The Market Monitor Minding the Nation's Business
By Riza Lozada
Money supply (M3) has risen 12.8 percent from a year ago in October to P8.9 trillion from a growth of 12.7 in the previous month in line with the sustained growth of the economy despite a slight decline in bank lending.
Data released by the Bangko Sentral ng Pilipinas (BSP) showed that the increase in M3 was driven by demand for credit.
BSP said domestic claims went up by 16.7 percent from month-ago’s 16.2 percent mainly because of credit to the private sector.
Net claims of the central government rose by 24.8 percent from 22.6 percent last September after the National Government withdrew its deposits with the central bank in line with its bid to increase spending.
At the same time, growth of net foreign assets (NFA) slowed down to 8.7 percent in peso terms from the previous month’s 13.6 percent.
BSP said foreign exchange inflows to the country primarily came from money sent home by Overseas Filipino Workers (OFWs), business process outsourcing (BPO) receipts, and portfolio investments.
Banks’ NFA position also rose because of higher deposits with other banks and investments in marketable debt papers.
The central bank said M3 growth remains manageable and in line with the BSP’s latest inflation and economic activity projections.
“Moving forward, the BSP will continue to closely monitor monetary conditions to ensure that overall domestic liquidity dynamics stay in line with its price and financial stability objectives,” it added.
During the same period, bank lending rose by 17.7 percent, excluding banks’ reverse repurchase (RRP) placements with the central bank. Including RRP placements, banking lending went up by 16.2 percent.
These growth levels, however, are lower than month-ago’s 17.8 percent and the revised 16.5 percent for net of RRPs and including RRPs, respectively.
The central bank said production loans, which account for about 80 percent of banks’ total loan portfolio, posted a flat growth of 17.4 percent.
Bulk of these was extended for information and communication at 40.8 percent followed by the 24.8 percent share of loans to electricity, gas, steam and air conditioning; 20 percent for real estate activities; 12.2 percent for wholesale and retail trade, repair of motor vehicles and motorcycles; and 8.6 percent for manufacturing,
On the other hand, loans extended for public administration and defense, compulsory social security contracted by 5.8 percent.
Household loans grew by 22.2 percent from last September’s 22.3 percent on continued hikes in motor vehicle loans, salary-based general-purpose loans and credit card loans.