There were fewer loan take outs among the universal and commercial licensed banks (U/KBs) in January when so-called domestic liquidity, essentially money readily available to households and businesses, similarly diminished.
Liquidity levels are some of the avenues the Bangko Sentral ng Pilipinas (BSP) manipulates to help manage inflation seen pushing past nine percent in February.
According to the BSP, the outstanding loans of U/KBs during the month grew at a slower pace of only 10.4 percent versus the 13.7 percent expansion twelve months earlier. On a month-on-month seasonally-adjusted basis, however, the outstanding loans of these lenders, net of those borrowed by the central bank, were broadly unchanged.
Outstanding loans to residents, net of reverse repurchases or RRPs, went up by 10.2 percent in January following a 13.5-percent (revised) increase in the previous month. RRPs allow the BSP to manage liquidity levels in the system by borrowing practically overnight a portion of the various banks’ cash balances and giving them back with a premium.
Outstanding loans for production activities grew by 9.2 percent in January from 12.4 percent (revised) in December, mainly due to the lending activities of major sectors including electricity, gas, steam and air-conditioning supply (12.7 percent); wholesale and retail trade, repair of motor vehicles and motorcycles (10.4 percent); manufacturing (10.3 percent); information and communication (21.4 percent); and real estate activities (3.5 percent), the BSP said.
Consumer loans to residents grew by 20.3 percent in January from 25.1 percent (revised) in the previous month, driven by the faster year-on-year growth in credit card loans and salary-based general purpose consumption loan.
Outstanding loans to non-residents expanded by only 16.8 percent in January from a 19.9-percent (revised) increase in the previous month.
The BSP gave assurance that loan growth and adequate liquidity will continue to sustain the momentum of expansion across the economy.
It also committed to ensure that liquidity and lending conditions remain in line with the BSP primary mandate of ensuring price and financial stability.
Data show domestic liquidity or M3 grew at an annual pace of 5.5 percent to about ₱16 trillion in January from the 6.7-percent (revised) the previous December. On a month-on-month seasonally-adjusted basis, M3 was broadly unchanged.
Domestic claims rose 11.3 percent year-on-year in January from 12.7 percent (revised) the previous month as bank lending to the private sector remained brisk.
Claims on the private sector grew by 10.5 percent in January from 10.8 percent (revised) in December due to the sustained expansion in bank lending to non-financial private corporations and households.
Net claims on the central government rose 16.5 percent in January from 20.8 percent (revised) in December owing to borrowings by the National Government.
Net foreign assets (NFA) in peso terms fell 1 percent year-on-year in January from a 3.5-percent decline in December.
The banks’ NFA contracted mainly on account of higher bills payable. Similarly, the BSP’s NFA position fell marginally by 0.2 percent in January.
On looking ahead, the BSP vowed to ensure that overall domestic liquidity conditions remain consistent with the prevailing monetary policy posture and in line with the BSP’s price and financial stability objectives.
