Bank lending, money supply growth pick up in August

Bank lending growth accelerated in August as businesses continued to borrow, while domestic liquidity also expanded at a faster pace, pointing to sustained credit activity in the economy, according to the Bangko Sentral ng Pilipinas (BSP).

In a Wednesday evening release, the BSP said money supply growth was supported by borrowing from both the private and public sectors. Banks continued lending to businesses and households, while National Government financing activities, including debt issuances and withdrawals of deposits from the BSP and banks, also contributed to liquidity growth.

Loans extended by universal and commercial banks grew 11 percent year-on-year in August, faster than the revised 10.4 percent expansion in July, preliminary BSP data showed. Outstanding loans to residents, which account for most bank lending, increased 11.3 percent.

The latest increase marked another acceleration in bank credit after lending growth picked up in July. The BSP said the August expansion reflected sustained demand for credit, particularly from businesses.

Business loans grew 10.6 percent in August, with increased lending to real estate; electricity, gas, steam and air-conditioning supply; wholesale and retail trade and motor vehicle repair; financial and insurance activities; manufacturing; information and communication; and transportation and storage.

Among major production sectors, lending to electricity, gas, steam and air-conditioning supply rose 27 percent, while transportation and storage loans increased 26.1 percent. Loans to wholesale and retail trade grew 10.5 percent, while manufacturing credit expanded 6.1 percent.

Real estate remained the largest recipient of production loans, with outstanding credit reaching P2.9 trillion, up 4.5 percent year-on-year.

Consumer loan growth, however, eased to 16.2 percent in August from 17.1 percent in July as credit card and motor vehicle lending slowed. Credit card loans rose 23.3 percent, while motor vehicle loans increased 5.8 percent.

Total loans outstanding to residents and nonresidents reached P15.12 trillion net of reverse repurchase agreements, up 11 percent from a year earlier.

Meanwhile, domestic liquidity or M3 grew 11.2 percent year-on-year to P20.7 trillion in August, faster than the revised 10.3 percent growth in July.

Domestic claims, which capture credit extended to the economy, grew 12.8 percent in August from 11.2 percent in July. Claims on the private sector increased 12.6 percent from 12.1 percent, while net claims on the central government accelerated to 16.6 percent from 12.4 percent.

Within M3, savings deposits grew 7.8 percent, while time deposits expanded 15.5 percent. Securities other than shares included in broad money surged 75.9 percent year-on-year.

The BSP said it monitors bank lending as a key channel through which monetary policy affects the economy and would continue ensuring that lending and domestic liquidity conditions remain consistent with its price and financial stability mandate.