Banks to weather Iran shocks–BSP
The Philippine banking system has limited direct exposure to the conflict in the Middle East, the Bangko Sentral ng Pilipinas (BSP) said, adding that strong capital buffers and ample liquidity should help cushion the industry from the fallout.
In its report on the Philippine financial system for the second half of 2025, the BSP said banks and nonbank financial institutions had remained in sound condition during the period, leaving the industry well-positioned when the Middle East crisis escalated earlier this year.
Assets held by Philippine banks rose 8.9 percent to P29.9 trillion in 2025, slightly slower than the previous year’s 9-percent growth but still outpacing the economy’s 5.4-percent expansion.
Bank lending climbed 11.7 percent to P17.1 trillion last year, driven by stronger borrowing from households and businesses in the electricity, real estate and wholesale trade sectors.
The central bank said lenders benefited from easing macroeconomic conditions and lower interest rates, allowing them to rebalance portfolios toward “high-quality, liquid instruments” while maintaining flexibility in managing risks.
“Latest supervisory assessments likewise indicate that the banking system’s direct exposures to geopolitical tensions in the Middle East remain limited, with risks largely transmitted through indirect channels, such as higher oil prices, inflationary pressures, foreign exchange movements and tighter global financial conditions,” the central bank said.
“Banks’ strong capital and liquidity positions, diversified funding bases and proactive risk management practices provide cushions against these external spillovers, supporting overall system resilience amid heightened global uncertainty,” it added.
Global debt watchers have warned that Philippine banks could still come under pressure from a prolonged conflict in the Middle East. The war is seen to fuel fresh inflation and force central banks to hike interest rates, slowing credit growth and straining borrowers already grappling with higher fuel and food costs.
Analysts have also cautioned that a wider regional war could displace Filipino workers in the Gulf, threatening remittance flows that support household spending and domestic consumption.
Amid the crisis, BSP Gov. Eli Remolona Jr. said the central bank remained committed to fostering a regulatory environment that supports the continued growth and resilience of banks and nonbanks while protecting the interests of Filipino financial consumers.
