Philippine banks post solid growth, stable profits in H1 2025

The Philippine banking system maintained strong growth and financial stability in the first half of 2025, supported by rising assets, robust lending activity, and sustained profitability, according to the Bangko Sentral ng Pilipinas (BSP).

Total banking system assets rose 7.7 percent year-on-year to PHP 28.2 trillion (USD 491.1 billion), fueled by a combination of stable domestic deposits, solid capital buffers, and strong demand for loans and investments.

Net profits reached PHP 198.1 billion (USD 3.4 billion), marking a 4.1 percent year-on-year increase, with BSP attributing the gain to prudent risk management and effective credit governance.

“The banking system’s solid performance underscores its strength in seizing opportunities, navigating emerging risks, driving innovation, and championing inclusive and sustainable growth,” BSP Governor Eli M. Remolona Jr. said in the report.

Governor Remolona added, “The BSP will continue pursuing policies that further strengthen the banking system. This supports an environment that helps banks to continue growing, supporting economic activity, and responding to the evolving needs of Filipinos.”

Lending activity expanded by 10.9 percent to PHP 15.9 trillion (USD 276.9 billion), driven primarily by the real estate, household, electricity, trade, and manufacturing sectors.

Real estate accounted for 18.1 percent of total loans, followed by households at 14.8 percent, electricity and gas at 10.6 percent, wholesale and retail trade at 10.4 percent, and manufacturing at 7.9 percent.

Consumer loans grew by 21.2 percent to PHP 3.4 trillion (USD 59.2 billion), with credit card receivables up 29.9 percent and salary-based loans rising 37.0 percent amid favorable financing terms and improved consumer sentiment.

The non-performing loan (NPL) ratio declined to 3.3 percent from 3.5 percent in June 2024, as total NPLs rose at a slower pace of 5.5 percent to PHP 530.3 billion (USD 9.2 billion), supported by a strong NPL coverage ratio of 95.4 percent.

Foreign currency deposit units (FCDUs) and trust operations also posted double-digit growth, contributing 15.9 percent and 28.2 percent of total banking system assets, respectively.

FCDU assets grew by 12.5 percent to USD 79.4 billion, while trust assets reached PHP 8.0 trillion (USD 139.3 billion), both benefiting from rising deposits and investment placements.

PERA contributions increased 13.9 percent to PHP 521.4 million (USD 9.1 million), reflecting growing public interest in long-term retirement planning.

Banks expanded their reach with 13,460 offices and 24,058 ATMs nationwide, while 139 banks provided electronic banking services to boost access in underserved areas.

Deposits grew 5.9 percent to PHP 20.7 trillion (USD 360.1 billion), driven by resident individuals and corporations, with savings deposits comprising the largest share.

The capital adequacy ratio stood at 16.5 percent on a consolidated basis, while liquidity metrics such as the liquidity coverage ratio (180.2 percent) and net stable funding ratio (135.4 percent) remained well above regulatory thresholds.

Universal and commercial banks continued to dominate the sector with a 93.6 percent share of total assets, equivalent to PHP 26.4 trillion (USD 459.7 billion).

The report also highlighted BSP-led reforms including enhancements to the credit information system, the establishment of a Financial Cyber Resilience Governance Council, and the launch of digital retirement savings pilots.

The banking system’s off-balance sheet exposures rose 11.1 percent to PHP 20.3 trillion (USD 353.6 billion), with derivatives, trust assets, and credit lines making up the bulk.

Meanwhile, investment holdings increased by 9.5 percent to PHP 8.0 trillion (USD 139.3 billion), with FVOCI securities showing the highest growth at 15.2 percent amid expectations of policy rate cuts.

Sustainability-linked bonds gained traction, with GSS+ bond issuances reaching PHP 515.9 billion (USD 9.0 billion), following a reduced reserve requirement ratio incentive.

As of June 2025, total loan exposure to micro, small, and medium enterprises grew by 11.2 percent to PHP 544.8 billion (USD 9.5 billion), while banks exceeded the mandatory 25 percent allocation to agriculture, fisheries, and rural development financing, reaching PHP 2.4 trillion (USD 41.8 billion).

The BSP said its monetary easing measures—including a total 150-basis point reduction in the reverse repurchase rate and reserve requirement cuts—are expected to further stimulate credit growth and reduce funding costs.

Overall, the BSP’s report underscores a resilient, well-capitalized, and profitable banking sector poised to support continued economic growth and financial inclusion in the Philippines.