MONEY SUPPLY grew faster in December amid the holiday cheer even as the pickup in bank loans eased anew, the Bangko Sentral ng Pilipinas (BSP) reported on Thursday.
M3 — the broadest measure of money circulating in an economy — expanded by 9.2% year-on-year to P11.612 trillion, faster than the upward-revised 8.5% recorded in November.
Money supply went down by 0.2% on a month-on-month seasonally adjusted basis. Still, that was the fastest pace clocked since September.
Credit demand fueled faster growth of money supply in the local financial system, the central bank said in a statement.
Domestic claims grew at a steady 14.6%, matching the previous month’s pace, as more private firms secured loans from banking sector, while net claims on the national government surged by 16.4% in December versus the previous month’s 12.2% climb.
Net foreign assets expressed in pesos edged up by 1.3% year-on-year, turning around from a 3.2% decline recorded in October. This was largely due to an increase in the BSP’s dollar reserves, which ended the year at $78.461 billion.
On the other hand, banks’ foreign assets declined anew from a year ago due to higher loans and investments in debt papers.
The faster liquidity growth came amid the holiday season, and as the Monetary Board kept interest rates steady at the 4.25-5.25% range after five consecutive hikes meant to temper inflation expectations.
Some market players noted that money supply was “tight” late last year, but central bank officials said that the tightness was temporary and that there are enough funds in circulation.
Bank lending growth decelerated anew in December amid softer demand from both consumer and corporate borrowers.
Outstanding loans grew by 15.6% that month, sliding from a 16.8% pace in November. Month-on-month, total lending still climbed by a modest 0.3%.
Computed to include reverse repurchase agreements, bank lending growth softened to 14.7% from 15.4%.
Production loans still accounted for bulk of credit at roughly 88.8%, even as growth slowed to 15.8% from 17.2% the prior month.
Loans for construction still posted the biggest rise at 35.9%, followed by financial and insurance activities (30.6%); wholesale and retail trade, repair of motor vehicles and motorcycles (15.2%); and manufacturing (13.1%). Other industries received bigger loans during the period, the BSP said.
Growth of consumer loans also slowed to 13.5% from November’s 13.8%. This came on the back of a decline in salary-based borrowings and other types of retail credit, together with a slower pickup in motor vehicle loans. At the same time, credit card loans went up during the period.
The BSP said that monetary authorities will continue to ensure that credit and liquidity growth will prop up economic activity.
The government targets overall economic growth to reach 7-8% this year, following a disappointing 6.2% finish in 2018. — Melissa Luz T. Lopez