Q4 2023 domestic claims of financial corporations rise 2.7% QoQ, 15% YoY

Based on preliminary results of the Other Financial Corporations Survey, the domestic claims of the other financial corporations rose by 2.7 percent in Q4 2023, slightly higher than the 2.1 percent growth quarter-on-quarter (QoQ) in Q3 2023.[1]

The domestic claims of other financial corporations stood at ₱9,054.6 billion in Q4 2023 from ₱8,817.8 billion in Q3 2023 and ₱7,873.3 billion in Q4 2022 (Figure 1).

The QoQ growth in the other financial corporations’ domestic claims stemmed from the rise in its claims on the other sectors, the central government, and the depository corporations.[2]

The other financial corporations’ claims on the other sectors, particularly the private sector, grew on account of the sector’s increased investments in equity shares issued by other nonfinancial corporations and higher loans extended to households.[3]

Likewise, the sector’s claims on the central government increased as its holdings of government-issued debt securities rose. Similarly, the sector’s claims on the depository corporations grew owing to its higher holdings of bank-issued debt securities and deposits with the banks.

The net foreign assets of the other financial corporations climbed by 4.8 percent QoQ from ₱370.9 billion to ₱388.7 billion as the sector’s investment in nonresident-issued debt securities expanded. The said growth, however, was lower than the 6.4 percent upturn posted in Q3 2023. Meanwhile, the sector’s other liabilities rose mainly on account of the increase in its shares and other equity issuances and insurance technical reserves.[4]

On a year-on-year (YoY) basis, the other financial corporations’ domestic claims grew, albeit at a slower pace of 15.0 percent in Q4 2023 from 17.8 percent in Q3 2023.

The growth is attributable to the rise in the sector’s claims on the central government, the private sector, and the depository corporations. In particular, the sector’s claims on the central government expanded on account of higher holdings of government-issued debt securities.

Moreover, the other financial corporations’ claims on the private sector rose as its investments in equity shares issued by the other nonfinancial corporations and loans extended to the household sector grew. The sector’s claims on the depository corporations also rose amid the increase in its bank deposits and holdings of bank-issued securities.

The net foreign assets of the sector climbed at a slightly higher rate of 48.0 percent YoY in Q4 2023 from the 47.6 percent YoY growth posted in Q3 2023. Meanwhile, the growth in the sector’s other liabilities is due mainly to the rise in its shares and other equity issuances and insurance technical reserves.

By component, claims on the other sectors, specifically the other nonfinancial corporations, comprised the bulk of the other financial corporations’ domestic claims in Q4 2023 (Figure 2). This is followed by claims on depository corporations and the central government.

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[1]  The Other Financial Corporations Survey 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 are comprised of 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.

[2] The other sectors are comprised of (a) state and local government, (b) public nonfinancial corporations, and (c) private sector. Meanwhile, the depository corporations are composed of a) the central bank, and b) other depository corporations (i.e., deposit-taking corporations, except the central bank).

[3] The private sector is composed of other nonfinancial corporations and other resident sectors. The other nonfinancial corporations refer to private corporations and quasi-corporations whose principal activity is the production of market goods or nonfinancial services. Meanwhile, other resident sectors comprise the households and non-profit institutions serving households.

[4] The insurance technical reserves are amounts set aside by insurance companies to meet future insurance liabilities, such as but not limited to unearned premiums, outstanding claims, expected losses, bonuses and rebates (for life insurance).