MONEY circulating in the economy grew faster in October despite a slight slowdown in bank lending, the Bangko Sentral ng Pilipinas (BSP) said yesterday.

Domestic liquidity or M3, the broadest measure of money in an economy, grew 14.8% in October to reach P10.26 trillion from the P8.94 trillion posted in the same month last year.

This was slightly faster than the 14.5% expansion recorded in September.

Domestic claims during the period rose 15.2% from a year ago, slower than the 16.1% uptick in September, driven largely by the deceleration in private sector credit growth, which stood at 16.5% in October from 18.3% 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 air-conditioning supply; real estate activities; wholesale and retail trade, repair of motor vehicles and motorcycles; financial and insurance activities; information and communication; and manufacturing,” the BSP said in a statement.

Meanwhile, net foreign assets, expressed in peso terms, grew by 6.1% in October from an upward-revised 0.1% in September. This was driven by overseas Filipinos’ remittances and business process outsourcing receipts, the BSP said.

The central bank added that the uptick was also due to the growth in banks’ foreign assets from higher loans and investments in marketable debt securities.

“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 BSP said.

Meanwhile, data released separately showed bank lending growth slowed to 19.9% in October from 21.1% in September after five consecutive months of acceleration.

Total outstanding loans amounted to P6.81 trillion as of end-October, P6.76 trillion previously, BSP data showed.

Likewise, the expansion of bank lending with reverse repurchase agreements entered into by banks factored in slowed to 18% in October from 20.1%.

Loans for production activities, which make up about 88.3% of banks’ total loan portfolio, also grew slower at 18.7% that month from 20.7% in September.

“The growth in production loans was driven primarily by increased lending to the following sectors: electricity, gas, steam and air-conditioning supply (25%); real estate activities (16%); wholesale and retail trade, repair of motor vehicles and motorcycles (19.9%); financial and insurance activities (24.5%); information and communication (40.4%); and, manufacturing (9.4%),” the BSP said.

Bank lending to other sectors also ticked up except for public administration, defense and compulsory social security, which went down 1.1%, and administrative and support services activities, which dropped 22.2%.

Household consumption loan growth, meanwhile, grew 23.4% percent, faster than the prior month’s 20%, mainly due to 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.

“Going forward, the BSP will continue to ensure that the expansion in domestic credit and liquidity conditions proceeds in line with overall economic growth while remaining consistent with the BSP’s price and financial stability objectives,” the central bank said. — Elijah Joseph C. Tubayan