M3 grows, lending slows in December

Money supply expands in December. contributed photo

The country’s cash-supply or M3 showed further expansion in December 2018 as this grew at a faster rate on an annual basis to P11.6 trillion.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) clocked its pace at the annual rate of 9.2 percent during the month, an improvement from the revised 8.5 percent growth in November.

However, on a month-on-month seasonally-adjusted basis, M3 decelerated by 0.2 percent.

According to the BSP, credit demand remained the main driver of money supply growth, given the unchanged 14.6 percent in domestic claims.

This was attributed to sustained credit growth in the private sector.

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

While the country’s M3 exhibited an improvement, growth in bank lending slowed in December last year.

“Preliminary data show that outstanding loans of commercial banks, net of reverse repurchase (RRP) placements with the BSP, grew at a slower rate of 15.6 percent in December from 16.8 percent in November,” the report said.

“Likewise, the growth in bank lending inclusive of RRP decelerated to 14.7 percent in December from 15.4 percent in the previous month,” it added.

On a month-on-month seasonally adjusted basis, both commercial bank loans net of RRP and RRP inclusive showed a slight expansion by 0.3 and 0.5 percent respectively.

The central bank in a statement gave assurance the expansion in both domestic credit and liquidity should remain consistent with the overall economic growth while remaining consistent with its goal of price and financial stability.

“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,” it concluded.