Demand for credit remained to be the principal growth driver of money supply despite the apparent easing observed during the month.

Domestic liquidity, also known as M3 grew at a faster rate for the month of July, the Bangko Sentral ng Pilipinas (BSP) reported on Tuesday.

Preliminary data from the BSP showed July M3 growing by 6.7 percent year-on-year from the registered 6.4 percent expansion in June, which translates to about P11.9 trillion.

According to the Central Bank, demand for credit remained to be the principal growth driver of money supply despite the apparent easing observed during the month.

“Domestic claims grew by 5.7 percent in July from 6.2 percent in the previous month due mainly to the sustained growth in credit to the private sector,” the BSP said.

“Loans for production activities continued to be driven by lending to key sectors such as real estate activities; financial and insurance activities; electricity, gas, steam and air-conditioning supply; construction; and wholesale and retail trade, repair of motor vehicles and motorcycles,” it added.

Bank lending accelerated with universal and commercial bank outstanding loans net of reverse repurchase (RRP) placements with 11.1 percent. This compares to the 10.5 percent posted in June.

Likewise, bank lending inclusive of RRP grew to 10.7 percent in July from the recorded 10.5 percent in June.

“On a month-on-month seasonally-adjusted basis, commercial bank loans net of RRP grew by 2.1 percent,” the BSP said.

Moreover, the BSP reported a 23 percent expansion in loans for household consumption in July, a significant improvement from just 15.3 percent in June as motor vehicle and salary-based general-purpose consumption loans grew at a faster rate during the month.