Domestic liquidity or M3, which ensures the economy is sufficiently fueled with money without risking inflation, grew at a slower pace of 5.9 percent to ₱16.4 trillion in June 2023 from 6.6 percent in May.
On a month-on-month seasonally-adjusted basis, M3 increased by 0.2 percent, according to the Bangko Sentral ng Pilipinas.
Domestic claims rose by 10.1 percent year-on-year in June from 11.4 percent in the previous month. Claims on the private sector grew by 7.9 percent in June from 9.3 percent in May, driven by the sustained expansion in bank lending to non-financial private corporations and households. Net claims on the central government also expanded by 17.2 percent in June from 18.3 percent in May owing mainly to the borrowings by the National Government.
Net foreign assets (NFA) in peso terms fell by 2.8 percent year-on-year in June following a 2.7-percent expansion in May. The BSP’s NFA position declined by 0.6 percent in June after increasing by 4.2 percent in the previous month. The banks’ NFA fell on account of higher bills payable.
This level of liquidity in the system helped push bank lending which expanded by 7.8 percent in June from 9.4 percent in May. On a month-on-month seasonally-adjusted basis, the outstanding universal and commercial bank loans, net of reverse repurchases or RRPs, increased by 0.6 percent.
Outstanding loans to residents, net of RRPs, also increased at a softer pace of 7.9 percent from 9.3 percent in May. Outstanding loans for production activities went up by 6.3 in June following a 7.9-percent expansion in the previous month, generally driven by the continued rise in lending to key sectors, particularly electricity, gas, steam, and airconditioning supply (11.8 percent); wholesale and retail trade, and repair of motor vehicles and motorcycles (9.7 percent); real estate activities (3.8 percent); financial and insurance activities (7.7 percent); and information and communication (11.2 percent). Likewise, outstanding loans to non-residents went up by 4.8 percent in June from 13.2 percent in the previous month.
Consumer loans to residents rose at a slightly faster rate of 23.7 percent in June from 22.7 percent in May given the increase in credit card and motor vehicle loans.
The slowdown in credit activity reflects the impact of monetary policy tightening which continues to work its way through the economy. Looking ahead, the BSP remains prepared to ensure that domestic liquidity and lending dynamics are in line with its price and financial stability objectives.
