Banks deliver another banner year
Philippine banks posted another year of record profitability in 2025 to cross the P400-billion mark.
This was as sticky borrowing costs and a deeper push into higher-yielding but riskier consumer loans likely helped sustain lenders’ margins even as interest rates declined.
Local banks netted a combined amount of P403.1 billion, growing by 3 percent from a year earlier, data from the Bangko Sentral ng Pilipinas (BSP) showed. That was the sector’s highest full-year aggregate net profit on available data dating back to 2008, beating the 2024 record of P391.3 billion.
Figures showed that such growth was driven by net interest income, which jumped by 11 percent to P1.15 trillion.
Noninterest income grew by nearly 10 percent to P256.9 billion. Under this segment, revenue from fees and commissions jumped by 10 percent to P179.9 billion.
However, trading income plummeted 93 percent to P1.8 billion, with banks reporting losses of P13.6 billion from foreign exchange transactions.
Even so, those revenues more than offset the 10-percent spike in noninterest expenses—like compensation, taxes, impairment losses and provisions—which reached P784 billion.
Last year’s earnings growth was underpinned by still-elevated interest rates and banks’ increased lending to the higher-yielding consumer segment.
At its first policy meeting of 2026, the BSP last Thursday cut the benchmark rate by another quarter point, bringing the key rate that guides bank lending costs to 4.25 percent, over a three-year low.
The move brought total reductions since the easing cycle began in August 2024 to 2.25 percentage points. But despite the cuts, which were meant to support an economy battered by a widening corruption scandal, BSP data showed the average bank lending rate stood at 7.651 percent per annum as of November 2025, just 5.5 percent lower than in end-2024.
Meanwhile, banks continued to ramp up their lending to the retail segment. Last year, consumer loans rose by a solid 21.4 percent to P1.9 trillion, driven by credit card and auto lending.
Overall, the total outstanding loans from big banks grew by 9.2 percent from a year earlier to P14.3 trillion in 2025.
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