Money supply grows slower in February

MANILA, Philippines — The country’s money supply continued to expand in February albeit at a slower pace as demand for credit slowed down, the Bangko Sentral ng Pilipinas (BSP) said yesterday.

Preliminary data from the central bank showed that domestic liquidity, also known as M3, rose by 7.1 percent to P11.5 trillion in February from P10.74 trillion in the same month last year.

This was, however, slower than the 7.7 percent revised growth in money supply recorded in January.

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

According to data from the central bank, domestic claims in February climbed by 11.7 percent due to the sustained growth in credit to the private sector. However, this was still slower than the 12.4 percent revised growth figure in the previous month.

Meanwhile, the growth in net claims on the central government last month accelerated to 8.3 percent from 5.3 percent in January.

On the other hand, net foreign assets (NFA) in peso terms declined 1.5 percent percent year-on-year in February, faster than the 1.2 percent contraction in the previous month.

“The NFA of banks decreased anew even as banks’ foreign assets rose as a result of higher loans and investments in marketable debt securities,” the BSP said.

In contrast, the central bank’s NFA position expanded last month, driven by foreign exchange inflows coming mainly from overseas Filipino’ remittances, business process outsourcing receipts, and foreign portfolio investments.

“The BSP will continue to closely monitor domestic liquidity dynamics to ensure that overall monetary conditions remain in line with maintaining price and financial stability,” the central bank said.

Meanwhile, data from the BSP also showed that outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the central bank, increased by 13.7 percent in February to P8.20 trillion from P7.22 trillion a year ago.

This pace of growth, however, is slower than the 15.3 percent expansion in January. 

Likewise, the growth in bank lending, inclusive of RRPs decelerated to 13.9  percent from 14.5 percent.

Loans for production activities, which comprised 88.4 percent of bank’s aggregate loan portfolio net of RRP, increased 13.6 percent year-on-year, albeit slower than the 15.5 percent posted the previous month.

The central bank said the growth in production loans was driven mainly by increased lending to various sectors, namely, real estate activities; wholesale and retail trade; repair of motor vehicles and motorcycles;  financial and insurance activities; manufacturing; construction; and electricity, gas, steam and airconditioning supply.

On the other hand, loans for household consumption grew by 14.9 percent last month, faster than the 13.2 percent recorded in the previous month.

The BSP said this growth was supported by the acceleration in credit card loans, faster expansion in motor vehicle loans, and the expansion in salary-based general purpose consumption loans and other types of household loans.

“Going forward, the BSP will continue to ensure that the expansion in domestic credit and liquidity proceeds in line with overall economic growth while remaining consistent with the BSP’s price and financial stability objectives,” the central bank said.