Banks’ loans to MSMEs rise to P536 billion

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December 10, 2025 | 12:00am

MANILA, Philippines — Loans disbursed by banks to micro, small and medium enterprises (MSMEs) grew by 7.1 percent to P536.51 billion in the January to September period from P500.81 billion a year ago.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that the banking sector’s overall compliance ratio stood at 4.45 percent as of end-September.

This is below the previously required 10 percent under Republic Act 6977, as amended by RA 8289 and RA 9501 otherwise known as the Magna Carta for SMEs.

The BSP earlier clarified that the mandatory credit allocation expired on June 2018. This previously required banks to allocate at least eight percent of their loan portfolios to micro and small enterprises, and two percent to medium enterprises.

“However, the BSP continues to monitor banks’ MSME lending through quarterly exposure reports submitted by banks as part of its supervisory oversight and policy development,” the central bank said.

It said that the continued growth in MSME credit exposures reflects the continuing support of the banking system to small and medium-sized businesses.

As of end-September, the industry’s total loan book, net of exclusions, jumped by 10.5 percent to P12.05 trillion from P10.9 trillion a year ago. This means allocations for the MSME sector should have reached P1.2 trillion.

Banks’ disbursements to micro and small enterprises stood at P220.55 billion from January to September, 7.6 percent higher than the P204.89 billion last year.

Meanwhile, funds allocated to medium enterprises rose by 8.3 percent to P320.37 billion from P295.92 billion.

Based on the type of bank, loans of universal and commercial banks to micro and small enterprises hit P158.57 billion as of September, equivalent to only 1.44 percent of their P10.98-trillion loan portfolio. Lending to medium-sized enterprises by big banks stood at P253.35 billion or 2.31 percent of their loan book.

Credit of thrift banks to micro and small enterprises reached P31.64 billion or 3.68 percent of their P859-billion loan portfolio. But thrift banks went beyond the previously required credit quota for medium enterprises as loans to the sector hit P37.23 billion or 4.33 percent of their loan book.

On the other hand, the total loans of rural and cooperative banks to micro and small enterprises hit P34.31 billion as of end-September. This is equivalent to 20.4 percent of their P168-billion credit book. Their compliance to medium enterprises stood at P20.69 billion or 12.3 percent of their loan portfolio.

“The BSP continues to foster and strengthen a more conducive ecosystem for MSME lending by improving credit risk assessment, streamlining loan application processes, promoting digital finance and developing enabling frameworks to advance MSME lending,” the central bank said.

MSMEs play a very important role, accounting for 99.5 percent of the total establishments and providing around 65 percent of employment to the Philippine workforce.