Bank lending, liquidity up in Nov on BSP’s monetary easing bias

Outstanding loans of universal and commercial banks, excluding their short-term placements with the central bank, grew by 10.1 percent in November, faster than the 9.3-percent in the previous month, the Bangko Sentral ng Pilipinas (BSP) said on Wednesday.

In a statement, the bank regulator also said that on month-on-month seasonally adjusted basis, commercial bank loans net of short term placements grew by 1 percent.

Loans for production activities comprising 87.2 percent of banks’ aggregate loan portfolio expanded by 8.1 percent in November, higher than the reported growth in October at 7.5 percent.

“The sustained increase in production loans was driven primarily by lending to the following sectors: real estate activities (19.3 percent); financial and insurance activities (15.3 percent); construction (29.1 percent); and electricity, gas, steam and air conditioning supply (7.6 percent),” the central bank said.

Bank lending to other sectors also increased during the month, except those to manufacturing (-2.3 percent), mining and quarrying (-10.8 percent), professional, and technical activities (-16.6 percent), and other community, social and personal activities (-35.7 percent).

Loans from universal and commercial banks for household consumption grew by 26.6 percent in November from 26.7 percent in October due to faster growth in motor vehicle loans during the month.

Preliminary data showed that domestic liquidity—the amount of cash and liquid assets circulating in the Philippine economy—expanded by 9.8 percent year-on-year to about P12.4 trillion in November 2019, faster than the 8.5-percent growth in October.

On a month-on-month seasonally adjusted basis, this level of “money supply” increased by 1.7 percent.

“Demand for credit remained the principal driver of money supply growth,” the BSP said, saying that domestic claims grew by 8.3 percent in November from 6.7 percent in the previous month due to the sustained growth in credit to the private sector.

Net claims on the central government grew by 13.9 percent in November from 6.6 percent in October, due in part to the sustained increase in borrowings by the national government, the central bank said.Net foreign assets in peso terms expanded by 11.5 percent in November from 9.6 percent in the previous month, supported by foreign exchange inflows coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts.

Similarly, the net foreign of banks increased as their foreign assets grew as a result of higher loans and investments in marketable debt securities.

“Going forward, the BSP will continue to ensure that the expansion in domestic credit and liquidity remains consistent with its price and financial stability objectives,” the regulator said.