By Katherine K. Chan, A reporter
Lending activity of the Philippine banking sector expanded to the slowest pace in nearly two years by the end of 2025 as lending to both consumers and business activities eased, the Bangko Sentral ng Pilipinas (BSP) reported.
Based on preliminary BSP data released late Monday, the total outstanding loans of international and commercial banks, net of repurchase agreements, grew 9.2% year-on-year at the end of December to P14.349 trillion from P13.138 trillion.
This was the slowest loan growth seen in 22 months or since the 8.6% seen in February 2024.
It was also the first time since April 2024 that bank lending grew by single digits.
Month-on-month, the pace of borrowing decreased from the 10.3% growth posted at the end of November.
Seasonally adjusted, bank lending fell 2% on the month.
Outstanding loans to residents reached P14.046 trillion for the year, up 9.7% year-on-year from P12.808 trillion. This was slower than the 10.7% increase seen in November.
Loans for productive activities of citizens accounted for the largest share or 84.4% of outstanding bank loans at the end of December. The rest were loans to consumers (13.5%) and non-residents (2.1%).
BSP data showed that loans for manufacturing activities grew by 8% annually to P12.114 trillion last year from P11.216 trillion in 2024.
This was driven by a 26.8% jump in lending to the electricity, gas, steam, and air conditioning supply sector. Loans extended to wholesale and retail trade, auto and motorcycle repair also grew by 10.8%, followed by real estate activities (8.3%) and finance and insurance activities (3.9%).
Meanwhile, consumer loans to residents reached P1.932 trillion at the end of December, up 21.4% from P1.592 trillion last year. Consumer loan growth slowed from 22.9% at the end of November.
This, as credit card loans jumped 27.7% to P1.193 trillion at the end of December, softening from 29.5% growth last month.
Auto loans also increased by 15.5% to P524.86 billion, slower than the 16.3% increase from November.
General wage loans reached P166.807 billion at the end of December, which means a slight growth of 5.6% from 6.4% at the end of November.
On the other hand, non-resident loans contracted by 8.1% to P303.208 billion, marking a sharp decline from the -4.5% recorded at the end of November. This includes loans issued by major banks to foreign currency deposit units.
LIQUIDITY GROWTH DOES
Meanwhile, separate BSP data showed that liquidity growth fell to the weakest in four months by 7% since December. This was also slower than the 7.6% increase in the previous month.
Domestic liquidity (M3) – a measure of the amount of money in the economy that includes current accounts, bank deposits, and other financial assets that are easily converted into cash – stood at P20.108 trillion at the end of the year.
“After adjusting for seasonal fluctuations, M3 has remained stable since November,” the central bank said in a statement.
Domestic claims, which include private and government claims, rose 10.1% year-on-year to P22.588 trillion, down from a 10.6% increase from November.
This came as disappointing bank lending to the non-financial private sector and households dragged private sector claims growth down to 10.1% from 11.1% last month. Private sector claims totaled P14.512 trillion during this period.
Meanwhile, the BSP said higher borrowing increased requests to the central government by 10.8% to P6.135 trillion. However, this was slower than the 11% growth seen at the end of November.
Central bank data also showed that net foreign assets (NFA) in peso terms rose 6.1% from December from 4.4% the previous month.
Broken down, BSP’s NFAs increased by 5.3%, up from 1.9% last month.
On the other hand, NFAs of banks increased by 13% annually driven by large allocations of debt securities denominated in foreign currency. However, this marked a significant drop from 26.9% from November.
NFAs show the difference between corporate claims and liabilities to non-residents.
“BSP monitors bank loans because it is an important channel of monetary policy,” the central bank said. “Looking forward, the BSP will ensure that domestic credit and bank lending conditions remain consistent with its rates and financial stability mandates.”
