MANILA, Philippines — The growth in domestic money supply decelerated in September amid a slowdown in bank lending expansion, according to the Bangko Sentral ng Pilipinas.

Preliminary data from the BSP showed money supply, also known as M3, grew by 9.7 percent to P11.16 trillion as of end- September from the P10.17 trillion recorded in the same period last year.

This was, however, slower than the 10.4-percent increase in money supply recorded in August.

Overall liquidity conditions during the month of September continued to be manageable and supportive of the country’s economic growth requirements, the BSP said. “The BSP will continue to closely monitor domestic liquidity dynamics to ensure that monetary conditions remain conducive to price and financial stability,” it added.

According to the central bank, domestic claims in September grew by 14.5 percent, lower than the 15 percent increase registered in the previous month.

Loans for production activities were driven by lending to key sectors, including wholesale and retail trade; repair of motor vehicles and motorcycles; real estate activities; manufacturing; financial and insurance activities; electricity, gas, steam and airconditioning supply; and construction.

Loans for household consumption also accelerated, owing to the faster expansion in motor vehicle loans, credit card loans, and salary-based general purpose consumption loans.

Net claims on the central government rose by 11 percent in September, faster than the 8.7 percent posted in August, fueled by the increased borrowings by the national government.

On the other hand, net foreign assets (NFA) in peso terms went down slightly by 0.7 percent year-on-year in September, albeit slightly better than the 1.3 percent contraction in the previous month.

“The BSP’s NFA position declined in September relative to a year ago, reflecting the decrease in gross international reserves. Meanwhile, the NFA of banks expanded due to the growth in banks’ foreign assets resulting from higher loans and investments in marketable debt securities,” the central bank said.

Meanwhile, preliminary data from the BSP also showed that outstanding loans of commercial banks, net of reverse repurchase (RRP) placements with the BSP, grew by 17.4 percent as of end-September to P7.94 trillion from P6.76 trillion a year ago.

But the BSP said this was slower than the 18.9 percent expansion recorded in the previous month.

Likewise, the growth in bank lending, inclusive of RRPs decelerated to 16.3 percent in September from 18.4 percent in the previous month.

Loans for production activities, which comprised 88.7 percent of bank’s aggregate loan portfolio net of RRP, increased by 17.2 percent year-on-year, also slower than the 19.1 percent posted the previous month.

The central bank said the growth in production loans was driven mainly by increased lending to various sectors, namely, wholesale and retail trade; repair of motor vehicles and motorcycles; real estate activities; manufacturing; financial and insurance activities; electricity, gas, steam and airconditioning supply; and construction.

Source: https://www.philstar.com/business/2018/11/01/1864814/money-supply-expansion-slows-september-2018#tWLERxrcL1HKvLwW.99