Credit growth slows to nearly 2-year low

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March 11, 2026 | 12:00am

In January

MANILA, Philippines —  Bank lending growth slowed slightly at the start of the year, marking its weakest expansion in nearly two years even as credit demand from businesses and consumers remained firm. Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed that outstanding loans of universal and commercial banks grew by 9.3 percent year-on-year in January, slower than the revised 9.6 percent expansion in December 2025.

The latest pace was also the slowest since the 8.7 percent growth recorded in February 2024.

In terms of volume, total loans outstanding reached P14.24 trillion in January, P1.22 trillion higher than the P13.02 trillion a year earlier.

Loans extended to residents, which make up the bulk of the banking system’s credit portfolio, grew by 9.9 percent to P13.94 trillion in January, easing slightly from 10.1 percent in December.

In contrast, lending to non-residents continued to contract. Outstanding loans to non-residents declined by 10.4 percent in January, a sharper drop than the revised eight percent decline in December, bringing the total to P296.39 billion.

Loans used to finance production activities remained the largest component of bank lending, expanding by 8.2 percent year-on-year in January. Production loans amounted to about P12 trillion, accounting for roughly 84 percent of total outstanding loans to residents.

Several key sectors posted solid credit growth during the month. Lending to real estate activities, the largest sectoral borrower, reached P2.84 trillion, rising by 9.1 percent year-on-year.

Loans to the electricity, gas, steam and air-conditioning supply sector climbed by 20.3 percent to P1.88 trillion, while credit to wholesale and retail trade, including repair of motor vehicles and motorcycles, rose by 8.3 percent to P1.61 trillion.

Other sectors also recorded gains, including transportation and storage, where loans grew by 19.1 percent to P584.37 billion, as well as financial and insurance activities, which expanded by 5.5 percent to P1.09 trillion.

Meanwhile, some industries posted declines in lending. Credit to manufacturing slipped by 6.9 percent to P1.18 trillion, while loans to construction fell by 6.3 percent to P498.02 billion.

Household borrowing remained robust, with consumer loans rising by 21.3 percent year-on-year in January, slightly slower than the revised 21.5 percent growth recorded in December.

Total consumer loans reached P1.94 trillion, equivalent to about 13.6 percent of banks’ outstanding loans to residents.

Credit card loans continued to account for the largest share, climbing by 27.7 percent to P1.20 trillion. Motor vehicle loans increased by 14.9 percent to P530.29 billion, while salary-based general-purpose consumption loans grew by five percent to P165.72 billion.

“The BSP monitors bank loans because they are a key transmission channel of monetary policy,” the central bank said.

Separate BSP data showed that domestic liquidity, or the amount of money circulating in the economy, grew by 8.6 percent year-on-year to P19.7 trillion in January. Growth was faster in January than the revised 7.2-percent increase in December.

Looking ahead, the BSP said it would ensure that domestic liquidity and lending conditions remain consistent with its mandate of maintaining price and financial stability.