THE Bangko Sentral ng Pilipinas (BSP) on Wednesday announced it would continue to ensure that liquidity and credit dynamics remain in line with the BSP's price and financial stability objectives.

"The sustained growth in bank lending and liquidity will support economic activity and domestic demand recovery," stated BSP in a statement.

Preliminary data show that outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the BSP, expanded by 12.0 percent year on year in July rate of growth as in June.

On a month-on-month seasonally adjusted basis, outstanding universal and commercial bank loans, net of RRPs, went up by 0.6 percent.

Outstanding loans to residents, net of RRPs, rose by 11.9 percent in July following the same expansion in the previous month.

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Outstanding loans for production activities increased by 11.6 percent in July after growing by 12.0 percent in June.

The loans are driven mainly by the rise in lending for real estate activities (14.6 percent); manufacturing (16.2 percent); information and communication (29.3 percent); and wholesale and retail trade, repair of motor vehicles and motorcycles (9.3 percent).

Similarly, the expansion in consumer loans to residents accelerated to 14.7 percent in July from 10.9 percent (revised) in June due to the year-on-year increase in credit card loans, motor vehicle loans and salary-based general purpose consumption loans.

At the same time, outstanding loans to nonresidents grew by 14.6 percent in July after a 16.4-percent uptick in the previous month.

Meanwhile, BSP said the increasing lending to the private sector in July contributed to an increase in the money supply in the Philippines.

According to BSP data, domestic liquidity or M3 — the broadest measure of money in the financial system — stood at P15.377 trillion in July.

This is a 7-percent increase compared to P14.372 trillion in the same month last year.

It is 0.3 percent higher than the previous month on a seasonally adjusted basis but 0.4 percent lower than the P15.440 trillion recorded in June on an adjusted basis.

Domestic claims posted annual growth of 11.5 percent due to increased lending to the private sector. This is a faster yearly growth rate than the 9.9-percent figure from June.

Given the ongoing growth in bank lending to non-financial private firms and people, private sector claims increased by 8.9 percent, while net claims against the federal government rose by 22.2 percent.

The BSP's net foreign asset (NFA) position decreased in July to the same month the previous year, suggesting fewer gross international reserves.

Banks' NFA also decreased due to increased foreign deposit liabilities and payables.

"As the BSP proceeds with the withdrawal of monetary accommodation, it will continue to ensure that domestic liquidity conditions remain conducive to [sustaining] the economic recovery, in line with the BSP's price and financial stability objectives," the central bank said.