M3 growth up, bank lending slows
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Tue, 08 Jan 2019 16:25:53 +0000
Money supply growth accelerated in November despite slower bank lending, the Bangko Sentral ng Pilipinas (BSP) reported on Tuesday.
Domestic liquidity or M3 expanded by 8.4 percent year-on-year to P11.250 trillion, faster than October’s revised 8.3 percent.
Month-on-month and seasonally adjusted, M3 growth increased by 0.5 percent.
“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 in a statement.
Domestic claims grew at a slower pace of 14.6 percent, from October’s 15.2 percent, “due mainly to the sustained growth in credit to the private sector.“
Net claims on the central government grew at a faster 12.1 percent from the previous month’s revised 11.2 percent.
Net foreign assets (NFA) in peso terms contracted by 3.2 percent from the previous month’s adjusted 5.0-percent drop.
Bank lending growth, meanwhile, decelerated to 16.8 percent in November from October’s revised 18.1 percent.
Including reverse repurchase placements (RRPs) with the BSP, lending growth also moderated to 15.4 percent from the previous month’s 17.9 percent.
On a month-on-month and seasonally-adjusted basis, commercial bank loans net of RRPs increased by 0.3 percent while loans inclusive of RRPs declined by 0.1 percent.
Lending for production activities, which accounted for 88.7 percent of the aggregate loan portfolio, grew at a slower 17.2 percent from 18.7 percent in October.
Household consumption loan growth eased to 13.8 percent from the previous month’s 14.6 percent “due to the weaker expansion in credit card loans and motor vehicle loans, as well as the contraction in salary-based general purpose consumption loans and other types of household loans,” the BSP said.
In a comment, ING Bank Manila senior economic Nicholas Antonio Mapa said that the latest data boded well for an expected cut in bank reserve requirements.
“In line with this development and given that inflation slowed in December 2018 and is now forecasted to slide back within target as early as 1Q (first quarter) 2019, the probability that the BSP unloads its much-anticipated 2019 reserve requirement ratio cut by 1Q has increased with [central bank Governor Nestor] Espenilla [Jr.] inching closer to his goal of single-digit RRR by the end of his term,” he said.
The RRR or the reserve requirement ratio is the proportion of current deposits that banks need to keep with the central bank against the sum they can loan out to borrowers.
One-percentage-point cuts to the ratio, currently at 18 percent, were ordered by the Monetary Board in February and May last year. Espenilla has said that monetary authorities would resume doing so this year as inflation is expected to return to target.
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