Liquidity, bank lending up in end-Dec

MANILA, Philippines – Liquidity in the financial system recorded a slower growth but remained strong in December amid the country’s robust economic growth, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Data released by the central bank showed money supply grew 8.3 percent to P8.3 trillion in end-December last year from P7.7 trillion in end-December 2014.

BSP Governor Amando Tetangco Jr. said in a statement the growth in money supply in December was slower than the revised 9.4-percent expansion recorded in October.

Tetangco said money supply continued to expand due largely to sustained demand for credit. Domestic claims grew 10.8 percent in December from the revised 11.8 percent in November.

“Credits to the private sector increased at a slower pace relative to the previous month,” he said.

Tetangco said the bulk of bank loans in December was channeled to key production sectors such as real estate activities; electricity, gas, steam and airconditioning supply; wholesale and retail trade, and repair of motor vehicles and motorcycles; financial and insurance activities; as well as information and communication.

Net public sector credit rose 12 percent in December, slower than the revised 10.5-percent growth registered in November.

Net foreign assets (NFA) in peso terms grew 6.4 percent in December from the revised 8.9 percent in November as the BSP’s NFA position continued to expand during the month on the back of robust foreign exchange inflows coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts.

Likewise, the NFA of banks increased as banks’ foreign assets expanded at a faster pace relative to that of their foreign liabilities.

“Banks’ foreign assets increased due largely to the growth in their investments in marketable debt securities, while banks’ foreign liabilities grew mainly on account of higher deposits and placements made by foreign banks with other banks,” he said.

The BSP chief explained the sustained expansion of M3 last December indicates money supply remains sufficient to support economic growth.

On the other hand, Tetangco also reported that bank lending booked a double-digit growth of 13.1 percent to P5.12 trillion in December from P4.53 trillion in end December 2014.

Loans for production activities reached P4.56 trillion and accounted to 89.7 percent of the total loan portfolio of the banking system in end December last year.

Loans extended to manufacturing companies inched up 1.9 percent to P792.24 billion in end-December from P777.5 billion in end December 2014.

Loans to the real estate sector surged 18.8 percent to P874.25 billion from P735.7 billion.