The Market Monitor Minding the Nation's Business
By Riza Lozada
Domestic liquidity or M3 reported a slower growth of 12.4 percent in January from the revised 12.7 percent increase last December, data released by the Bangko Sentral ng Pilipinas (BSP) showed.
The money in circulation last January reached P9.4 trillion.
The central bank said credit demand remained up and continued to result in strong M3 growth.
Domestic claims rose 15.9 percent last January, slower than the previous month’s 17 percent expansion but remains strong due to rise of lending to the private sector.
“Growth in bank loans remains strong on account of lending to key production sectors such as real estate activities; wholesale and retail trade, repair of motor vehicles and motorcycles; financial and insurance activities; electricity, gas, steam and airconditioning supply; and manufacturing,” the BSP said.
Net claims of the central government grew by 19.2 percent during the same period “as a result of the continued withdrawal by the national government (NG) of its deposits with the BSP as part of NG cash operations.”
Net foreign assets (NFA), or the value of assets a country own overseas, rose by 8.7 percent year-on-year in peso terms to P354.16 billion from last December’s 7.8 percent rise.
Foreign exchange inflows coming from overseas Filipinos’ remittances, business process outsourcing receipts, and portfolio investments were the main factors behind the increase in the BSP’s NFA position, which stood at P170 billion last January, up 4.5 percent year-on-year, it said.
NFA of financial institutions reached P172.42 billion last January, up 4.4 percent year-on-year and the BSP traced this to “higher interbank loans, deposits with other banks, and investments in marketable debt securities.”
The BSP, in a statement, said increases in M3 “remains consistent with the BSP’s prevailing outlook for inflation and economic activity.”
“Going forward, the BSP will continue to monitor monetary conditions closely to ensure that domestic liquidity stays adequate to support the BSP’s price and financial stability objectives,” it added.
During the same period, outstanding loans of commercial banks, excluding banks’ placements in the BSP’s overnight borrowing or reverse repurchase (RRP) facility, rose 17.9 percent, up from the previous month’s revised 17.3 percent expansion.
Including RRPs, bank lending was up 16.2 percent from month-ago’s 16.1 percent.
Production loans, which account for 89.2 percent of the total, rose 17.5 percent from 16.9 percent in the previous month.
This was mainly due to the 25.1 percent hike in lending for financial and insurance activities, the 20.6 percent rise of loans for wholesale and retail trade, repair of motor vehicles and motorcycles; the 18.7 percent of loans for real estate activities; 15.8 percent increase of loans to electricity, gas, steam and airconditioning supply and 8.5 percent increase for manufacturing.
Household loans, in turn, went up by 23.7 percent, faster than the 23.4 percent in the previous month, driven by the rise in credit card loans, motor vehicle loans and salary-based loans.
“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 objectives,” the BSP added.