Both money supply and bank loans sustained their expansion last year amid strong demand for credit, data from the Bangko Sentral ng Pilipinas show.
Data showed domestic liquidity or money supply rose 9.2 percent year-on-year to about P11.6 trillion in December 2018. This was faster than the revised 8.5-percent expansion in November.
The Bangko Sentral said M3 decreased 0.2 percent on a month-on-month seasonally-adjusted basis, .
“Demand for credit remained the principal driver of money supply growth. Growth in domestic claims was unchanged at 14.6 percent in December 2018 due mainly to the sustained growth in credit to the private sector,” it said in a statement.
Net claims on the central government grew by 16.4 percent in December, faster than the 12.2-percent growth in the previous month.
Net foreign assets in peso terms expanded 1.3 percent year-on-year in December, following a decline by 3.2 percent in the previous month. The BSP’s NFA position improved in December relative to November, reflecting the increase in gross international reserves.
Meanwhile, the NFA of banks contracted, albeit at a slower pace, even as banks’ foreign assets continued to increase as a result of higher loans and investments in marketable debt securities.
Meanwhile, outstanding loans of commercial banks, net of reverse repurchase placements with the BSP, grew 15.6 percent in December, slower than 16.8 percent in November.
The growth in bank lending inclusive of RRPs decelerated to 14.7 percent in December from 15.4 percent in the previous month. On a month-on-month seasonally-adjusted basis, commercial bank loans net of RRPs and inclusive of RRPs increased by 0.3 percent and 0.5 percent, respectively.
Loans for production activities―which comprised 88.8 percent of banks’ aggregate loan portfolio, net of RRP ― increased at a slower pace of 15.8 percent, compared to 17.2 percent in the previous month.
The growth in production loans was driven by increased lending to the following sectors: financial and insurance activities (30.6 percent); wholesale and retail trade, repair of motor vehicles and motorcycles (15.2 percent); real estate activities (11.1 percent); manufacturing (13.1 percent); electricity, gas, steam and air-conditioning supply (12.0 percent); and, construction (35.9 percent).
Bank lending to other sectors also increased during the month.
Meanwhile, the growth of loans for household consumption was marginally slower in December at 13.5 percent relative to the 13.8-percent growth in the previous month.
The deceleration in motor vehicle loans as well as the contraction in salary-based general purpose consumption loans and other types of household loans was tempered by the faster expansion in credit card loans during the month.