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Bank lending growth slows down; M3 increases by 9.2%



By Lee Chipongian

Big banks’ outstanding loans grew by 15.6 percent year-on-year in December 2018, it is a slower pace of growth compared to November’s 16.8 percent.

In peso value, bank lending amounted to P8.328 trillion net of reverse repurchase (RRP) placements with the BSP.

(Taylor Weidman / Bloomberg / MANILA BULLETIN)

(Taylor Weidman / Bloomberg / MANILA BULLETIN)

Inclusive of RRPs, bank lending growth was at 14.7 percent in December from 15.4 percent in November. On a seasonally-adjusted basis, bank loans net of RRPs and inclusive of RRPs increased by 0.3 percent and 0.5 percent month-on-month.

As for domestic liquidity or M3, the central bank said money supply grew by 9.2 percent year-on-year to P11.6 trillion in December 2018. “This was slightly faster than the 8.5-percent (revised) expansion in the previous month. On a month-on-month seasonally adjusted basis, M3 decreased by 0.2 percent,” explained the BSP.

Demand for credit remained the principal driver of money supply growth, it added. “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.”

“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,” said the BSP.

It added that it will also ensure that the expansion in domestic credit and liquidity “proceeds in line with overall economic growth while remaining consistent” with its objectives.

In December, the BSP reported that loans for production activities which accounted for 88.8 percent of banks’ aggregate loan portfolio, net of RRP — went up by 15.8 percent from 17.2 percent in the previous month. Total loans amounted to P7.395 trillion.

Loans for household consumption, in the meantime, was also lower during the period. It grew by 13.5 percent compared to 13.8 percent 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,” said the BSP.

Household consumption lending amounted to P657.362 billion in December.

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