Domestic liquidity posted slower growth in September, says BSP

The growth of money circulating in the financial system slowed in September after the policy measures implemented by the Bangko Sentral ng Pilipinas (BSP) tempered the flow of money.

 

Domestic liquidity, or M3, grew by 16.2 percent to P7.2 billion from P6.2 billion a year earlier, slower compared the revised 18.3 percent growth rate in August, central bank data showed.

 

"Domestic liquidity growth is expected to further moderate to levels consistent with domestic demand, as previous monetary adjustments continue to work their way through the economy," the BSP said in a statement.

 

So far, the BSP has raised its policy rates by 50 basis points to 4 percent from record lows as a preemptive response to signs of inflation pressures.

 

Special deposit accounts (SDA) were hiked by 50 basis points to 2.50 percent while the reserve requirement for thrift, universal and commercial banks were raised by 2 percentage points in the previous meetings. 

 

The continued increase in money supply is attributed to the sustained demand for credit in the domestic economy, the BSP said.

 

Domestic claims climbed 16 percent in September from the revised 14.6 percent growth in August, reflecting in part the continued expansion in credits to the private sector.

 

Bulk of bank loans were channeled to key production sectors such as wholesale and retail trade, utilities, real estate, renting, and business services, manufacturing, and financial intermediation.

 

Public sector credit also jumped by 12.9 percent from the revised 5.5 percent a month earlier as the National Government withdrew more money from the BSP for the redemption of maturing government securities.

 

Net foreign assets (NFA) in peso terms grew by 3.9 percent in September from 1.4 percent in the previous month on the back of higher foreign loans and receivables and in their deposits with other banks.

 

Meanwhile, banks’ foreign liabilities declined slightly on account of lower deposits made by foreign banks with their local branches. The BSP’s NFA position contracted during the month, reflecting the year-on-year decrease in gross international reserves.

In a separate statement, the BSP said lending by universal and commercial banks expanded by 20.5 percent in September, slightly faster than the revised 20.1 percent growth registered a month earlier.

 

Bulk or four-fifths of the total loan portfolio were focused on production activities, which increased by 18.7 percent from the revised 19 percent expansion in August.

 

Growth in product loans was driven primarily by increased lending to wholesale and retail trade; real estate, renting, and business services; manufacturing; electricity, gas and water; and, financial intermediation.

 

Bank lending to other sectors also rose during the month except for public administration and defense, which declined by 1.8 percent.

 

Consumer loans grew 17.7 percent in September from the revised 16.7 percent on higher auto loans and other types of loans (i.e. salary loans and personal loans) which offset the slight slowdown in the growth of credit card loans. — RSJ, GMA News