Bank lending in the Philippines continued to expand in December, though at a slower pace, reflecting more cautious borrowing amid tighter financial conditions, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.
Loans from universal and commercial banks (U/KBs) grew by 9.2 percent year-on-year in December, easing from 10.3 percent in November. On a month-on-month basis and after adjusting for seasonal factors, outstanding loans slipped by 2.0 percent, pointing to softer credit demand toward the end of the year.
Despite the moderation, lending to residents remained robust, expanding by 9.7 percent in December, slightly lower than 10.7 percent in November.
In contrast, loans to non-residents declined further, posting an 8.1 percent contractionfrom a 4.5 percent decrease in the previous month.
Business loans drive credit growth
Loans used to fund business activities grew by 8.0 percent in December, supported by increased lending to key sectors. These included real estate activities (up 8.3 percent), electricity, gas, steam, and air-conditioning supply (up 26.8 percent), wholesale and retail trade, including vehicle and motorcycle repair (up 10.8 percent), and financial and insurance activities (up 3.9 percent).
The sustained expansion in these industries suggests continued investment and working capital needs, even as overall loan growth shows signs of cooling.
Consumer borrowing remains strong
On the household side, consumer loans to residents — which cover credit card, motor vehicle, and salary-based loans — rose by 21.4 percent in December, easing slightly from 22.9 percent in November. The double-digit growth highlights resilient consumer demand and the role of retail lending in propping up overall credit expansion.
Policy implications
The BSP closely monitors bank lending as it serves as a key transmission channel for monetary policy, influencing spending, investment, and inflation dynamics.
Looking ahead, the central bank said it will ensure that domestic liquidity and bank lending conditions remain aligned with its mandates of price stability and financial stability, as it balances inflation risks with the need to support economic activity.
While December’s data point to moderating momentum, the continued rise in business and consumer loans underscores the banking sector’s role in sustaining growth as the economy navigates shifting financial conditions.
