Money supply continues to expand in July – BSP

CEBU, Philippines - Money supply continued to expand in July on account of sustained demand for credit, the Bangko Sentral ng Pilipinas reported yesterday.

"Domestic claims grew by 16.5 percent in July from 16.9 percent in June as credits to the private sector increased further," the BSP said in a report released yesterday.

Domestic liquidity or M3, which is the broadest measure of money within an economy, rose by 13.1 percent year-on-year to P8.8 trillion in July.

"This was faster than the 12.4-percent expansion recorded in June. On a month-on-month seasonally-adjusted basis, M3 increased by 1.0 percent," the central bank said.

The bank regulator further said that bulk of bank loans during the month continued to go to key production sectors such as real estate activities; electricity, gas, steam and airconditioning supply; and wholesale and retail trade, repair of motor vehicles and motorcycles.

On the other hand, net foreign assets (NFA) in peso terms also grew 12.5 percent in July from 11.1 percent (revised) in the previous month.

"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, business process outsourcing receipts, and portfolio investments," the BSP further noted. 

Meanwhile, the NFA of banks likewise increased as their their foreign assets grew.

The central bank said: "Banks’ foreign assets continued to grow primarily because of investments in marketable debt securities and interbank loans, while banks’ foreign liabilities fell due to decreased placements made by foreign banks with their Philippine branches."

The BSP said the robust expansion of domestic liquidity in July indicates that overall liquidity remains adequate to support economic growth.

"Moving forward, the BSP will continue to monitor monetary conditions closely to ensure that liquidity growth remains consistent with the BSP’s objectives of price and financial stability."

The central bank also reported that bank lending continued to sustain its growth in July.

Sought for comment yesterday, Cebu Bankers Club past president Maximo Eleccion said: "The growth is consistent with last years' performance where we grew 18 percent. Bank clients continue to expand their businesses and get credit facilities from banks, avail of housing loans, auto loans, personal loans and use their credit cards because of the very low interest rate environment."

Loans for production activities — which comprised more than 80 percent of banks’ aggregate loan portfolio —  increased by 17.4 percent in July from 17.7 percent in June.

The expansion in production loans was driven primarily by increased lending to the following sectors: real estate activities (18.8 percent); electricity, gas, steam and airconditioning supply (26.4 percent); wholesale and retail trade, repair of motor vehicles and motorcycles (14.1 percent); financial and insurance activities (20.7 percent); manufacturing (10.0 percent); and information and communication (35.4 percent).

Bank lending to other sectors likewise expanded during the month, except for public administration and defense, compulsory social security  which declined by 5.4 percent.

Loans for household consumption rose by 20.6 percent in July from 18.7 percent (revised) in June due to the expansion in credit card loans, motor vehicle loans and salary-based general purpose loans, which offset the decline in other types of household loans. (FREEMAN)