The Market Monitor Minding the Nation's Business
By Riza Lozada
Bank lendings grew last December by 16 percent, which was slower than the 17.4- percent increase the previous month, data released by the Bangko Sentral ng Pilipinas (BSP) recently showed.
The BSP data indicated that net of banks’ placements in the central bank’s reverse repurchase (RRP) facility, bank lending expanded by 17.2 percent from last November’s 18.6 percent.
Production loans, which account for 89.3 percent of banks’ total loan portfolio, increased by 16.8 percent, net of RRPs, from the 18.1 percent last November.
The bulk of the loans was extended to information and communications businesses, which were up 40.9 percent; real estate activities, up 20.6 percent; electricity, gas, steam, and air-conditioning supply, up 19.6 percent; financial and insurance activities, up 15.6 percent; wholesale and retail trade, repair of motor vehicles and motorcycles, up 12.4 percent; and manufacturing, up 6.3 percent.
On the other hand, lending for public administration and defense, compulsory social security contracted by 7.2 percent along with mining and quarrying, -5.7 percent; water supply, sewage, waste management and remediation activities, -0.7 percent.
Household loans also posted a lower growth of 22.8 percent from last November’s 24.5 percent, with the expansion traced to rise in credit card loans, motor vehicles loans, and salary-based general purpose loans.
During the same period, growth of domestic liquidity or the total money sloshing in the economy, went up 12.4 percent year-on-year to Php 9.5 trillion. This growth, however, is slower than month-ago’s 12.7 percent.
The strong demand for credit also continued to boost money supply or M3, with domestic claims rising by 16.7 percent from 17 percent in November 2016, the BSP said.
Net claims on the central government, during the period, rose 27.6 percent, because of withdrawals by the national government (NG) of its deposits with the central bank to finance its requirements, it said.
Net foreign assets (NFA) went up by 7.4 percent, in peso terms, last December, lower than month-ago’s 9.2 percent, with the rise boosted by inflows of remittances and receipts from the business process outsourcing (BPO) sector.
”Going forward, the BSP will continue to ensure that the expansion in domestic credit and liquidity conditions proceeds in line with overall economic growth ,while remaining consistent with the BSP’s price and financial stability objective,” the BSP said.