Bank lending expands 15.3% in January; money supply at P11.4 T

By Lee C. Chipongian

Bank lending growth slowed down in January to 15.3 percent compared to 15.7 percent end-December 2018, while domestic liquidity expanded to P11.4 trillion.

MB file photo. MB file photo.

Based on Bangko Sentral ng Pilipinas (BSP) data, the big banks’ outstanding loans increased to P8.216-trillion net of reverse repurchase (RRP) placements with the BSP.

With RRP, bank lending went up by 14.4 percent in January from 14.8 percent in December. The total value gross of RRP was P8.466 trillion. Commercial bank loans net of RRPs and inclusive of RRPs both increased by 0.9 percent, based on a month-on-month seasonally-adjusted basis.

“The BSP will continue to ensure that the expansion in domestic credit and liquidity proceeds in line with overall economic growth while remaining consistent with the BSP's price and financial stability objectives,” it said in a statement.

As for domestic liquidity dynamics, which the central bank closely monitors, it said that the overall monetary conditions also continue to “remain in line with maintaining price and financial stability.”

In January, about 88.6 percent of outstanding loans were loans for production activities, which increased year-on-year by 15.5 percent, slower than December’s 15.8 percent growth. Productivity loans amounted to P7.277 trillion.

The BSP said the growth in production loans was driven primarily by the wholesale and retail trade, repair of motor vehicles and motorcycles sector which rose by 16.5 percent to P1.129 trillion. Loans to the financial and insurance activities sector also increased by 26.5 percent to P747.185 billion while real estate activities went up by 10.7 percent to P1.382 trillion.

Loans for household consumption was lower in January at 12.7 percent relative to the 13.6 percent growth in December, said the BSP. “The deceleration in credit card loans and motor vehicle loans as well as the contraction in salary-based general purpose consumption loans offset the expansion in other types of household loans during the month.”

Household consumption loans totaled P657.301 billion, of which auto loans accounted for P290.219 billion while credit card loans amounted to P286.987 billion.

In the meantime, domestic liquidity grew by 7.6 percent year-on-year to P11.4 trillion in January, slower than December’s 9.2 percent growth.

The BSP said “demand for credit eased but remained the principal driver of money supply growth.”

The BSP stated that domestic claims were up by 12.2 percent in January from 14.6 percent in December mainly because of the sustained growth in credit to the private sector. Liquidity growth in net claims on the central government, in the meantime, also slowed to 4.7 percent in January from 16.4 percent in the previous month, said the BSP.