Bank's lending increases by 11.3% in May, signifying growth in borrowing activity.
The trend of outstanding loans from universal and commercial banks (U/KBs) in the Philippines continues to show steady growth, with a year-on-year increase of 11.3% in May 2025. This growth, driven by both business and consumer lending, is a positive indicator of robust credit demand, particularly in consumer loans.
Breaking down the growth, loans to residents expanded by 11.8% year-on-year, albeit marginally slower than the previous month. Conversely, loans to non-residents declined by 6.6%. Lending for business activities increased by 10.2%, although growth slowed in sectors such as real estate, wholesale and retail trade, and transportation and storage, while loans to manufacturing contracted by 3.0%. Consumer loans, however, showed strong expansion, growing by 23.7%.
S&P Global Ratings projects bank loan growth in the Philippines to be between 11% and 14% over the next two years. This growth is led by continued expansion in consumer loans (projected to rise by 18%) and easing interest rates. Corporate loan growth is expected to remain steady, while consumer lending will likely be the main growth driver, supported by favorable macroeconomic conditions.
The steady increase in bank lending supports domestic liquidity, providing businesses and households access to credit which can stimulate economic activity. The Bangko Sentral ng Pilipinas (BSP) actively monitors bank loan growth because lending is a key monetary policy transmission channel, ensuring that domestic liquidity and bank lending conditions are aligned with price and financial stability objectives.
In summary, the trend of rising outstanding loans from U/KBs in the Philippines reflects robust credit demand, particularly in consumer loans, with a projected growth rate around 11-14% in the near term. This positively influences domestic liquidity and bank lending conditions, although the BSP remains vigilant to maintain macroeconomic stability amid these dynamics. The BSP will continue to ensure that domestic liquidity conditions remain consistent with the prevailing stance of monetary policy, in line with its price and financial stability objectives.
References: [1] Bangko Sentral ng Pilipinas. (2025). Monthly Economic and Financial Bulletin. [2] S&P Global Ratings. (2025). Philippines: Bank Loan Growth to Remain Robust. [3] Philippine Statistics Authority. (2025). Gross Domestic Product. [4] Philippine Daily Inquirer. (2025). Consumer Loans in the Philippines Show Strong Expansion. [5] BusinessWorld. (2025). BSP Remains Vigilant Amid Rising Bank Loans.
The growth in consumer loans, driven by favorable macroeconomic conditions, is anticipated to rise by 18%, contributing significantly to the projected overall bank loan growth of 11% to 14% in the Philippines, as indicated by S&P Global Ratings. In light of this, the government's role becomes pertinent, as the Bangko Sentral ng Pilipinas (BSP) diligently monitors bank loan growth to maintain macroeconomic stability and ensure that domestic liquidity conditions align with the prevailing stance of monetary policy, in line with its price and financial stability objectives.
