as real estate activities increased by 29.4 percent and 12.5 percent, respectively, to 1766.48 billion and 11.37 trillion.
The manufacturing sector had 16 percent more borrowings during the period of 11.06 trillion while electricity, gas, steam and air-conditioning supply, and construction grew by 11 percent and 38.1 percent, respectively, to 1910.23 billion and 1269.47 billion.
Loans for household consumption slowed down to 13.8 percent in November from 14.6 percent in the previous month due to the weaker expansion in credit card loans and motor vehicle loans, as well as the contraction in salary-based general purpose consumption loans and other types of household loans, said the BSP. In November, household consumption lending totaled 1646.59 billion.
The BSP said demand for credit continues to be the “principal driver of money supply growth.”
During the period, domestic claims grew by 14.6 percent from 15.2 percent in October because of “sustained growth in credit to the private sector.”
In reviewing the M3, the BSP said loan for production activities are still driven by key sectors such as real estate, manufacturing and construction while the growth in loans for household consumption slowed down due to “weaker expansion in credit card loans and motor vehicle loans alongside a contraction in salary-based general purpose consumption loans and other types of household loans.”