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The country’s money supply and bank lending expanded in September, but at a moderate pace, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday.
In a statement, the central bank said domestic liquidity (M3) rebounded 12.3 percent year-on-year to P13.5 trillion in the ninth month, slower than the 13.7 percent revised in August. Month-over-month and seasonally adjusted, M3 was up 0.2 percent.
Domestic claims increased 8.2 percent year-on-year in September from a revised 10 percent the previous month.
“Assets vis-à-vis the private sector, driven mainly by bank loans to non-financial private companies and households, grew at a weaker pace due to restricted economic activity and the weak performance of the corporate sector,” explained the BSP.
Net loans from the national government soared 45.7 percent in September,
from August’s adjusted 50 percent, in part due to “the lower government funding requirement during the month,” he said.
Bank credit expansion slowed to 2.8 percent in the ninth month from 4.7 percent annually.
month before. Commercial bank lending, seasonally and month-on-month adjusted, fell 1 percent.
“The general decline in banking growth reflects in part the banks’ lower tolerance for risk; decreased demand for loans due to … weak business and income prospects; and the change observed by non-financial companies towards alternative sources of funds ”, explained the central bank.
Lending for production activities expanded 2.4 percent, also slower than August’s revised 4.1 percent increase, he said, as lending in most sectors slowed during the month.
Loans outstanding to key sectors also continued to decline, particularly in manufacturing (-2.6 percent), as well as wholesale and retail trade and repair of motor vehicles and motorcycles (-3.4 percent).
Real estate activities (7.3 percent) contributed to the overall expansion of production loans; information and communication (9.7 percent); supply of electricity, gas, steam and air conditioning (3.0 percent); human health and social work activities (44.5 percent); and transportation and storage (8.4 percent).
In addition, universal and commercial bank lending for household consumption grew 10.2 percent lower from 12.9 percent in August, “primarily due to the continuing slowdown in lending for credit cards and motor vehicles during the month, “said the BSP.
The Bangko Sentral said its accommodative monetary policy stance, along with the national government’s ongoing health and fiscal initiatives, remain crucial in supporting market confidence and credit activity.
“Going forward, the BSP remains prepared to calibrate its monetary instruments as necessary to ensure adequate domestic liquidity and credit in support of economic activity amid the Covid-19 (coronavirus disease 2019) pandemic,” added.
In a comment, ING Bank Manila senior economist Nicholas Antonio Mapa said the slowdown in bank lending reflected current trends in the economy, and that capital formation was crumbling as companies and corporations slowed down major investments to wait for the economic storm to pass.
“From here, we can only hope that the downward trends in lending in most sectors will fall, households in the single digits soon, and lending overall to get closer to zero with the economy. [still reeling from the coronavirus] pandemic ”, he warned.
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