Bank lending growth slows down; liquidity (M3) accelerates in April

Commercial banks’ outstanding loans had a slower pace of growth for the month of April but domestic liquidity accelerated on credit demand.

The Bangko Sentral ng Pilipinas (BSP) yesterday reported a 15.4 percent year-on-year bank lending growth for April, lower compared to March’s 16.1 percent expansion. In peso terms, total loans amounted to net of reverse repurchase arrangements (RRPs) between the BSP and the banks.

Including RRPs, credit growth stood at 14.8 percent, also slower compared to the 15.7 percent increase posted in March. With RRPs, total loans amounted to trillion.

The BSP said the “sustained expansion in bank lending, particularly to productive sectors, is expected to support sustainable levels of economic growth.”

The BSP also said it will continue to make sure that domestic credit and liquidity conditions are GDP supportive and consistent with its price and financial stability outlook.

As of end-April, domestic liquidity or M3 increased by nine percent year-onyear to trillion, which was faster compared to March’s 8.7 percent growth.

The BSP explained that sustained M3 growth meant liquidity remains sufficient to keep up the economy’s growth momentum.

“Money supply continued to increase due largely to sustained demand for credit,” said the BSP.

Domestic claims grew by 9.3 percent in April from 10.4 percent in March as credits to the private sector expanded at a slightly slower pace relative to the previous month. “The bulk of bank loans during the month was channeled to key production sectors such as manufacturing, real estate, renting, and business services, wholesale and retail trade, utilities, and financial intermediation.”

Bank lending to the production sector rose by 15.1 percent during the period to

trillion while loans for household consumption amounted to billion.

Lending that are part of BSP’s RRP arrangement, in the meantime, totaled

billion. (LCC)