PH bank loan growth slid to 22-mo low in December 2025
Bank lending expanded at its slowest pace in nearly two years in December 2025, underscoring the limits of the central bank’s power to revive confidence that has been weighed down by an unresolved, high-profile graft scandal and the absence of a clear recovery in government spending.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed outstanding loans from big banks grew by 9.2 percent from a year earlier to P14.3 trillion during the final month of 2025, the softest annual expansion since the 8.6-percent increase recorded in February 2024.
The central bank closely tracks bank lending as a key channel through which monetary policy affects the economy. The December slowdown came despite a series of interest-rate cuts intended to support growth in an economy strained by a widening investigation into alleged irregularities in flood control projects.
The scandal has exposed governance weaknesses and delayed public works, weighing on business and consumer sentiment. As a result, economic growth slowed to multiyear lows in the second half of 2025, prompting the Marcos administration to scale back its growth targets.
By borrower type, lending to businesses rose 8 percent to P12.1 trillion in December, the weakest pace in 20 months. Loans to manufacturing firms fell 9.4 percent, while credit to construction companies—many affected by the pullback in public spending—contracted by 5.4 percent.
Consumers continued to borrow, with retail loans rising a solid 21.4 percent to P1.9 trillion, driven by credit card and auto lending. Even so, the pace of growth was the slowest in nearly three years.
“The December slowdown in bank lending mirrors the broader cooling in economic activity late in 2025,” Ruben Carlo Asuncion, chief economist at Union Bank of the Philippines, said.
“The BSP’s rate cuts continue to support credit conditions, but the impact is being tempered by soft domestic demand and tighter risk management by banks,” Asuncion added. “Monetary easing is helping prevent a sharper deceleration, though it cannot fully offset the broader economic slowdown.”
Since August 2024, the central bank has reduced its benchmark rate—which guides banks’ lending costs—by 2 percentage points, to 4.5 percent. Governor Eli Remolona Jr. has said the easing cycle is nearing an end, though policymakers remain prepared to act if conditions warrant further support for domestic demand.
Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said lower rates may not be enough to spur bank lending at this point.
