GROWTH of money supply picked up in February as bank lending grew by nearly a fifth, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday.

More money circulated in the Philippine economy as liquidity grew by 13.5% last month, faster than the 12.8% clocked in January.

Domestic liquidity, or M3, is the broadest measure of money in an economy. It grew to P10.724 trillion in February, with the growth marking the fastest pace since November 2017. Month on month, money supply rose by 1.5%.

Funds drawn from local sources expanded by 13.8%, picking up from January’s 13.6% amid robust bank lending, the central bank said.

Net claims on the central government grew 3.7%, steady from the previous month’s 3.6%.

At the same time, net foreign assets grew by a slower 4.6% versus January’s 4.9% when expressed in peso terms. This came on the back of money sent home by overseas Filipino workers as well as revenues from the business process outsourcing industry.

Foreign assets maintained by banks also grew amid bigger loans and investments in debt papers.

Still, the BSP said the faster money supply growth remains “consistent” with its outlook for inflation and economic activity.

The current administration is targeting a 7-8% growth this year from 2017’s 6.7%, as increased state infrastructure spending adds to the impetus provided by robust household spending that accounts for about 70% of the economy.

Bank lending also picked up at sustained double-digit pace in February, the central bank said.

Credit growth clocked 19.5% that month, coming from January’s downward-revised 19% climb.

Computed to include reverse repurchase agreements availed by banks, lending slowed to 17.6% from 18.4% a month prior.

Some 88.4% of loans went to firms in the production sector, with growth picking up to 18.6% last month compared to January’s 18% year-on-year increment.

Real estate accounted for bulk of loans at 17.3% of the total in February, growing 18.1% year-on-year.

The segment “wholesale & retail trade, repair of motor vehicles and motorcycles” came next with a 13.5% share, growing by 18.5%.

Manufacturing was third at 13% with 10.7% growth, while “electricity, gas, steam & air-conditioning supply” accounted for 11.7% and logged a 28.5% increase.

The biggest increase was recorded in the “professional, scientific and technical activities” at 54.6%, although this segment accounted for just 1.1% of the total, while mining and quarrying, which accounted for just 0.7% of total loans in February, increased by 53.2%.

Growth in consumer loans softened last month but remained relatively faster at 19.9% compared to January’s 20.2% year-on-year increase. The BSP said a slower rise in car loans and declines in other types of retail lending offset increases in credit card and salary-based borrowings that month.

The central bank keeps a close watch on liquidity and bank lending as part of its mandate of maintaining price and financial stability, at a time of planned cuts in bank reserves and as some watchers flag potential overheating in the economy due to rapid loan growth.

Monetary authorities maintained that credit growth isn’t alarming just yet, as it simply mirrors increased activity in the country. — Melissa Luz T. Lopez