Bank loans up 13.4% in September, money supply at P15.4T – Manila Bulletin

The total outstanding loans of major banks rose 13.4% year-on-year in September, higher than 12.2% in August, supported by sufficient liquidity to encourage credit growth.

The Bangko Sentral ng Pilipinas (BSP) also released the latest domestic liquidity or M3 of 15.4 trillion pesos on Monday, October 31, up 5% year-on-year. However, this was a slower pace of growth compared to the 6.7% growth in M3 in September.

BSP Governor Felipe M. Medalla said he “will ensure that domestic liquidity conditions remain consistent with BSP’s price and financial stability objectives.” The medium-term inflation outlook remains high and will likely exceed the 2-4% target until 2023. For this year, the BSP’s average inflation forecast is 5.6%.

BSP Governor Felipe M. Medalla

Regarding bank lending, the Medalla said in a separate statement that “the continued expansion of lending activity and ample liquidity will continue to support the recovery in economic activity and domestic demand.” .

Based on preliminary data, on a seasonally adjusted monthly basis, outstanding universal and commercial bank loans, net of repo loans, or RRPs, increased by 1.7%. M3 on a seasonally adjusted monthly basis has meanwhile decreased by 0.2%.

In September, outstanding loans from major banks, net of RRPs, increased by 13% year-on-year to P10.169 billion from 12.1% in August. Gross of RRPs, outstanding loans reached 10,768 billion pesos.

Outstanding loans for production activities increased by 12.3% year-on-year to P9.203 billion. The main sectors that have driven the growth of productivity loans are real estate activities, manufacturing, the information and communications sector, and wholesale and retail trade, repair of motor vehicles and motorcycles.

Consumer loans in September also rose 18.3% year-on-year to 965.994 billion pesos, driven by increases in credit card loans, auto loans and general purpose consumer loans based on salaries.

Medalla said that while continuing to monitor and manage high inflation, the BSP will ensure that domestic liquidity conditions remain consistent with their price and financial stability objectives.

In September, money supply-related domestic claims rose 10.8 percent year-on-year, slower than August’s 11.4 percent.

Medalla said claims on the private sector rose 10.1% in September from 8.9% in August with the sustained expansion of bank lending to private non-financial corporations and households.

“At the same time, net claims on central government increased by 15.3% in September from 21.2% in August due to sustained borrowing by the national government,” he noted.

Also part of the M3 data, the BSP reported that net foreign assets (NFA) fell 1.7% in September from 0.8% in August.

Banks’ NFA also declined over the period due to higher bills payable, while BSP’s position in NFA was “broadly stable”, Medalla said.

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