Western Visayas adds 15 bank offices in a year: BSP

ILOILO CITY — Western Visayas added 15 bank offices in the year to June 2026, bringing the region’s total to 597, according to the Bangko Sentral ng Pilipinas (BSP).

The count rose from 582 a year earlier, a 2.6% increase that outpaced the 1.7% growth in bank offices nationwide, based on the regional profile in the BSP’s Report on the Philippine Financial System for the First Semester of 2026.

Of the region’s 597 bank offices, 23 are head offices and 574 are branches and other offices, such as branch-lite units.

The neighboring Negros Island Region had 427 bank offices, up from 413, while the Visayas as a whole had 2,150, up from 2,094.

Figure 1. Change in bank offices by area, end-June 2025 to end-June 2026.

Western Visayas accounted for about 4.4% of the 13,688 bank offices in the country.

Nationwide, the BSP supervised 460 banks with 13,228 branches and branch-lite units as of June 2026, along with 1,573 non-bank financial institutions with 15,642 branches.

Bank office growth was uneven across the country. Offices in Mindanao rose 5.3% and those in Eastern Visayas 4.3%, while the count in the National Capital Region fell 1.0%.

Physical branches remain part of how Filipinos reach the banking system. The BSP said physical, digital, and payment channels “operate as one network,” and that progress depends on whether services remain “reliable, affordable, and secure.”

The regional expansion came as the BSP said the Philippine banking system remained sound and resilient in the first half of 2026, with banks well-capitalized, well-provisioned, and flush with liquidity.

Profitability was sustained, funding conditions remained stable, and asset quality was manageable, according to the central bank’s Report on the Philippine Financial System for the First Semester of 2026.

The assessment matters well beyond bank balance sheets. Individuals held PHP 10.8 trillion, or 48.2%, of resident deposits as of end-June 2026, so the capital and liquidity cushions banks keep are, in practice, the protection behind household savings.

The same report shows strain building at the household end of the loan book. Non-performing consumer loans grew nearly twice as fast as total bad loans, led by credit cards and other unsecured borrowing, a sign that more Filipino borrowers are falling behind on payments even as banks stay healthy.

Banks continued to support households and businesses through lending, the BSP said.

Gross loans grew 11.9% year on year to PHP 17.78 trillion as of end-June 2026, outpacing the 8.3% growth in deposits to PHP 22.39 trillion.

Figure 2. Gross loans and deposits of the Philippine banking system, in PHP trillion.

Total banking system assets rose 10.3% to PHP 31.13 trillion, while total loans were equivalent to 61.6% of gross domestic product (GDP).

Households and key sectors — including electricity, real estate, wholesale and retail trade, transportation, and manufacturing — contributed significantly to credit expansion, the report said.

Lending to micro, small, and medium enterprises (MSMEs) rose 8.1% to PHP 580.5 billion, with universal and commercial banks providing 71.3% and wholesale and retail trade accounting for 41.9% of the total.

Loans for agriculture, fisheries, and rural development reached PHP 3.1 trillion, exceeding the mandatory 25% allocation under Republic Act No. 11901, or the Agriculture, Fisheries and Rural Development Financing Enhancement Act of 2022. The BSP placed the compliance ratio at 89.8%.

Credit cards remained the main driver of consumer lending, with receivables rising 25.3%, or PHP 263 billion, as existing cardholders used their cards more.

Capital and liquidity buffers also remained well above regulatory requirements, the report said.

The banking system’s capital adequacy ratio (CAR) stood at 15.2% on a solo basis and 15.6% on a consolidated basis at end-June 2026, down from 15.8% and 16.5%, respectively, a year earlier but well above the BSP’s 10% minimum.

Total capital rose 5.3% to PHP 3.69 trillion, supported by a 13.5% increase in retained earnings.

Among universal and commercial banks, the liquidity coverage ratio stood at 169.5% and the net stable funding ratio at 128.4%, both above the 100% regulatory floor.

The BSP attributed the dip in key ratios to continued credit and asset growth, which drew more actively on available capital and funding. The loans-to-deposits ratio climbed to 79.4% from 76.8% a year earlier.

Net profit rose 5.2% to PHP 208.5 billion in the six months to June, from PHP 198.1 billion in the same period last year.

Interest income grew 8.8% to PHP 871.6 billion, while interest expense fell 1.6% to PHP 231.0 billion, lifting the net interest margin to 4.6% from 4.4%.

Consumer lending fed much of the earnings growth. Income from credit cards rose 23.5% to PHP 96.1 billion, while income from other consumer loans jumped 67.0% to PHP 21.8 billion.

