BANK lending continued to accelerate in March with money supply rebounding from a four-month decline, the Bangko Sentral ng Pilipinas (BSP) reported late Thursday.
Preliminary data showed that the outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the BSP, grew by 9.4 percent from 8.6 percent in February.
This is the fourth consecutive month of pick-up and the highest bank lending growth recorded since April 2023 at 9.7 percent.
Month on month and seasonally adjusted, the expansion was at 1.3 percent.
Domestic liquidity or M3, meanwhile, expanded by 5.7 percent, improving from February's 5.1 percent to about P17.2 trillion.
It was up 0.9 percent month on month and seasonally adjusted.
Outstanding loans to residents net of RRPs grew by a faster 9.5 percent in March from 8.7 percent in the previous month. Those granted to nonresidents also went up to 9.1 percent from 6.5 percent.
Loans for production activities went up by 7.7 percent from 6.8 percent, which the BSP said was largely due to an expansion in lending to industries such as real estate activities (11.5 percent); electricity, gas, steam, and air-conditioning supply (10.1 percent); wholesale and retail trade, and repair of motor vehicles and motorcycles (6.6 percent); construction (18.3 percent); manufacturing (4.9 percent); and transportation and storage (14.3 percent).
Growth in consumer loans to residents was steady at 25.4 percent, supported by a sustained increase in credit card, motor vehicle loans, and salary-based general-purpose consumption loans.
As for money supply, domestic claims saw growth expanding to 10.8 percent from February's revised 9.6 percent.
Claims on the private sector, in particular, grew by 10.9 percent from revised 10.3 percent amid a "sustained expansion in bank lending to non-financial private corporations and households," according to the BSP.
Net claims on the central government, meanwhile, grew by 15.0 percent from February's revised 12.0 percent, partly due to the decline in the deposits of the national government with the central bank.
In peso terms, net foreign assets (NFA) grew by 5.0 percent from 3.6 percent in February.
The central bank's NFA position rose 6.2 percent, while that of banks was said to have contracted "on account of higher bills payable."
The central bank said it would continue to "ensure that domestic liquidity conditions remain consistent with the prevailing stance of monetary policy, in keeping with its price and financial stability objectives."
It will also "ensure that domestic liquidity and credit conditions remain in line with its price and financial stability objectives."
Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the bank loan growth could be attributed to better business and economic conditions.
The accelerated M3 growth, Ricafort said, can be attributed to the significant maturity of P700 billion Retail Treasury Bonds between March 9 and 12, 2024.
This influx could have bolstered peso liquidity, potentially contributing to an uptick in M3 growth during March 2024.
"For the coming months, an easing trend in headline inflation would eventually justify local policy rate cuts later in 2024... [which] would help spur greater demand for loans with lower borrowing costs," Ricafort said.
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