Philippine bank lending rises 11%, liquidity hits PHP 20.7 trillion

Philippine bank lending grew faster in August 2026 as businesses borrowed more, while domestic liquidity reached PHP 20.7 trillion, the Bangko Sentral ng Pilipinas reported.

The figures show continued financing for business operations and household purchases, alongside borrowing by the government. For the public, the question is whether credit can support spending and jobs while the BSP keeps prices and the financial system stable.

Loans by universal and commercial banks rose 11.0% from a year earlier, accelerating from 10.4% in July, according to releases dated Sept. 30. Outstanding lending, excluding banks’ reverse repurchase agreements with the BSP, reached PHP 15.121 trillion.

Loans to residents, which account for most bank lending, increased 11.3% year-on-year to PHP 14.816 trillion.

Lending for business activities grew 10.6% to PHP 12.731 trillion, up from July’s 9.8% growth. These production loans represented 84.2% of total lending, net of reverse repurchase agreements.

The BSP identified real estate as one of the sectors supporting business lending. Its loan balance reached PHP 2.898 trillion, up 4.5% year-on-year, accounting for 19.2% of total lending.

Loans for electricity, gas, steam, and air-conditioning supply rose 27.0% to PHP 2.129 trillion. Lending for wholesale and retail trade, including motor vehicle and motorcycle repairs, increased 10.5% to PHP 1.674 trillion.

Other contributors were financial and insurance activities, with lending up 9.0%, and manufacturing, up 6.1%. Information and communication loans rose 8.6%, while transportation and storage lending increased 26.1%.

The expansion was uneven. Loans to agriculture, forestry, and fishing fell 1.0%, while construction lending declined 11.7%.

Consumer loans to residents grew 16.2% to PHP 2.084 trillion, easing from 17.1% growth in July as credit card and motor vehicle lending expanded more slowly. The consumer-loan category excludes residential real estate loans.

Credit card loans rose 23.3% to PHP 1.323 trillion, compared with July’s 24.5% growth. Motor vehicle loans increased 5.8% to PHP 542.981 billion, slowing from 7.0%.

Salary-based general-purpose consumption loans grew 11.6% to PHP 183.587 billion, accelerating from 9.9%. Other consumer loans fell 20.7% to PHP 34.533 billion, following an 18.4% decline in July.

The BSP monitors bank lending because it is a channel through which monetary policy affects the economy. Changes in borrowing costs can influence credit demand and spending, although the releases do not establish what drove individual borrowing decisions.

Meanwhile, domestic liquidity, or M3, grew 11.2% year-on-year to PHP 20.7 trillion, according to preliminary data. Growth accelerated from 10.3% in July, while seasonally adjusted M3 increased 0.7% month-on-month in August.

M3 measures money supply broadly, covering currency in circulation, bank deposits, and other financial assets readily convertible to cash.

Private- and public-sector borrowing supported the expansion. Domestic claims grew 12.8% year-on-year, up from a revised 11.2% in July.

Claims on the private sector increased 12.6%, compared with 12.1% in July, as banks continued lending to businesses and households. Loans to production sectors and households make up 98% of these claims.

Net claims on the central government rose 16.6%, accelerating from 12.4% in July. The BSP attributed the increase to government financing activities, including debt issuance and withdrawals of deposits from the central bank and banks.

Net foreign assets were broadly unchanged from a year earlier. These measure the difference between foreign assets held by the BSP and banks, or claims on nonresidents, and their liabilities to nonresidents.

The BSP’s net foreign assets increased 6.0%, while those of other depository corporations fell 40.5%, offsetting that rise. The release attributed the decline in banks’ net foreign assets to higher foreign currency-denominated liabilities, particularly bills payable.

For the lending statistics, residents include Philippine citizens living in the country, foreign citizens permanently residing here, and corporations or other juridical persons organized under Philippine law.

The definition also covers Philippine-operating branches, subsidiaries, affiliates, extension offices, and other units of foreign-organized corporations or juridical persons, except offshore banking units. It follows Section 1, Part Two, Chapter I of the Manual of Regulations on Foreign Exchange Transactions.

The BSP said it would keep lending and liquidity conditions consistent with its price and financial stability objectives.