Money supply, bank lending growth ease in January

MANILA, Philippines — Less funds circulated in the economy in January, with sluggish growth in money supply and continued slowdown in bank lending, the Bangko Sentral ng Pilipinas reported.

In a statement, the BSP said M3, or the broadest measure of money supply in the financial system, grew 7.6 percent year-on-year to about P11.4 trillion in January.

That was slower than the 9.2-percent expansion in December last year. On a month-on-month seasonally-adjusted basis, M3 increased by 0.6 percent.

“Demand for credit eased but remained the principal driver of money supply growth,” the central bank.

Data released by the BSP showed loans extended by financial institutions grew at a slower pace for a third consecutive month in January.

Outstanding loans of universal and commercial banks increased 15.3 percent in January, lower than the revised 15.7 percent posted in December. 

Computed to include reverse repurchase agreements entered into by banks, credit growth decelerated to 14.4 percent in January from the revised 14.8 percent in the previous month.

Loans for production activities—which comprised 88.6 percent of banks’ aggregate loan portfolio—picked up at a slower pace of 15.5 percent in January from 15.8 percent in the preceding month.

Meanwhile, household loans—composed of credit card liabilities, salary and auto loans as well other personal credit—slowed to 12.7 percent last month from 13.6 percent previously.

“The deceleration in credit card loans and motor vehicle loans as well as the contraction in salary-based general purpose consumption loans offset the expansion in other types of household loans during the month,” the central bank said.

To fight multi-year high inflation, the central bank lifted its policy rate by a cumulative 175 basis points last year. Banks typically use the BSP's benchmark rate as basis on charging their loans to consumers.

Less loans mean lower money supply in the financial system, which could aid in cooling down inflation, but could also weigh on economic growth. — Ian Nicolas Cigaral