BANK lending and money supply growth continued to rise in July amid further interest rate cuts expected this year, Bangko Sentral ng Pilipinas (BSP) data issued on late Friday showed.

The outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the BSP, grew by 10.4 percent in July, slightly higher than the 10.1 percent recorded in the previous month.

Month-on-month and seasonally adjusted, the expansion was at 0.8 percent.

Domestic liquidity or M3, meanwhile, grew by 7.2 percent to P17.5 trillion from June's 6.6 percent.

It was also up 0.7 percent month on month and seasonally adjusted.

Outstanding loans to residents net of RRPs grew by 10.4 percent from 10.1 percent, while those granted to nonresidents grew slower at 9.2 percent from 9.8 percent.

Loans for production activities, meanwhile, accelerated by 8.8 percent from 8.3 percent.

These mostly comprised lending for real estate activities (12.0 percent); professional, scientific, and technical activities (438.3 percent); manufacturing (7.9 percent); transportation and storage (20.6 percent); and wholesale and retail trade, repair of motor vehicles and motorcycles (6.0 percent).

Consumer loans to residents, meanwhile, also slowed to 24.3 percent from 25.0 percent mainly due to credit card lending.

As for money supply, domestic claims growth rose to 11.3 percent from June's 10.5 percent.

Claims on the private sector, in particular, edged up to 11.9 percent from 11.7 percent amid a "continued expansion in bank lending to non-financial private corporations and households," the BSP said.

Net claims on the central government, meanwhile, recorded an uptick at 14.0 percent from 12.1 percent amid sustained government borrowings.

In peso terms, net foreign assets (NFA) expanded by 11. 2 percent from 8.3 percent in June.

The central bank's NFA position grew 13.8 percent while that of banks was said to have contracted "on account of higher bills and bonds payable."

The central bank said it would continue to "ensure that domestic liquidity conditions are consistent with the prevailing stance of monetary policy, in line with its price and financial stability objectives."

It will also "continue to ensure that domestic liquidity and credit activity are aligned with its price and financial stability objectives."

Asked to comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said that easing inflation and expected rate cuts could spur loan demand.

The BSP's benchmark rate — used by banks to set their own lending rates — currently stands at 6.25 percent.

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