The country’s supply of cash increased at a slower pace in July as bank lending growth moderated given the monetary tightening last year.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said growth in domestic liquidity continued to support the growing economy’s need for fresh cash.
“The continued expansion of domestic liquidity during the month indicates that money supply remains sufficient to support economic growth,” the BSP said in a statement.
“Going forward, the BSP will continue to monitor monetary conditions closely to ensure that liquidity in the financial system remains consistent with the BSP’s price and financial stability objectives,” the regulator added.
In July, domestic liquidity or M3, referring to the amount of money circulating in the economy, grew by 8.5 percent year-on-year to reach P7.7 trillion. This was slightly slower than the 9.3-percent expansion recorded in June.
On a month-on-month seasonally-adjusted basis, M3 increased by 0.7 percent. “Money supply continued to expand due largely to sustained demand for credit,” the BSP said.
This came as outstanding loans of commercial banks, net of reverse repurchase (RRP) placements with the BSP, expanded by 13.5 percent in July from 14.5 percent in June. Inclusive of RRPs, bank loans grew by 13.4 percent from the 14.2 percent growth in the previous month.
Month-on-month, commercial bank lending increased by 1 percent for loans net of RRPs and by 1.1 percent for loans inclusive of RRPs.
Universal and commercial banks make up about 90 percent of the banking industry’s assets and resources.
Loans for production activities—which accounted for more than 80 percent of banks’ aggregate loan portfolio—grew by 13.4 percent in July from 14.5 percent in June. This expansion of loans benefited companies in real estate, electricity, gas, and air-conditioning supply, wholesale and retail trade, and finance industries.
Loans for household consumption grew by 13.7 percent in July from 14.9 percent in June due to sustained growth in credit card loans, auto loans and salary loans.