By Katherine K. Chan, Reporter
Philippine banks’ loan growth posted its fastest pace in over a year in May amid faster lending for residents’ business activities, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.
Universal and commercial banks’ total outstanding loans, net of reverse repurchase agreements, grew by 12.1% year on year in May to P14.989 trillion from P13.37 trillion.
This was faster than the 11.4% expansion in April.
It was also the quickest lending growth seen in 15 months or since the 12.2% in February 2025.
“This reflects banks’ expectations of steady loan demand from businesses and households in Q2 2026,” the central bank said in a statement late on Tuesday.
Most or 53.8% of banks polled by the BSP expected businesses to sustain steady demand for credit in the second quarter of the year, while 52.9% saw steady loan demand from households, the central bank’s latest Senior Bank Loan Officers’ Survey showed.
BSP data showed outstanding loans to residents climbed to P14.692 trillion in May from P13.046 trillion a year ago, reflecting a faster 12.6% jump versus April’s 11.8%.
This accounted for the bulk of the sector’s total outstanding loans during the period, with the remainder composed of loans to nonresidents.
For nonresidents, bank lending declined quicker by 8.3%, from 7.9% in April, to P296.887 billion in May from P323.828 billion last year. This includes loans by big banks’ foreign currency deposit units to nonresidents.
Based on BSP data, loans extended for residents’ production activities reached P12.67 trillion, up 11.7% annually from P11.347 trillion. This was an improvement from the 10.7% increase posted in April.
This came amid increased lending to major industries, the BSP said, with loans to the electricity, gas, steam, and air-conditioning supply sector surging by 32.9%.
Lending for transportation and storage also jumped by 21.4%, wholesale and retail trade, and repair of motor vehicles and motorcycles by 10.1%, real estate activities by 7.3%, and manufacturing by 6.4%.
Meanwhile, big banks disbursed a total of P2.022 trillion in consumer loans, 19% higher than the P1.699 trillion lent out a year earlier.
“This is slightly slower than the previous month’s 19.6% growth, reflecting softer expansion in credit card and motor vehicle loans,” the central bank said.
In May, credit card loans rose by 26.3% year on year to P1.269 trillion, while motor vehicle loans increased by 10.2% to P540.9 billion, and salary-based general purpose consumption loans by 6.4% to P171.79 billion.
The central bank monitors banks’ lending activities to track the transmission of monetary policy.
MONEY SUPPLY
Meanwhile, continued growth in private and public sector borrowings drove the country’s liquidity (M3) to climb by 12.8% to P20.604 trillion in May from P18.265 trillion the prior year.
This was faster than the 12.2% increase logged in April, and marked the fastest money supply growth in nearly six years or since the 13.7% expansion in August 2020
“Domestic liquidity growth was driven mainly by the sustained expansion in borrowings by both the private and public sectors,” the BSP said in a separate statement. “The increase in domestic liquidity supports economic activity by facilitating consumption, lending, and investment.”
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.
Based on preliminary BSP data, domestic claims picked up by 13.3% from 12.7% in April as it rose to P23.672 trillion from P20.891 trillion in May last year.
Claims on the private sector, which is largely composed of loans to production sectors and households, rose faster by 13.2% in May to P15.204 trillion, improving from 12.6% in the previous month.
“Credit to production sectors and households, mainly in the form of bank loans, continued to grow and support economic activity,” the BSP said.
Net claims on the central government likewise increased by 16.2% annually to P6.41 trillion in May. This was faster than the 15.1% in April.
The central bank noted that this was driven by “the National Government’s issuance of debt securities and withdrawal of deposits from the BSP and banks to finance its spending.”
Claims on a sector refer to that sector’s liabilities to depository corporations such as banks and the central bank.
Meanwhile, net foreign assets (NFA) in peso terms went up by 9.1% to P7.153 trillion in May from P6.559 trillion in the same month in 2025.
Banks’ larger holdings of foreign currency-denominated debt securities boosted their NFA position by 16.4% to P776.001 billion.
The central bank’s NFAs also rose by 8.2% year on year to P6.377 trillion.
NFAs reflect the difference between depository corporations’ claims and liabilities to nonresidents.
On the other hand, M1 — which is considered a narrower measure of money supply comprising currency in circulation and current account deposit liabilities — was 9.5% higher at P7.982 trillion from P7.287 trillion a year ago.
The BSP said it will ensure that local bank lending and domestic liquidity conditions “remain consistent with its price and financial stability objectives.”
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