M3 growth picks up; bank lending slows

MONEY supply growth accelerated in August but that for bank lending slowed, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday.

Based on preliminary data, domestic liquidity or M3 expanded by 6.8 percent to about P16.5 trillion during the month, picking up from July's 5.7 percent.

Month on month and seasonally adjusted, M3 grew by about 1.6 percent.

Domestic claims rose by 9.1 percent, rising from 8.9 percent in July.

Claims on the private sector, however, saw growth slow to 7.3 percent from 8.2 percent, «driven by the sustained expansion in bank lending to nonfinancial private corporations and households.»

Net claims on the central government, meanwhile, grew by a faster 14.7 percent from 12.5 percent, due mostly to borrowings.

In peso terms, net foreign assets (NFA) rose by 3.2 percent following a 2.6-percent decline in July.

The central bank's NFA position grew by 3.2 percent in August after contracting by 0.5 percent a month earlier while that of banks was said to have also increased «on account of lower bonds payable.»

The BSP said that it would continue to «ensure that domestic liquidity conditions are in line with its price and financial stability objectives.»

As for bank lending, preliminary data also showed that the outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the BSP, grew at a slower 7.2 percent compared to July's 7.7 percent.

Month on month and seasonally adjusted, the expansion remained at 0.6 percent.

Growth in outstanding loans to residents net of RRPs softened to 7.2 percent from 7.7 percent.

Loans for production activities slowed to 5.5 percent from 6.2 percent, the BSP said, despite a sustained expansion in lending to key industries such as real estate (5.7 percent); electricity, gas, steam and air-conditioning supply (9.0 percent); wholesale and retail trade, and repair of motor vehicles and motorcycles (7.1 percent); information and communication (10.7 percent); and financial and insurance activities (6.1 percent).

Consumer loans to residents saw an uptick of 22.7 percent from 22.6 percent in July. The continued gain was traced to an increase in credit card and motor vehicle loans.

Outst