Liquidity, bank lending rise in June amid supportive credit conditions
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Domestic liquidity and bank lending in the country both registered steady growth in June, reflecting continued support for economic activity and reinforcing the Bangko Sentral ng Pilipinas’ (BSP) efforts to maintain stable monetary conditions.
Preliminary BSP data showed that domestic liquidity (M3) – the broadest measure of money circulating in the financial system – rose by 6.3 percent year-on-year to approximately P18.6 trillion in June. On a month-on-month, seasonally adjusted basis, M3 expanded by 1.2 percent.
The increase in money supply was mainly driven by stronger demand for credit. Claims on the domestic sector, which include credit extended to both the private sector and the national government, increased by 10.7 percent. Specifically, claims on the private sector rose by 11.3 percent, up from 10.9 percent in May, as banks ramped up lending to non-financial corporations and households.
In parallel, outstanding loans issued by universal and commercial banks grew by 12.1 percent year-on-year in June, faster than the 11.3 percent expansion recorded the previous month. Adjusted for seasonal factors, bank lending increased by 1.2 percent from May.
Lending to residents expanded by 12.6 percent, while loans to non-residents contracted by 6.4 percent. Business loans rose by 11.1 percent, driven by increased credit to key sectors such as real estate (9.9 percent), electricity and utilities (29.2 percent), financial and insurance activities (12.0 percent), and transportation and storage (15.9 percent).
Meanwhile, consumer loans to residents – comprising credit card, auto, and salary loans – surged by 24.0 percent, reflecting sustained household demand.
On the external side, net foreign assets (NFA) in peso terms declined by 1.7 percent year-on-year, following a 4.6-percent drop in May. The BSP’s own NFA position fell by 2.7 percent, primarily due to the peso’s appreciation against the US dollar. In contrast, banks’ NFA rose amid larger holdings of foreign currency-denominated debt instruments.
The BSP reiterated that it will continue to ensure that domestic liquidity and lending conditions remain in line with its monetary policy stance, with the goal of preserving both price and financial stability.
