PHL M3 Grows Faster at 13.5%, Bank Lending at 17.7%

Growth of Philippines’ domestic liquidity, or M3, posted a faster rate in May 2016 to 13.5 percent from month-ago’s 12.8 percent due to continued robust demand for credit.

Data released by the Bangko Sentral ng Pilipinas (BSP) Thursday showed that domestic claims rose slightly at 18.7 percent from last April’s 18.4 percent.

Majority of the loans were extended to the key production sectors, namely real estate, wholesale and retail trade, repair of motor vehicles and motorcycles, financial and insurance activities and information and communication.

Net foreign assets (NFA) during the same period rose by nine percent from eight percent last April.

The central bank said its NFA position continued to rise due to strong inflows of remittances from overseas Filipinos, business process outsourcing (BPO) revenues and portfolio investments.

During the same period, banks’ foreign assets also went up due to higher investments in marketable debt securities. Their foreign liabilities also rose because of increased deposits made by foreign banks.

The BSP said sustained M3 growth “indicates that money supply remains sufficient to support economic growth.”

“Going forward, the BSP will continue to monitor liquidity and credit dynamics to ensure that monetary conditions remain consistent with maintaining price and financial stability,” it said.

On the same month, lending activities of banks, excluding placements with the central bank’s reverse repurchase (RRP) facility, posted a faster growth of 17.7 percent from month-ago’s 15.6 percent.

Including RRPs, bank lending rose by 16.6 percent from the 14.8 percent in the previous month.

Production loans or those extended to production sectors, which account for about 80 percent of banks’ loan portfolio, went up by 17.9 percent from month-ago’s 15.6 percent.

Household loans also posted faster growth of 17.4 percent from last April’s 16.8 percent.

“Going forward, the BSP will continue to ensure that domestic credit and liquidity conditions will keep pace with over-all economic growth while remaining consistent with its price and financial stability objectives,” it added. (PNA) RMA/JSV/EDS