Bank lending expands 10.5% in August; money supply (M3) stands at 111.9 trillion

Big banks’ outstanding loans reported slower growth in August or up 10.5 percent year-on-year compared to 11.1 percent in July, the Bangko Sentral ng Pilipinas (BSP) reported.

The data does not include banks’ reverse repurchase (RRP) placements with the BSP. In peso terms, total outstanding loans stood at 18.669 trillion and 18.843 trillion with RRPs.

The BSP also reported that during the same period, domestic liquidity (M3) grew by 6.2 percent year-onyear to 111.857 trillion, lower than the 6.7 percent M3 growth registered in July.

On a month-on-month seasonallyadjusted basis, M3 increased by 0.3 percent while bank lending on a month-on-month seasonally-adjusted basis, increased by 0.7 percent.

The BSP said it “will continue to ensure that the expansion in domestic credit and liquidity remains consistent with the BSP's price and financial stability objectives.”

In a statement late Monday, the BSP said loans for production activities or about 87.4 percent of total outstanding loans minus RRPs, rose by nine percent in August from July’s 9.8 percent.

Lending to real estate activities was up by 17.7 percent year-on-year to 11.554 trillion while loans to the financial and insurance activities, and electricity, gas, steam and air conditioning supply increased by 16.3 percent to 1855.215 billion and 11.2 percent to 1977.014 billion, respectively.

Loans to the construction sector went up by 39.2 percent to 1339.051 billion while loans to wholesale and retail trade, repair of motor vehicles and motorcycle rose by 3.7 percent to 11.126 trillion.

As for lending for household consumption, this increased by 25.4 percent in August to 1777.458 billion because of the “faster growth in motor vehicle, credit card, and salary-based general purpose consumption loans during the month,” noted the BSP.

The central bank said demand for credit was still the principal driver of money supply growth.

Domestic claims grew by 6.2 percent in August from 5.8 percent in July. “This was due mainly to the sustained growth in credit to the private sector,” said the BSP.

“The BSP will continue to monitor domestic liquidity dynamics to ensure that overall monetary conditions remain in line with maintaining price and financial stability,” said the BSP.