Philippine bank lending jumps 11.4% in September

By Katherine K. Chan, Reporter

PHILIPPINE BANK LENDING growth picked up to a four-month high in September as demand for credit from businesses and consumers remained resilient, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Universal and commercial banks’ total outstanding loans, net of reverse repurchase agreements, rose by 11.4% to P15.265 trillion as of September from P13.704 trillion a year ago, preliminary BSP data showed.

“Loans from universal and commercial banks (U/KBs) grew year on year by 11.4% in September from 11% in August, reflecting sustained credit demand from businesses and consumers,” the central bank said in a statement on Thursday.

This was the fastest lending growth recorded in four months or since 12.1% in May.

Month on month, big banks’ loans to residents and nonresidents went up by about 1% from P15.121 trillion.

Lending to residents climbed by 11.7% to P14.952 trillion at end-September from P13.389 trillion a year earlier, faster than 11.3% in August. This accounted for the bulk of the total bank loans extended during the period.

Banks’ loans for residents’ production activities stood at P12.837 trillion, up by an annual 11% from P11.568 trillion. This was faster than the 10.6% uptick as of end-August.

The BSP said the growth was largely driven by increased lending to key sectors including electricity, gas, steam, and air-conditioning supply; manufacturing; real estate activities; transportation and storage; wholesale and retail trade, and repair of motor vehicles and motorcycles; and financial and insurance activities.

Meanwhile, big banks’ consumer loans to residents went up by 16.2% to P2.115 trillion at end-September from P1.82 trillion a year ago. This was the same annual expansion seen at end-August.

Consumer loans include credit card, motor vehicle, and general-purpose salary loans, but exclude residential real estate loans.

“Consumer loans to residents also increased by 16.2% in September due in part to the sustained expansion in credit card and motor vehicle loans,” the BSP noted.

Broken down, credit card loans jumped 22.8% year on year to P1.344 trillion, while loans for motor vehicles rose by 5% to P542.032 billion. However, both eased from the 23.3% and 5.8% growth rates, respectively, recorded as of August. 

Outstanding salary loans amounted to P193.804 billion in the nine months to September, up 17.5% annually to outpace the previous month’s 11.6% expansion.

For nonresidents, bank lending slipped by 0.6% to P313.394 billion as of September from P315.214 billion in the same period last year. It was softer than the 1.5% drop a month earlier.

Such loans include those extended by big banks’ foreign currency deposit units to nonresidents.

“September’s lending data indicate that credit demand remains relatively resilient despite elevated inflation and a weaker peso,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

Mr. Asuncion noted that the results of the recent US midterm elections could partly improve near-term business sentiment and financial conditions.

He said bank lending might still ease in the fourth quarter of the year as borrowers turn cautious due to the challenging and uncertain macroeconomic backdrop.

“However, with economic growth showing signs of moderation, we expect bank lending growth to stay in double digits but may ease slightly in the fourth quarter as both businesses and households become more cautious in taking on additional debt in a still generally uncertain environment,” Mr. Asuncion said.

Meanwhile, Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., noted that bank lending will likely continue to support the economy as inflation and interest rates ease next year.

“Credit growth remains one of the clearest indicators that the Philippine economy is still expanding,” he said via Viber. “As long as inflation remains manageable and rates start to trend lower, bank lending should remain a key pillar supporting growth into 2027.”

The central bank monitors banks’ lending activities to track the transmission of monetary policy.

M3 GROWTH EASES
Meanwhile, domestic liquidity (M3) went up by 9.3% to P20.702 trillion as of September from P18.944 trillion in the comparable year-ago period as private and public sector borrowings continued to expand.

However, this was slower than the growth posted in the prior month, when the country’s money supply climbed by 10.8% to P20.614 trillion.

“Money supply in the Philippines grew by 9.3% year on year to P20.7 trillion in September amid sustained growth in credit activity, preliminary data show,” the BSP said in a separate statement.

“Borrowings by the private and public sectors grew by 12%, supporting the expansion in money supply, also known as domestic liquidity or M3,” it added.

M3 is a measure of the amount of money in the economy that includes currencies in circulation, bank deposits, and other financial assets that are easily convertible to cash.

Domestic claims from the private and public sectors increased by 12% year on year to P24.072 trillion as of September, easing from the 12.5% growth as of August.

Preliminary BSP data also showed claims on the private sector increased by 12.4% annually to P15.561 trillion, while claims on the central government went up by 14.2% to P6.5 trillion.

“The National Government’s financing activities, including debt issuances and withdrawal of deposits from the BSP and banks, also contributed to liquidity growth,” the central bank added.

Claims on a sector refer to that sector’s liabilities to depository corporations such as banks and the central bank.

However, the BSP noted that the decline in net foreign assets (NFA) offset the gains from domestic claims.

NFA in peso terms fell by 6.4% to P6.724 trillion as of September from P7.185 trillion in the same period in 2025.

Year on year, the BSP’s NFA slipped by 2.3% to P6.21 trillion from P6.356 trillion. Banks’ NFA also declined by 38% to P514.246 billion from P829.297 billion as their holdings of foreign debt securities declined.

NFAs reflect the difference between depository corporations’ claims and liabilities to nonresidents.

The BSP said it will continue to ensure that bank lending and domestic liquidity conditions are consistent with its price and financial stability mandate.