Money supply, lending continue to grow

MANILA, Philippines — Liquidity in the domestic financial system continued to expand in August due to the strong demand for credit, the Bangko Sentral ng Pilipinas reported yesterday.

According to BSP data, money supply, also known as M3, grew 15.4 percent in August to P10.08 trillion from P8.73 trillion in the same period last year.

The BSP said the 15.4 percent growth rate was faster than the 13.5 percent year-on-year growth rate seen in July. On a month-on-month and seasonally adjusted basis, domestic liquidity increased 1.8 percent.

“Demand for credit remained the principal driver of money supply growth,” the BSP said, also noting that the growth in money supply remains consistent with the BSP’s prevailing outlook for inflation and economic activity.

The BSP said sustained credit growth to the private sector boosted the domestic claims in August by 16.9 percent, higher than the 15.7 percent growth rate posted in July.

Meanwhile, net claims on the public sector side rose 16.7 percent due to increased borrowings by the national government.

Growth of net foreign assets (NFA) in peso terms also accelerated to 6.4 percent in August from 2.7 percent a month ago.

“Foreign exchange inflows coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts continued to be the drivers behind the increase in the BSP’s NFA position,” the BSP said.

NFA of banks, likewise expanded due to growth in banks’ foreign assets resulting from higher loans and investments in debt securities, it said.

Meanwhile, preliminary data from the BSP also showed bank lending in August grew 20.4 percent to P6.6 trillion from P5.48 trillion in the same month in 2016. The latest growth figure was higher than July’s level of 19.7 percent.

Inclusive of reverse repurchase placements with the BSP, lending growth accelerated to 17.9 percent during the month from 18.7 percent in July.

Loans for production activities — which took up 88.5 percent of banks’ aggregate loan portfolio — expanded at a faster rate of 19.5 percent from 18.9 percent the previous month.