By Melissa Luz T. Lopez, Senior Reporter

MORE MONEY circulated in the economy as of November on the back of sustained bank lending, although growth eased from the previous month, the central bank reported on Friday.

Domestic liquidity or M3, the broadest measure of money in an economy, expanded by 14% last month to reach P10.4 trillion, the Bangko Sentral ng Pilipinas (BSP) said. However, this pace is slower than the 14.8% logged in October.

This pace is also the slowest since a 13.5% increase in July. Month on month, liquidity increased by 0.3%.

“Growth in bank loans continued to be driven by lending to key production sectors,” the BSP said in a statement, even as it noted that domestic claims posted a slower growth compared to the previous month.

Liquidity from domestic sources grew by 14.7% in November, slowing from a 15.2% increase posted in October. This came on the back of a slower pickup in private sector credit, which logged at 16% from 16.5% a month ago.

Net foreign assets expressed in peso terms also remained growing, albeit at a substantially slower pace of 1.9% versus 6.1% in October. A reduction in the dollar reserves held by the central bank drove the reduction in its foreign asset stash, as the BSP sometimes uses these reserves for its “tactical interventions” to contain sharp swings in the peso-dollar exchange rate.

Meanwhile, foreign assets held by banks remained growing amid higher loans and investments in debt securities.

LENDING GROWTH SOFTENS
Local banks also reported a slight easing in credit growth in November, marking the second straight month of deceleration.

Bank lending jumped by 19.2% last month, still robust although slower than a 19.9% increase posted in October, the BSP said. This is the slowest pace seen since a 19% climb in June.

Still, outstanding loans granted by banks totalled P6.961 trillion as of end-November, according to central bank data.

Factoring in reverse repurchase agreements held by banks, total lending rose by 18.3%, slightly faster than the 18% growth clocked in the previous month.

About 88.4% of the fresh credit lines granted by lenders went to production activities, which grew by 18.5% year-on-year.

Loans extended to the information and communication sector posted the biggest increase at 31.4%. This is followed by a pickup in lending for electricity, gas, steam and air-conditioning supply (24.2%), financial and insurance activities (23.1%), wholesale and retail trade, repair of motor vehicles and motorcycles (18.5%), and real estate activities (18.3%). Lending for the manufacturing sector also rose by 11.5%, according to central bank data.

Lending to other industries also posted increases, except for administrative and support services which declined by 31.5% and a 2.1% drop in lending for public administration, defense and compulsory social security.

On the other hand, growth in consumer loans also slowed to 20.6% in November from 23.4% the previous month. A slower pickup in car loans and salary-based borrowings offset higher credit card lending, the BSP said.

The central bank regularly monitors liquidity and bank lending dynamics to ensure price and financial stability, as it noted that current money supply conditions remain attuned to upbeat economic activity.

Several analysts have flagged overheating risks for the economy in light of the sustained double-digit expansion in bank credit. However, central bank officials have said that the robust lending simply mirrors increased domestic activity and continues to support rapid economic growth.

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