BANK lending further picked up in September but money circulating in the economy eased, the Bangko Sentral ng Pilipinas (BSP) reported on Thursday.
Outstanding loans of universal and commercial banks expanded by 11.4 percent, preliminary central data showed, improving from August’s 11.0 percent.
The amount of money circulating in the economy, also known as M3, meanwhile, grew at a slower pace of 9.3 percent to P20.7 trillion in September from the 11.2-percent growth recorded a month earlier.
Union Bank chief economist Ruben Carlo Asuncion said the increase in bank loans and M3 suggests that “credit demand remains resilient even as overall liquidity growth moderates.”
“Bank lending likely continues to benefit from corporate working-capital and household financing needs, including financing higher operating costs, while slower M3 growth may increasingly reflect tighter monetary conditions and softer domestic activity,” Asuncion said.
“We expect lending to remain in double digits in the near term, but high inflation, elevated borrowing costs and weaker growth should eventually temper credit demand, while liquidity growth is likely to remain adequate but moderate further,” he added.
Outstanding loans to residents grew by 11.7 percent, up from 11.3 percent in August.
Loans for business activities, in particular, grew by 11.0 percent, with lending up for electricity, gas, steam and air-conditioning supply; manufacturing; real estate activities; transportation and storage; wholesale and retail trade, and repair of motor vehicles and motorcycles; and financial and insurance activities
Consumer loans, meanwhile, remained at 16.2 percent, unchanged from a month earlier “due in part to the sustained expansion in credit card and motor vehicle loans.”
“The BSP monitors bank lending as it serves as a key monetary policy transmission channel,” the central bank said.
“Looking ahead, the BSP will continue to ensure that bank lending conditions remain consistent with its price and financial stability objectives,” it added.
As for liquidity, growth in domestic claims slowed to 12.0 percent in September from 12.5 percent a month earlier.
Private sector claims alone grew by 12.4 percent from 12.3 percent, while net claims on the central government grew by 14.2 percent, down from the 16.2 percent recorded in August.
“The National Government’s financing activities, including debt issuances and withdrawal of deposits from the BSP and banks, also contributed to liquidity growth,” the central bank said.
However, these were offset by the contraction in net foreign assets — 6.4 percent.
“Banks’ A also fell, mainly reflecting the decline in their holdings of foreign debt securities,” the central bank said.
“The BSP will continue to ensure that domestic liquidity conditions remain consistent with its price and financial stability objectives,” it added.
