Money supply, bank loans rise

Growth in the country’s money supply inched up in August as banks lent to clients more aggressively, catering to the needs of the growing domestic economy.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said steady domestic liquidity and loan growth rates were expected, given the country’s strong fundamentals.

“The continued expansion of money supply during the month indicates that domestic liquidity remains adequate to support the requirements of the economy,” the BSP said. “Going forward, the BSP will continue to monitor monetary conditions closely to ensure that liquidity in the financial system stays in line with maintaining price and financial stability.”

Domestic liquidity or M3, referring to the amount of money circulating in the economy, grew by 9 percent in August, faster than July’s 8.4-percent expansion.

The BSP closely monitors the country’s money supply in line with its mandate of keeping consumer prices steady. Regulators want to make sure that the economy has the money it needs to fuel growth, but not to the point that it creates excessive demand, which would drive up the price of basic goods.

Money supply continued to expand due largely to sustained demand for credit, driven by the private sector’s appetite for additional financing.

Outstanding loans held by universal and commercial banks, which account for bulk of the financial sector’s assets and resources, rose 14.1 percent in August, faster than the 13.6-percent growth recorded the month before.

Bank lending inclusive of

central bank placements grew by 14.3 percent in August from 13.6 percent a month earlier.

Loans for production activities—which make up four out of every five pesos that banks lend—grew 13.8 percent in August from 13.4 percent in July. This money went to the real estate, manufacturing, wholesale and retail trade, and financial sectors, among others.

Consumers also borrowed more during the month. The BSP said consumer loans grew 14 percent in August from 14.3 percent in July due to sustained growth in credit card loans, auto loans and salary loans.  Paolo G. Montecillo