DOMESTIC liquidity, or money supply in the financial system, grew 9.5 percent year-on-year in October to P7.9 trillion, due largely to sustained demand for credit, the Bangko Sentral ng Pilipinas said over the weekend.
The rise was faster than the 8.7-percent revised expansion recorded in September. M3 increased 1.1 percent on a month-on-month seasonally-adjusted basis.
“The continued expansion of domestic liquidity during the month indicates that money supply remains sufficient to support economic growth. Going forward, the BSP will continue to monitor liquidity in the financial system to ensure that monetary conditions remain consistent with the BSP’s objectives to maintain price and financial stability,” the Bangko Sentral said in a statement.
Domestic claims rose 12.4 percent in October from 12.7 percent in September. Credits to the private sector increased at a faster pace relative to the previous month. The bulk of bank loans during the month was channeled to key production sectors such as real estate activities, electricity, gas, steam and air-conditioning supply; wholesale and retail trade, and repair of motor vehicles and motorcycles; financial and insurance activities; and construction.
Meanwhile, the net public sector credit rose 12.1 percent in October, slower than the 16.5-percent growth a month earlier.
Net foreign assets in peso terms increased 8.2 percent in October from 6.8 percent in the previous month. The Bangko Sentral’s NFA position continued to expand during the month on the back of robust foreign exchange inflows, coming mainly from the remittances of migrant Filipino workers, business process outsourcing receipts and portfolio investments.
The net foreign assets of banks also expanded as banks’ foreign assets grew at a faster pace relative to their foreign liabilities. Banks’ foreign assets increased due largely to the growth in their investments in marketable debt securities, while banks’ foreign liabilities rose mainly on account of higher deposits and placements made by foreign banks with other banks.
Outstanding loans of commercial banks, net of reverse repurchase placements with the central bank, climbed 13.9 percent in October from 12.6 percent in September. Similarly, bank lending inclusive of RRPs increased 13.6 percent in October from 12.4 percent in the previous month.
On a month-on-month seasonally-adjusted basis, commercial bank lending increased 2.2 percent for loans net of RRPs and by 2.0 percent for loans inclusive of RRPs.