Money supply, lending expand in April

Domestic liquidity, also known as M3, continued to expand in April this year, the Bangko Sentral ng Pilipinas (BSP) said.

In its latest Depository Corporations Survey released Friday, the BSP said the country’s money supply grew by 14.2 percent to PHP10.9 trillion in April 2018 from PHP9.5 trillion in the same month last year. Although, growth of M3 on a month-on-month basis slightly slowed down from its 14.4-percent growth in March.

The central bank noted that the 16.4-percent expansion on domestic claims in April, which is higher than its growth of 14.5 percent in March, has driven the increment in M3. This is due to higher bank lending in April.

The BSP also recorded higher net claims on the central government, increasing by 13 percent in April 2018 to PHP1.7 trillion from PHP1.5 trillion in April 2017, due to continued borrowings by the national government.

Likewise, net foreign assets in peso terms rose 4.2 percent with the continued foreign exchange inflows from remittances of overseas Filipinos, revenues of business process outsourcing firms, and foreign portfolio investments.

“Overall, domestic liquidity conditions remain broadly in line with BSP’s prevailing outlook for inflation and economic activity,” the central bank said.

Meanwhile, outstanding loans of commercial banks grew faster at 19.9 percent in April from the 18.5-percent expansion in March.

BSP attributed the upbeat activity on bank lending to higher production loans, which comprised 88.5 percent of banks’ total loan portfolio. Loans for production activities grew in April 2018 by 19.6 percent to PHP6.6 trillion from PHP5.5 trillion in the same period last year.

Drivers of growth in production loans in April were sectors of wholesale and retail trade, repair of motor vehicles and motorcycles; real estate activities; financial and insurance activities; electricity, gas, steam, and air conditioning supply; manufacturing; other community, social, and personal activities; transportation and storage; and information and communication.

Likewise, household consumption loans continued to grow, however, on a slower pace year-on-year expansion of 8 percent in April 2018 from March 2018’s growth of 8.1 percent. Household consumption loans grew to PHP599.8 billion in April 2018 from PHP503.8 billion in April 2017.

“The BSP will continue to ensure that the expansion in domestic credit and liquidity proceeds in line with overall economic growth while remaining consistent with the BSP’s price and financial stability objectives,” the central bank stressed.