Philippine Bank Loan Expansion Moderates in December 2025
The Bangko Sentral ng Pilipinas (BSP) has reported a notable deceleration in loan growth for the country's universal and commercial banks (U/KBs) as 2025 drew to a close. According to data released on Monday night, loans extended by these financial institutions expanded at a rate of 9.2 percent in December 2025, marking a slowdown from the 10.3 percent growth recorded in the previous month of November.
Resident vs. Non-Resident Loan Trends
Breaking down the figures, the central bank highlighted a mixed performance across different borrower categories. Loans extended to residents grew by 9.7 percent in December, which represents a deceleration from the 10.7 percent increase seen in November. In contrast, loans for non-residents experienced a more pronounced slowdown, dropping by 8.1 percent in December compared to a 4.5 percent decline in the previous month.
Consumer Loans Outpace Business Lending
BSP data reveals a significant divergence between consumer and business loan growth. Consumer loans posted a robust expansion of 21.4 percent in December, substantially outpacing the 8 percent growth observed for business activities. This category includes credit card loans, motor vehicle financing, and general-purpose loans, all of which registered a slower increase in December compared to the 22.9 percent growth recorded in November.
Sectoral Breakdown of Business Loans
Business loans, while growing at a more modest pace overall, showed varied performance across key sectors:
- Electricity, gas, steam, and air-conditioning supply led with a 26.8 percent increase.
- Wholesale and retail trade, along with repair of motor vehicles and motorcycles, grew by 10.8 percent.
- Real estate activities expanded by 8.3 percent.
- Financial and insurance activities saw a 3.9 percent rise.
BSP's Monitoring and Policy Stance
The BSP emphasized its ongoing vigilance over bank lending, noting that loans serve as a key transmission channel of monetary policy. In its statement, the central bank affirmed its commitment to ensuring that domestic liquidity and bank lending conditions remain aligned with its mandates for price and financial stability. Looking ahead, the BSP will continue to monitor these indicators closely to support economic objectives.
Expert Analysis on the Slowdown
Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort provided insights into the underlying factors driving the loan growth deceleration. In a response to queries from the Philippine News Agency on Tuesday, February 10, 2026, Ricafort attributed the slowdown to "the same trend of the domestic economy in the second half of last year." He pointed to reduced government spending on infrastructure as a key factor, which negatively impacted sales and earnings in related sectors and dampened investor confidence.
Despite the moderation, Ricafort noted that bank loan growth remains faster than the three percent output of the domestic economy in the last quarter of 2025. He suggested that this disparity may have been supported by relatively lower borrowing costs following reductions in the BSP's key interest rates.
Looking forward, Ricafort highlighted the potential for recovery: "Going forward, catch up spending by the National Government, especially on infrastructure in 2026, to make up for the underspending in the latter part of 2025 hinged on priority anti-corruption measures and other priority reforms to further improve/level up good governance standards would help boost economic growth and also improve investor confidence/sentiment, foreign and local, thereby would lead to faster demand for loans/credit."
Domestic Liquidity Trends
In a related development, the BSP reported that domestic liquidity growth also moderated during the same period. The growth of domestic liquidity, which refers to the money circulating in the economy, registered a slower expansion of seven percent in December, down from 7.6 percent in November. Preliminary data indicates that money supply, or M3, reached P20.1 trillion in December.
Despite this deceleration, the BSP noted that M3 remained broadly stable from November. Domestic liquidity encompasses currency in circulation, bank deposits, and other financial assets that are easily convertible to cash, reflecting overall monetary conditions in the Philippines.
