Commercial lending, money supply grew faster in December

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Category: Top News

Published on Wednesday, 13 February 2013 20:44

Written by Miguel R. Camus / Reporter

Total lending by large banks grew at a faster pace in December while the country’s money supply growth also accelerated, the Bangko Sentral ng Pilipinas (BSP) said in separate statements on Wednesday.

The BSP added that total outstanding loans of commercial banks, net of reserve repurchase placements (RRP) with the central bank, grew 16.2 percent to P3.24 trillion in December, faster than the 14 percent recorded in November. Including RRPs, the central bank said that lending grew faster at 15.4 percent to P3.48 trillion from 13.3 percent the previous month.

According to the BSP, loans for production activities, which comprised over 80 percent of the total loan portfolio, rose 16.6 percent in December from 14.6 percent the previous month. Production loans were led by financial intermediation (38.5 percent), transportation, storage and communication (37.5 percent), and real estate, renting and business services (29.7 percent).

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A dip was noted in lending to mining, agriculture, hunting and forestry.

“The continued growth in bank lending, particularly to the productive sectors, is expected to support the growth momentum of the economy,” the BSP said in the statements.

The central bank added that money supply or M3 grew 10.6 percent to P5.2 trillion year-on-year in December, faster than the 9.8-percent expansion the previous month. On a monthly basis, seasonally-adjusted M3 expanded by 1.3 percent compared to the 2.0 percent (revised) month-on-month growth in November, the BSP said.

“The continued expansion in domestic liquidity indicates that previous policy actions of the BSP to help support non-inflationary economic growth continue to work their way through the economy,” according to  the statements.

It noted that money supply growth was driven by the expansion in net domestic assets, up 19.2 percent year-on-year,  mainly on the sustained increase in net domestic credits, which grew 7.8 percent due to gains in private-sector claims from strong lending by banks.

Claims on the public sector contracted further by 14.0 percent in December (after declining by 9.5 percent in the previous month) as deposits of the national government increased, reflecting the proceeds from the issuance of 25-year retail Treasury bonds in October, the BSP said.