M3 growth up but bank lending eases

MONEY supply growth picked up in December even as bank lending dipped, data released by the Bangko Sentral ng Pilipinas (BSP) on Tuesday showed.

Preliminary data showed that domestic liquidity or M3 expanded by 6.4 percent year on year to about P16.3 trillion in December, the central bank said in a statement, higher than November’s revised 5.5-percent growth.

Month on month and seasonally adjusted, M3 grew by 0.9 percent.

Domestic claims rose by 12.5 percent from 11 percent “with the broadly steady pace of bank lending to the private sector,” the BSP said.

Claims on the private sector grew by a slightly slower 10.5 percent in December from 10.6 percent a month earlier. Still, the central bank said that lending to non-financial private corporations and households had posted a “sustained expansion.”

Net claims on the government, meanwhile, surged by 21.0 percent from 13.8 percent due to increased borrowings.

Net foreign assets (NFA) in peso terms, meanwhile, declined by 3.5 percent in December from November’s revised contraction of 1.5 percent. Banks’ NFA was said to have fallen due to higher bills payable. The BSP’s NFA position also contracted by 3.4 percent.

The central bank said that it would continue to “ensure that domestic liquidity conditions remain appropriate to support the prevailing stance of monetary policy, consistent with the BSP’s price and financial stability objectives.” As for bank lending, preliminary data showed that outstanding loans of universal and commercial banks (U/KBs), net of reverse repurchase (RRP) placements with the BSP, grew by 13.4 percent year on year in December.

The growth slowed from November’s revised expansion of 13.9 percent.

Month-on-month and seasonally-adjusted basis, outstanding U/ KB loans net of RRPs dipped by 0.04 percent.

Outstanding loans to residents, net of RRPs, rose by 13.2 percent from November’s revised figure of 13.6 percent.

Outstanding loans for production activities grew by 12.1 percent from the previous month’s revised 12.6 percent, “driven largely by the credit growth of key industries such as real estate activities (13.1 percent); manufacturing (14.9 percent); electricity, gas, steam and air-conditioning supply (14.4 percent); wholesale and retail trade, repair of motor vehicles and motorcycles (12.7 percent); and information and communication (21.6 percent).”

Consumer loans to residents rose by 24.8 percent in December from a revised 24.2 percent, mostly due to faster growth in automobile loans.

Outstanding loans to nonresidents, meanwhile, grew by a slower 20.0 percent from November’s revised 24.6 percent.

“The sustained growth in credit activity and ample liquidity will continue to support the recovery of economic activity and domestic demand,” the BSP said.