MONEY supply growth quickened in August – at an annual 15.4% – after bank lending sustained its double-digit pace, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.

Domestic liquidity or M3, the broadest measure of money in an economy, reached P10.1 trillion from the P8.73 trillion posted during the same month in 2016. The August pace was also faster than the 13.5% reading in July.

The BSP said in a statement that sustained demand for credit remained as the “principal driver” of money supply growth.

Separate data released also on Friday showed lending activity grew by 20.4% in August from a year ago, a tad faster than the 19.7% rise seen in July.

“Growth in bank loans has remained strong on account of lending to key production sectors such as real estate activities; electricity, gas, steam and airconditioning supply; wholesale and retail trade, repair of motor vehicles and motorcycles; manufacturing; and information and communication, other community, social and personal activities; agriculture, forestry and fishing; and financial and insurance activities,” the BSP said in a statement.

M3 sums up net foreign assets and domestic claims, as well as long-term deposits.

Net foreign assets (NFA) – expressed in peso terms – saw a 6.4% increase year-on-year coming from a 2.7% uptick 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 BSP said.

“Meanwhile, the NFA of banks expanded due to the growth in banks’ foreign assets resulting from higher loans and investments in marketable debt securities,” it added.

Domestic claims during the period rose by 16.9% from a year ago, faster than the 15.7% growth seen in July due largely to sustained growth in credit to the private sector.

The BSP said loans for production activities accounted for 88.5% of banks’ aggregate loan portfolio.

“The growth in production loans was driven primarily by increased lending to the following sectors: real estate activities (18%); electricity, gas, steam and airconditioning supply (23.7%); wholesale and retail trade, repair of motor vehicles and motorcycles (15.2%); manufacturing (13.1%); and information and communication (38.1%),” the BSP said, while noting that bank lending to other sectors also increased during the month.

Consumer loans swelled by 22.8% in August due to the “expansion in credit card loans as well as sustained growth in auto loans and salary-based general purpose loans,” offsetting the contraction in other types of household loans. – Elijah Joseph C. Tubayan

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