BANK LENDING UP, DOMESTIC LIQUIDITY SLOWS IN FEB
BANK lending of universal and commercial banks (U/KBs) grew at a faster pace in February this year while domestic liquidity growth slowed.
Data released by the Bangko Sentral ng Pilipinas (BSP) released late Thursday showed that banks’ outstanding loans, excluding those placed in the central bank’s reverse repurchase facility, went up by
8.7 percent, up from the 7.8 percent increase in January this year.
Outstanding loans issued by U/KBs amounted to P11.6 trillion from P11.5 trillion in January and P10.6 trillion in February last year.
The central bank said outstanding loans to residents, net of RRPs, increased by 8.7 percent in February from 7.8 percent in the previous month, while outstanding loans to non-residents expanded by 6.5 percent after growing by 9.8 percent in January.
Loans for production activities went up by 6.8 percent from 5.9 percent in the previous month.
The BSP said the increase was mainly driven by the higher lending to key sector such as real estate activities (11.6 percent); electricity, gas, steam, and airconditioning supply (11.2 percent); wholesale and retail trade, and repair of motor vehicles and motorcycles (7.1 percent); transportation and storage (21.1 percent); and manufacturing (5.9 percent).
Consumer loans to residents also grew by 25.2 percent in February, the same rate as in January, on the sustained increase in credit card and motor vehicle loans.
Domestic liquidity (M3), meanwhile, grew by 5 percent to about P16.9 trillion in February 2024 from 6.0 percent in January.
Rizal Commercial Banking Corporation chief economist Michael Ricafort said the issuance of the five-year Retail Treasury Bond last month likely contributed to the slower M3 growth.
“The record P584.86 billion 5-year RTB issuance in February 2024 would have fundamentally siphoned off some of the excess peso liquidity from the financial system and slowed down the M3 growth for the month, but would eventually be offset by the large P700 billion RTB maturity from March 9-12, 2024 that could be added to the peso liquidity and could lead to some pick up in M3 growth by March 2024,” he said.
He added that the slower M3 growth is still fundamentally consistent with the relatively tight monetary policy measures as local monetary authorities siphon off some of the
excess liquidity in the financial system.
Domestic claims expanded by 9.5 percent from 9.9 percent in the previous month.
Claims on the private sector grew by 10.1 percent from 8.9 percent in January with the sustained expansion in bank lending to non-financial private corporations and households.
The BSP said net claims on the central government expanded by 12.1 percent from 15.8 percent due in part to the sustained borrowings of the National Government.
Net foreign assets (NFA) in peso terms rose by 3.6 percent from 4.4 percent in January.
The BSP’s NFA meanwhile grew by 5.9 percent while the NFA of banks contracted on account of lower interbank loans receivables.
The BSP said that looking ahead, it will ensure that liquidity and bank lending conditions remain consistent with its price and financial stability objectives. /