M3 growth slows, bank lending steady
BANK lending stayed steady in December, the Bangko Sentral ng Pilipinas (BSP) reported late on Thursday, but money supply growth moderated due to the impact of higher interest rates.
Based on preliminary data, domestic liquidity or M3 expanded by 5.9 percent, slower than November’s 7.0 percent, to about P17.4 trillion.
Month on month and seasonally adjusted, M3 recorded an uptick of 0.4 percent.
Domestic claims saw growth slow to 9.0 percent from the previous month’s revised 9.7 percent.
Claims on the private sector, in particular, grew by a faster 8.5 percent from 8.3 percent due to “sustained expansion in bank lending to nonfinancial private corporations and households.”
Net claims on the central government, on the other hand, grew by a slower 14.2 percent from 17.3 percent, due mostly to a decline in national government deposits with the central bank.
In peso terms, net foreign assets (NFA) rose by 4.3 percent from 3.2 percent in November.
The central bank’s NFA position grew by 7.4 percent, while that of banks was said to have contracted “on account of lower interbank loans receivable.”
As for bank lending, preliminary data showed that the outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the BSP, grew by 7.0 percent — unchanged from November.
Month on month and seasonally adjusted, the expansion was 0.3 percent.
Growth in outstanding loans to residents net of RRPs moderated to 7.3 percent from 7.4 percent.
Loans for production activities grew by 5.5 percent from 5.7 percent, largely due to an expansion in lending to key industries such as real estate (10.9 percent); wholesale and retail trade and repair of motor vehicles and motorcycles (7.2 percent); and electricity, gas, steam, and airconditioning supply (6.2 percent).
Consumer loans to residents saw growth ease to 23.5 percent from 23.6 percent, supported by an increase in credit card loans, motor vehicle loans, and salary-based general purpose consumption loans.
Outstanding loans to nonresidents, meanwhile, plunged by 2.8 percent from 5.0 percent in November.
The central bank said it would continue “to ensure that domestic liquidity
conditions remain consistent with the prevailing stance of monetary policy, in keeping with its price and financial stability objectives.”
“Looking ahead, the BSP will ensure that liquidity and bank lending conditions remain in line with its price and financial stability objectives,” it added.
Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the deceleration in M3 growth remained in line with tight monetary policy.
“The latest M3 growth could have also still reflected relatively higher amounts of excess liquidity in the financial system, as manifested by the relatively large bids or demand in the various BSP securities auctions,” he added.
As for bank lending, Ricafort said the steady growth was due to improved business and economic conditions, especially in terms of employment.
“The pickup in bank lending growth may have also been consistent with the seasonal increase in production, importation, and other economic activities since the third quarter in preparation for the seasonal increase in demand for many businesses,” he added.