Money supply stable as banks lend more

The Bangko Sentral ng Pilipinas (BSP) said the country’s money supply grew steadily in November last year, despite a faster increase in bank lending.

Domestic liquidity (M3) rose 8.3 percent year-on-year to reach 14.8 trillion pesos in November 2021, according to a statement released this weekend by the central bank, unchanged from the revised October gain. M3 increased by 0.5% month on month and adjusted for seasonal variations.

“Due to the increase in net claims on the central government as well as the continuous improvement in bank lending to the private sector,” BSP noted, domestic claims climbed 8.1 percent year-on-year in November. , faster than 7.5 percent. percent increase in the previous month.

National claims jumped 8.1% year-on-year in November, faster than 7.5% the month before, Bangko Sentral said.

“Net claims on the central government increased 23.9% in November from 21.7% (revised) in October thanks to sustained borrowing from the national government,” he said.

In the meantime, the central bank announced a 4% acceleration in bank lending, compared to a 3.5% increase in the previous month.

“Outstanding loans from U / KB (universal and commercial banks) continue to gain ground amid the optimistic business outlook for businesses due to the easing of Covid-19 restrictions and the continued rollout of vaccines,” a- he declared.

On the other hand, commercial bank loans edged up 0.3% month-on-month and adjusted for seasonal variations.

Loans to locals rose 4.1% net of repurchase agreements “against a backdrop of continued expansion of loans for production activities”. Outstanding production loans increased by 5.3% in November, after 4.9% in October, mainly due to the increase in loans to real estate activities (8.0%); information and communication (27.2%); financial and insurance activities (9.0%); manufacturing (6.7 percent); and transport and storage (11.4 percent).

The drop in outstanding loans to other sectors, such as agriculture, forestry and fishing (-8.3%), as well as household activities as employers and undifferentiated goods and services (-23, 8%), reduced the overall expansion of outstanding production loans. , according to the BSP.

At the same time, consumer loans to residents declined at a slower pace of 7.1% in November than in October, “mainly due to the year-over-year increase in credit card loans.” At the same time, the Bangko Sentral reported a 0.4% improvement in outstanding loans to non-residents, following a 3.7% drop in the previous month.

“The BSP sees a sufficient margin to continue to provide appropriate political support to support the recovery of credit activity,” he said.

In line with its pricing and financial stability mandates, the Bangko Sentral also said it intends to keep a patient hand on its monetary tools in the future to allow the economic recovery to gain stronger momentum.

In response to recent statistics, the chief economist of Rizal Commercial Banking Corp. Michael Ricafort said that besides the resumption of traditional lending growth, M3 growth may improve further in the coming months due to the increase in ongoing investment banking transactions, especially between December 2021. and January 2022, which could lead to inflows of foreign investment and some local banks investing part of their excess liquidity in central bank pesos.

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