Big banks’ lending slows to near 2-year low in January

Lending by big banks, or universal and commercial banks (U/KBs), grew at its slowest pace in nearly two years in January, dragged down by a deeper contraction in foreign loans and modest growth in domestic lending.

The latest data from the Bangko Sentral ng Pilipinas (BSP) released Monday night, March 9, showed bank lending growth slowed to 9.3 percent in January 2026 from a revised 9.6 percent in December 2025. This pace remains the slowest expansion for the sector since the 8.6 percent recorded in February 2024.

Broken down, the growth in outstanding loans to residents slowed to 9.9 percent in January from a revised 10.1 percent in the previous month.

Meanwhile, the contraction in outstanding loans to non-residents deepened significantly, recording a decline of 10.4 percent following the eight-percent decrease seen in December.

Non-resident loans include those extended by big banks’ foreign currency deposit units (FCDUs) to borrowers abroad.

Loans meant to fund business activities expanded by 8.2 percent during the month, slightly slower than the 8.4 percent recorded in December. Trends across major industries were mixed.

Real estate activities grew by 9.1 percent, up from 8.8 percent in December. Similarly, financial and insurance activities expanded faster at 5.5 percent from 4.4 percent.

Meanwhile, wholesale and retail trade, including motor vehicle repair, slowed to 8.3 percent from 11.1 percent. Likewise, electricity, gas, steam, and air-conditioning supply slowed to 20.3 percent from 26.9 percent.

Notably, consumer loans to residents—which cover credit card, motor vehicle, and general-purpose salary loans—expanded at a slower rate of 21.3 percent in January, down from 21.5 percent in December. The January growth matches the previous weak expansion recorded in February 2023.

Domestic liquidity, or the amount of money in the economy as measured by M3, expanded by 8.6 percent in January, reaching ₱19.7 trillion, according to separate preliminary data from the BSP. This growth rate was faster than the 7.2-percent increase recorded in December.

M3 is a broad measure of money supply that includes currency in circulation, bank deposits, and other financial assets that are easily convertible to cash.

Claims on the domestic sector—which cover both private and government entities—remained a driver of money supply, rising by 10 percent in January from 10.5 percent in December.

Claims on a sector represent that sector’s liabilities to depository corporations, such as banks and the central bank.

In particular, claims on the private sector grew by 10.6 percent in January, a slight moderation from the revised 10.7-percent growth seen in the previous month. This expansion was driven by continued bank lending to non-financial private corporations and households.

Meanwhile, net claims on the central government increased by 8.9 percent in January, down from 10.8 percent in December.

The BSP said it will continue to ensure that domestic liquidity conditions remain consistent with its price and financial stability objectives.