Bank lending grows 19%; money supply at T

Banks’ outstanding loans expanded by 19 percent year-onyear in June to R6.43 trillion with lending to real estate and manufacturing sectors continuing to lead the increase.

Including banks’ placements with the Bangko Sentral ng Pilipinas (BSP) or reverse repurchase (RRP), the total loans amounted to R6.713 trillion, up by 18.3 percent.

Both gross and net of RRP numbers were higher than the previous month’s 18.7 percent and 17.4 percent growth. Month-on-month bank lending net of RRPs and with RRPs improved by 1.4 percent and 1.9 percent, respectively.

The BSP said domestic liquidity or M3 in June also increased by 13.2 percent to R9.9 trillion, a faster pace of growth compared to 11.3 percent in May. On a month-on-month basis, M3 went up by 1.8 percent.

The BSP said the increase in money supply is still manageable and are expected based on their current inflation outlook and assessment of the pace of economic growth.

The central bank in a statement said they continue to monitor monetary conditions to “ensure overall domestic liquidity dynamics stay in line with BSP’s price and financial stability” agenda.

The BSP has the job of balancing credit growth with M3 or liquidity conditions and to make sure the monetary stance is supportive of sustaining economic growth.

In June, banks’ lending to production activities which is bulk of the total or about 88.5 percent, grew by 17.9 percent year-on-year to R5.694 trillion. This was a higher growth than May’s 17.6 percent.

The real estate sector contributed R1.116 trillion of these loans, up 17.8 percent year-on-year. Lending to electricity, gas, steam and airconditioning supply went up by 24.9 percent to R773.486 billion while manufacturing sector and the wholesale and retail trade, repair of motor vehicles and motorcycles increased by 11.6 percent both to R865.845 billion and R845 billion, respectively. In the meantime loans to information and communication sector rose by 35.5 percent to R246.42 billion.

Household consumption loans amounted to R519.286 billion in June, up by 22.5 percent year-on-year, but lower than May’s 23.6 percent growth. The BSP said credit card loans, other types of household loans, auto loans and salary-based general purpose loans increased during the period.

Credit card loans amounted to R208.885 billion in June, auto loans reached R230.322 billion while salarybased general purpose loans totaled R66.585 billion.

The BSP said demand for credit continue to drive up money supply.

Domestic claims increased by 15.4 percent in June and these are primarily private sector credit. Due to sustained activity in the real estate sector, manufacturing, information and communication, among others, growth in bank loans has continued to be robust, said the BSP.

Government’s net claims, in the meantime, went up by 14 percent because of more public sector borrowings, mainly the National Government.

Under M3, net foreign assets in peso terms increased by 2.8 percent in June with remittances and outsourcing sector receipts boosting the BSP’s NFA from these foreign exchange inflows.

Banks’ NFA, according to the BSP, “expanded due to the growth in banks’ foreign assets resulting from higher loans and investments in marketable debt securities.”