Bank lending expanded 19%, money supply (M3) at trillion in 2017

Big banks’ outstanding loans grew by 19 percent year-on-year in December 2017 while domestic liquidity or money supply (M3) expanded by 11.9 percent, based on Bangko Sentral ng Pilipinas (BSP) data.

Total bank lending at end-2017 amounted to R7.18-trillion net of reverse repurchase placements with the BSP. With RRPs, outstanding loans went up by 18.1 percent to R7.45 trillion.

In net and gross RRPs, bank lending registered a slower pace of growth compared to November’s 19.3 percent and 18.4 percent, respectively.

“The BSP will continue to ensure that the expansion in domestic credit and liquidity proceeds in line with overall economic growth,” a statement from the central bank said on Wednesday.

Domestic liquidity growth, in the meantime, is still in a comfortable level as far as BSP is concerned. “(M3 growth) remains broadly consistent with the BSP’s prevailing outlook for inflation and economic activity,” it said, adding that it will “continue to monitor domestic liquidity closely (and) monetary conditions remain conducive to maintaining price and financial stability.”

M3 growth of 11.9 percent at R10.6 trillion in December was slower compared to 14 percent in November. On a month-on-month seasonally adjusted basis, M3 decreased by 0.7 percent, said the BSP.

Domestic claims grew by 13.4 percent in December, lower than the 14.7 percent increase in November as growth in credit to the private sector eased to 15.7 percent from 16 percent, according to the BSP.

“Meanwhile, net foreign assets (NFA) in peso terms grew by 2.3 percent year-on-year in December from 1.9 percent in the previous month.

Foreign exchange inflows coming mainly from overseas Filipinos’ remittances, business process outsourcing receipts, and foreign portfolio investments drove the increase in the BSP’s NFA position,” said the BSP.

The NFA of banks also continued to expand at a slower pace as growth in banks’ foreign assets eased on account of lower interbank loans and deposits with other banks, it further explained.

Banks’ loan portfolio is 88.9 percent composed of productivity loans. Loans for production activities as a category grew by 18.5 percent in December to R6.38 trillion.

Loans for household consumption, on the other hand, increased by 17.2 percent to R561.88 billion.