PRELIMINARY data show that outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the Bangko Sentral ng Pilipinas (BSP), grew at a faster rate of 11.1 percent in July from 10.5 percent in June.
On a month-on-month seasonally-adjusted basis, commercial bank loans net of RRPs grew by 2.1 percent, the BSP said in a statement.
Loans for production activities—which comprised 87.6 percent of banks’ aggregate loan portfolio, net of RRPs—grew by 9.8 percent in July, similar to the pace recorded in the previous month.
The growth in production loans was driven primarily by lending to the following sectors: real estate activities (18.1 percent); financial and insurance activities (19.1 percent); electricity, gas, steam and air conditioning supply (13.8 percent), construction (38.2 percent); and wholesale and retail trade, repair of motor vehicles and motorcycle (4.5 percent).
Bank lending to other sectors also increased during the month, except those in other community, social and personal activities (-41.3 percent) and professional, scientific and technical activities (-36.0 percent).
Meanwhile, loans for household consumption grew by 23.0 percent in July from 15.3 percent in June, due to faster growth in motor vehicle and salary-based general purpose consumption loans during the month.
Going forward, the BSP will continue to ensure that the expansion in domestic credit and liquidity remains consistent with the BSP’s price and financial stability objectives.
DOMESTIC LIQUIDITY EXPANDS
Meanwhile, preliminary data also indicated show that domestic liquidity (M3) grew by 6.7 percent year-on-year to about P11.9 trillion in July 2019, slightly faster than the 6.4-percent growth in June.
On a month-on-month seasonally-adjusted basis, M3 increased by 0.8 percent.
Demand for credit eased slightly but remained the principal driver of money supply growth.
Domestic claims grew by 5.7 percent in July from 6.2 percent in the previous month. This was due mainly to the sustained growth in credit to the private sector. Loans for production activities continued to be driven by lending to key sectors such as real estate activities; financial and insurance activities; electricity, gas, steam and airconditioning supply; construction; and wholesale and retail trade, repair of motor vehicles and motorcycles.
Loans for household consumption increased due to the growth in motor vehicle and salary-based general purpose consumption loans during the month.
Meanwhile, net claims on the central government contracted by 1.8 percent in July following a 3.9-percent decline in June as a result of the increase in deposits by the National Government with the BSP.
Net foreign assets (NFA) in peso terms increased by 5.8 percent in July from 5.3 percent in June. The BSP’s NFA position expanded during the month, driven by foreign exchange inflows coming mainly from overseas Filipinos’ remittances, business process outsourcing receipts, and foreign portfolio investments.
By contrast, the NFA of banks decreased as their foreign liabilities grew due to increased placements and deposits made by foreign banks with their local branches and other banks.
The BSP will continue to monitor domestic liquidity dynamics to ensure that overall monetary conditions remain in line with maintaining price and financial stability.