Fees and commissions increased 7.5%, or PHP 6.7 billion, on the back of digital banking, electronic payments, bancassurance, and investment banking.

Operating costs rose faster. Non-interest expenses grew 10.0%, or PHP 38.5 billion, driven mainly by compensation and other administrative expenses.

Return on assets eased to 1.4% from 1.5%, and return on equity to 11.6% from 12.0%.

Supervisory assessments indicate that credit conditions remain supportive, while asset quality is broadly manageable, the BSP said.

The headline non-performing loan (NPL) ratio held at 3.3%. Total NPLs, however, rose 10.3% to PHP 585 billion, which the BSP said warrants closer monitoring.

Consumer NPLs, including soured home loans, jumped 19.6%, or PHP 37.3 billion, to PHP 227.4 billion. Credit card receivables were the largest contributor to the increase, while residential real estate loans made up the largest share.

NPL ratios across major consumer loan types ranged from 5.3% for credit card receivables to 6.2% for residential real estate loans.

Banks set aside more reserves to absorb potential losses. Allowances for credit losses rose 7.0% to PHP 541.2 billion, although the NPL coverage ratio — the share of bad loans backed by reserves — eased to 92.5% from 95.4%.

Coverage was higher in riskier retail segments, at 105.0% for credit card receivables and 126.5% for other consumer loans.

Figure 3. Non-performing loan ratio and NPL coverage ratio, Philippine banking system.

The BSP said the outlook for the banking system remains favorable, although banks, businesses, and households have become more selective in their borrowing, lending, and investment decisions amid a more uncertain environment.

Credit growth is expected to remain “measured and selective” through the rest of 2026, the report said, with construction and project-related lending subdued until project activity and payment flows improve.

“The Philippine banking system remains in a strong position to provide funding to Filipino households and firms,” BSP Governor Eli M. Remolona Jr. said.

“As financial services become more digital and accessible, the BSP will continue to promote both financial stability and financial inclusion. We will continue to support innovation while ensuring that strong governance, sound risk management, and operational resilience remain in place,” the governor added.

The report also highlighted developments in foreign currency deposit units (FCDUs), trust operations, and digital financial services, which continued to broaden access to financing, investment, savings, and other financial products.

FCDU assets grew 4.9% to USD 83.33 billion, or about PHP 5.1 trillion, equivalent to 16.4% of banking system assets.

FCDU net profit rose 21.2% to USD 530.3 million, while the FCDU NPL ratio improved to 1.6% from 2.3%.

Trust assets rose 30.9% to PHP 10.42 trillion, or 33.5% of banking system assets, driven by a surge in custodianship mandates from insurers, corporate treasuries, and funds. Custodianship accounts reached PHP 2.33 trillion, from PHP 673.7 billion a year earlier.

Unit investment trust funds drew 2.9 million participants, up 7.2%, with placements rising 10.9% to PHP 1.1 trillion.

Contributions to the Personal Equity and Retirement Account rose 36.7% to PHP 757.6 million, while the number of contributors climbed 385.3% to 30,055. Self-employed individuals made up 78.3% of contributors.

The report likewise discussed BSP initiatives on cybersecurity, digital finance, Islamic banking, reporting governance, and supervisory technology.

Circular No. 1232, issued April 27, 2026, sets a Cybersecurity Maturity Framework that assesses institutions across four tiers: foundational, established, managed, and optimized.

Circular No. 1237 sets rules for BSP-supervised institutions that operate digital financial marketplaces, which must present products from at least three providers outside the operator’s group.

Circular No. 1219 allows all types of conventional banks to apply for an Islamic banking unit license, a move the BSP said supports wider participation in Islamic banking.

Circular No. 1231 makes regulatory reporting an institution-wide governance responsibility, holding boards, senior management, and business units accountable for the quality of data submitted to the BSP.

The report also featured Circular No. 1239, issued June 18, 2026, which extends the maximum tenor of salary-based general-purpose consumption loans to seven years, from the previous three to five years.

Loans to Department of Education personnel under the Automatic Payroll Deduction System account for a significant share of these salary loans, the BSP said.

The central bank noted that longer tenors may ease periodic payments but could also mean longer debt commitments and higher total borrowing costs.

The report also underscored the continued use of stress testing and advanced analytics, including artificial intelligence and supervisory technology tools, to strengthen risk monitoring and oversight.

The BSP prepares the semestral report and submits it to the President and Congress under Republic Act No. 7653, or the New Central Bank Act, as amended by Republic Act No. 11211.

The Report on the Philippine Financial System for the First Semester of 2026 is available on the BSP website.