Liquidity in the Philippine financial system and bank lending both posted faster growth in March 2026, signaling sustained credit demand from businesses and households despite the central bank’s continued focus on maintaining price and financial stability.
Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed domestic liquidity, or M3, expanded by 12.0% year-on-year to ₱20.4 trillion in March, accelerating from the 10.3% growth recorded in February.
On a seasonally adjusted basis, M3 also increased by 1.7% month-on-month.
The faster expansion in money supply was driven largely by stronger borrowings from non-financial private corporations and households, reflecting continued financing activity across the broader economy.
Claims on the private sector, which mainly consist of loans to businesses and consumers, rose by 11.8% in March, up from 10.6% in February. Meanwhile, net claims on the national government increased by 12.1%, mainly due to higher government securities issuances.
Complementing this trend, lending by universal and commercial banks [1] also gathered pace, growing by 10.7% year-on-year in March compared to 9.6% in February.
Seasonally adjusted outstanding bank loans were likewise higher by 1.7% month-on-month.
Credit growth fuels broader economic activity
The synchronized rise in liquidity and lending suggests stronger financial intermediation, with banks channeling increased funds into productive sectors and household consumption.
Business lending expanded by 9.7% in March, supported by robust credit growth in several key industries. Loans to electricity, gas, steam, and air-conditioning supply posted the fastest increase at 26.7%, followed by transportation and storage at 19.4%.
Other major sectors also saw healthy borrowing activity, including real estate, which grew by 8.8%, and wholesale and retail trade, including motor vehicle and motorcycle repair, which rose by 9.3%.
Consumer lending remained a key growth driver, increasing by 20.5%, although slightly slower than February’s 20.8%. The moderation was attributed to softer growth in motor vehicle financing and salary-based general-purpose consumption loans.
Outstanding loans to Philippine residents [2] climbed by 11.1%, while loans to non-residents continued to decline, falling by 5.9%. [3]
BSP tracks liquidity as economic momentum builds
IMAGE CREDIT: BSP
The BSP also reported that net foreign assets in peso terms rose by 8.6% in March from 7.5% in February, supported by gains in both the central bank’s and banks’ foreign asset positions.
The narrower M1 measure of money supply, which includes currency in circulation and current account deposits, also accelerated to 9.4% growth from 8.5% previously.
The latest figures point to sustained economic activity as access to credit remains strong across both corporate and consumer segments.
However, the BSP reiterated that it will continue to closely monitor domestic liquidity and lending conditions to ensure they remain aligned with its price stability and financial system objectives.
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[1] Loans cited in this press release excludes reverse repurchase agreements of U/KBs with the BSP.
[2] Resident shall refer to: a) an individual citizen of the Philippines residing therein; or b) an individual who is not a citizen of the Philippines but is permanently residing therein; or c) a corporation or other juridical person organized under the laws of the Philippines; or d) a branch, subsidiary, affiliate, extension office or any other unit of corporations or juridical persons which are organized under the laws of any country and operating in the Philippines, except Offshore Banking Units (OBUs), as defined in Section 1 of Part Two, Chapter I of the Manual of Regulations on Foreign Exchange Transactions.
[3] Outstanding loans to non-residents include loans by U/KB’s foreign currency deposit units to non-residents.
