M3 growth up but bank lending slows

MONEY supply growth accelerated in September but that for bank lending slowed, the Bangko Sentral ng Pilipinas (BSP) reported on Monday.

Based on preliminary data, domestic liquidity or M3 expanded by 7.9 percent to about P16.6 trillion during the month, picking up from August’s 6.8 percent.

Month on month and seasonally adjusted, M3 grew by about 1.0 percent.

Domestic claims rose by 9.5 percent, rising from revised 9.3 percent in August.

Claims on the private sector, however, saw growth slow to 6.3 percent from 7.5 percent, “driven by the sustained expansion in bank lending to non-financial private corporations and households.”

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Net claims on the central government, meanwhile, grew by a faster 19.2 percent from 15.2 percent, due mostly to a decline in deposits by the national government with the BSP.

In peso terms, net foreign assets (NFA) saw a downtick by 1.0 percent following a 3.5-percent increase in August.

The central bank’s NFA position declined by 2.3 percent in September after expanding by 3.2 percent a month earlier, while that of banks was said to have also contracted “on account of higher bills payable and foreign deposit liabilities.”

The BSP said it would continue to “ensure that domestic liquidity conditions remain in line with the prevailing stance of monetary policy, consistent with its price and financial stability objectives.”

As for bank lending, preliminary data showed that the outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the BSP, had grown by a slower 6.5 percent compared to August’s 7.2 percent.

Month on month and seasonally adjusted, the expansion was 0.7 percent.

Growth in outstanding loans to residents net of RRPs softened to 6.6 percent from 7.2 percent.

Loans for production activities slowed to 4.9 percent from 5.5 percent, the BSP said, despite a sustained expansion in credit to major sectors such as real estate (5.0 percent); electricity, gas, steam, and airconditioning supply (9.2 percent); wholesale and retail trade, and repair of motor vehicles and motorcycles (6.6 percent); financial and insurance activities (4.9 percent); and information and communication (8.1 percent).

Consumer loans to residents saw an uptick of 23.5 percent from 23.1 percent in August. The continued gain was traced to an increase in credit card loans and a faster expansion in motor vehicle loans.

Outstanding loans to nonresidents, meanwhile, plunged by 0.3 percent from 8.4 percent.

“Looking ahead, the BSP will continue to ensure that domestic liquidity and credit conditions are in line with its price and financial stability mandates,” the central bank said.

Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said higher interest rates had made borrowing more expensive.

China Banking Corp. chief economist Domini Velasquez said slowing inflation could benefit consumer loans moving forward.