Money supply grows faster in November

MANILA, Philippines — Money supply growth slightly accelerated in November 2018, driven by the growing demand for credit, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Preliminary data from the BSP showed that domestic liquidity, also known as M3, grew by 8.4 percent to P11.25 trillion in November 2018 from the P10.38 trillion recorded in the same month last year.

This was slightly faster than the 8.3 percent expansion in money supply recorded the previous month. On a month-on-month seasonally adjusted basis, M3 increased by 0.5 percent.

“Demand for credit remained the principal driver of money supply growth,” the BSP said in a statement.

The BSP said domestic claims in November grew by 14.6 percent from 15.2 percent in October, mainly due to the sustained growth in credit to the private sector.

Loans for production activities continued to be driven by lending to key sectors, including wholesale and retail trade; repair of motor vehicles and motorcycles; financial and insurance activities; real estate activities; manufacturing; electricity, gas, steam and air conditioning supply; and construction.

Meanwhile, the central bank said loans for household consumption slowed down due to weaker expansion in credit card loans and motor vehicle  loans, alongside a contraction in salary-based general purpose consumption loans and other types of household loans.

On the other hand, net claims on the central government grew by 12 percent in November, faster than the 11.2-percent revised growth figure in the previous month.

Net foreign assets in peso terms declined 3.2 percent year-on-year in November, following a decline of five percent in the previous month.

“The BSP’s NFA position improved in November relative to October, reflecting the increase in gross international reserves. Meanwhile, the NFA of banks fell due to the slower expansion in banks’ foreign assets as growth in loans and investments in marketable debt securities eased,” the BSP said.

The BSP will continue to closely monitor domestic liquidity dynamics to ensure that overall monetary conditions remain in line with maintaining price and financial stability.

Meanwhile, preliminary data from the central bank also showed that outstanding loans of commercial banks, net of reverse repurchase placements with the BSP, rose By 16.8 percent to P8.13 trillion compared to the P6.96 trillion registered a year ago.

The growth in commercial bank loans, however, is slower than the previous month’s pace of 18.1 percent.

Likewise, the growth in bank lending inclusive of RRPs decelerated to 15.4 percent in November from 17.9 percent in the previous month. On a month-on-month seasonally-adjusted basis, commercial bank loans, net of RRPs, increased by 0.3 percent, while loans inclusive of RRPs declined by 0.1 percent.

Loans for production activities – which comprised 88.7 percent of bank’s aggregate loan portfolio net of RRP – rose 17.2 percent  in November, albeit slower than the 18.7 percent growth posted in October.