Domestic claims of OFCs post fastest growth in Q2

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DOMESTIC claims of other financial corporations posted the fastest growth on record in the second quarter, according to the latest results of the Other Financial Corporations Survey released by the Bangko Sentral ng Pilipinas (BSP).

The BSP said the domestic claims of the other financial corporations rose at an accelerated pace of 19.2 percent in the second quarter of 2023, the highest growth on record since the BSP began recording the OFCS in 2017. Prior to the second quarter of 2023, the highest was in the third quarter of 2019 at 16.2 percent.

“The year-on-year growth in the other financial corporations’ domestic claims in the second quarter of 2023 was due to higher claims on the depository corporations, the other sectors, and the central government,” BSP explained.

“In particular, the other financial corporations’ claims on depository corporations expanded significantly owing to the sector’s increased deposits in banks and holdings of bank-issued equity shares,” it added.

BSP data showed the domestic claims of other financial corporations reached P8.61 trillion in the third quarter of 2023 from P7.22 trillion in the second quarter of 2022.

“The other financial corporations’ claims on other sectors, particularly the private sector, grew due to the sector’s higher investments in equity shares and debt securities issued by other nonfinancial corporations as well as the uptick in the loans extended to the households,” BSP said.

“Claims on the central government expanded due to the other financial corporations’ increased holdings of government securities,” it added.

The BSP also showed that net foreign assets of the sector grew by 51 percent year-on-year in the second quarter of 2023, higher than the 20.8 percent recorded in the first quarter of 2023.

The data showed the net foreign assets increased to P348.4 billion in the second quarter of 2023 from P230.7 billion in the second quarter of 2022.

BSP explained that the sector’s other liabilities was higher from the previous year on account of the increase in its shares and equity issuances, combined with the expansion of its insurance technical reserves.

Meanwhile, other financial corporations’ domestic claims grew at a slightly higher pace of 4.7 percent in the second quarter of 2023 from 4.5 percent in the preceding quarter.

“The expansion was primarily due to the rise in the sector’s claims on the private sector, coupled with the increase in its claims on the central government and depository corporations,” BSP said.

“The higher claims on the private sector were mostly due to the other financial corporations’ increased investments in equity and debt securities issued by private nonfinancial corporations and amount of loans extended to households,” it explained.

BSP also said the other financial corporations’ larger investments in government securities contributed to the rise in the sector’s claims on the central government.

The central bank also traced the increase in the sector’s claims on depository corporations to its higher deposits in banks and holdings of debt securities issued by other depository corporations.

The net foreign assets of the other financial corporations rose by 14.5 percent quarter-on-quarter from P304.3 billion as the sector continued to increase its investments in foreign-issued debt securities.

The BSP noted that this was slightly slower than the 16.5-percent expansion posted in the preceding quarter.

“The sector’s other liabilities increased due to higher shares and other equity issuances and the expansion of its insurance technical reserves from a quarter ago,” it added.

By component, claims on the other sectors, specifically the other nonfinancial corporations, comprised the bulk of the other financial corporations’ domestic claims in the second quarter of 2023. This is followed by claims on depository corporations, and the central government.

The OFCS is a comprehensive measure of the claims and liabilities of the other financial corporations. Other financial corporations refer to institutional units providing financial services other than banks, non-banks with quasi-banking functions, non-stock savings and loan associations, and the central bank.

These institutional units comprise non-money market funds of trust institutions, trust corporations, and investment companies, private and public insurance corporations, holding companies, government-owned or -controlled corporations engaged in financial intermediation, and other financial intermediaries and auxiliaries.

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