Bank lending growth slows in December

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February 11, 2026 | 12:00am

Despite rate cuts

MANILA, Philippines — Credit growth moderated further at end-2025, slipping to its weakest pace in 22 months as higher living costs, cautious bank behavior and softer business sentiment continued to weigh on loan demand.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed that loans disbursed by universal and commercial banks rose by 9.2 percent in December last year, easing from the 10.3 percent growth a month ago.

The December figure marked the lowest expansion since the 8.6 percent recorded in February 2024. In terms of value, outstanding loans amounted to P14.35 trillion in end-December, P1.21 trillion higher than the P13.14 trillion seen a year prior.

John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, said the slowdown reflects weaker business sentiment and delayed investment decisions amid slower economic growth, governance concerns and still-elevated borrowing costs despite earlier rate cuts.

The BSP has slashed interest rates by 200 basis points, including the 25-basis-point-cut last December, since it started its easing cycle in August 2024.

“Firms are prioritizing cash preservation and working capital rather than expansion, while banks remain cautious in extending credit to riskier sectors,” Rivera said.

“On the household side, consumer loans remain relatively strong but are also easing as higher living costs and uncertainty temper spending,” he added.

Based on BSP data, loans used to fund business activities expanded by eight percent to P12.11 trillion in December, easing from the nine-percent growth in November.

Bank lending remained uneven across sectors, with credit increasing for real estate activities at 8.3 percent (down from nine percent a month prior) and wholesale and retail trade including motor vehicle repair at 10.8 percent (from 11.4 percent).

Meanwhile, loans to the electricity, gas, steam and air-conditioning supply sector continued to post a strong growth at 26.8 percent, up from 26.6 percent in November, while lending for financial and insurance activities inched up to 3.9 percent from 3.5 percent.

Consumer loans to residents remained the main support for overall credit growth, rising by 21.4 percent to P1.93 trillion in December, albeit slower than the 22.9-percent increase in November.

Broken down, credit card loans grew by 27.7 percent to P1.19 trillion, motor vehicle loans by 15.5 percent to P524 billion and salary-based general-purpose consumption loans by 5.6 percent to P166 billion.

According to Rivera, the BSP’s pro-growth rate cuts are still working their way through the economy.

“Monetary easing typically takes several quarters to fully feed into borrowing and investment decisions, so the impact on business expansion and credit demand will likely become clearer in 2026,” he said.

“However, rate cuts alone cannot drive a strong lending rebound. It’s confidence in governance, steady public spending and clearer growth prospects that can unlock stronger credit demand,” Rivera explained.

The BSP said it continues to closely monitor bank lending as a key transmission channel of monetary policy.

Looking ahead, the central bank reiterated its commitment to ensuring that domestic liquidity and credit conditions remain consistent with its price and financial stability mandates.