March loan growth at 7-month high
Philippine banks saw a 10.7% year-on-year growth in loans in March, the fastest in seven months, driven by demand from businesses and consumers amid rising prices and interest rate expectations. The Bangko Sentral ng Pilipinas (BSP) attributed the surge to production loans, particularly in energy, transport, and real estate sectors, while consumer loans also climbed, with credit cards and motor vehicle financing leading the increase.
The Bangko Sentral ng Pilipinas (BSP) reported that Philippine banks recorded a 10.7% year-on-year expansion in outstanding loans in March, reaching P14.603 trillion—up from P13.192 trillion in the same month last year. This marked the fastest growth since August 2025, with seasonally adjusted lending rising by 1.7% month-on-month, reflecting stronger support for business production and household consumption. Production loans surged 9.7% to P12.322 trillion, led by a 26.7% increase in lending to the electricity, gas, steam, and air-conditioning supply industry. Other growing sectors included transportation and storage (19.4%), wholesale and retail trade (9.3%), and real estate (8.8%). Meanwhile, consumer loans rose 20.5% to P1.977 trillion, driven by a 27.9% jump in credit card loans and a 12.5% increase in motor vehicle financing. Loans to nonresidents declined by 5.9% to P303.993 billion, a smaller drop than the 13.9% contraction in March 2025. Economists linked the lending growth to businesses preemptively securing financing ahead of anticipated price and interest rate hikes due to the Middle East conflict. The BSP raised benchmark rates to 4.5% in April, its first hike in over two years, citing inflation pressures from the U.S.-Iran war. BSP Governor Eli Remolona Jr. signaled further modest rate increases, with headline inflation expected to average 6.3% this year—well above the 2%-4% target band. Analysts noted that robust domestic demand and ample liquidity sustained lending growth despite global uncertainties. The central bank’s data underscores resilience in key sectors amid escalating inflationary pressures.
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