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Money supply, bank loans sustained strong growth in October

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Both money supply and bank loans posted a double-digit growth in October, on strong corporate and household demand for cash, data from the Bangko Sentral ng Pilipinas show.

The Bangko Sentral ng Pilipinas said domestic liquidity or the money supply circulating in the financial system grew 14.8 percent year-on-year to about P10.3 trillion in October, slightly faster than the 14.5-percent rise in September.

Data showed that on a month-on-month seasonally-adjusted basis, liquidity or M3 increased 1.3 percent.

“The growth in M3 remains consistent with the BSP’s prevailing outlook for inflation and economic activity. Going forward, the BSP will continue to monitor domestic liquidity closely to ensure that monetary conditions are conducive to maintaining price and financial

stability,” the regulator said.

Domestic claims grew increased 15.2 percent in October, slower than the 16.1-percent increase in September as growth in credit to the private sector eased to 16.5 percent from 18.3 percent in the previous month.

“Nevertheless, growth in bank loans remained robust on account of lending to key production sectors such as electricity, gas, steam and airconditioning supply; real estate activities; wholesale and retail

trade, repair of motor vehicles and motorcycles; financial and insurance activities; information and communication; and manufacturing,” the Bangko Sentral said.

Net foreign assets in peso terms grew 6.1 percent year-on-year in October, up from a revised 0.1 percent in the previous month.

“Foreign exchange inflows coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts continued to be the drivers behind the increase in the BSP’s NFA position. The NFA of banks likewise expanded due to the growth in banks’ foreign assets asa result of higher loans and investments in marketable debt securities,” it said.

Meanwhile, outstanding loans of commercial banks, net of reverse repurchase placements with the BSP, expanded at a slower rate of 19.9 percent in October compared to 21.1 percent in September.

The growth in bank lending inclusive of RRPs slowed down to 18 percent in October from 20.1 percent in the previous month. 

Loans for production activities”•which comprised 88.3 percent of banks’ aggregate loan portfolio, net of RRP “• grew 18.7 percent while loans for household consumption rose 23.4 percent.

The expansion in credit card loans, motor vehicle loans and other types of household loans

compensated the slower growth in salary-based general purpose loans, data showed.

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