Philippine financial system’s resources up nearly 10% as of May

The Philippine financial system’s resources jumped by nearly 10% higher year on year as of May on the back of record-high assets and strong lending activity, analysts said.

Based on data from the Bangko Sentral ng Pilipinas (BSP), the combined resources of domestic banks and nonbank financial institutions (NBFIs) reached PHP 37.638 trillion in the first five months of the year, up 9.98% from PHP 34.224 trillion a year ago.

Resources inched up 0.88% month on month from USD 37.311 trillion as of end-April.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the nearly 10% rise in resources came as banks’ assets and loans have consistently posted double-digit growth despite uncertainty arising from the Middle East war.

“(This is) largely attributed to banks’ total assets and total loans growth rates of more than +10% year on year for both despite the war on Iran since Feb. 28, 2026, amid some hedging and frontloading of purchases or imports that are funded by bank loans,” he said via Viber.

Separate BSP data showed banks’ assets jumped by about 11.7% year on year to hit a new record high of PHP 30.442 trillion at end-May, breaking the previous record of PHP 30.336 trillion at end-March.

This as big banks’ lending expanded by 12.1% annually in May to PHP 14.989 trillion from PHP 13.37 trillion, marking the fastest loan growth in 15 months or since 12.2% in February 2025.

For Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., this means that the country’s banking sector held firm despite ongoing global uncertainties.

“The nearly 10% growth in the Philippine financial system’s resources as of May reflects the continued strength and resilience of the banking sector,” he said in a Viber message. “Higher deposits, sustained lending activity, and expanding investment portfolios continue to support balance sheet growth, even amid global uncertainties.”

The financial system’s resources include the funds and assets of banks and NBFIs such as deposits, capital, and bonds or debt securities, but exclude those from the central bank.

Meanwhile, central bank data also showed the 9.98% growth in total resources as of end-May eased from the 10.58% recorded at end-April.

However, Mr. Ravelas noted that this slowdown merely reflects “normalization” following strong expansion in recent months.

“The slight easing from April’s 10.58% pace to 9.98% is not a sign of weakness but rather a normalization after a period of strong expansion,” he said. “In fact, this suggests that growth is becoming more sustainable and balanced.”

As of May, banks held most of the financial system’s resources with PHP 31.291 trillion. This was 10.85% higher than the PHP 28.228 trillion logged a year ago.

Universal and commercial banks accounted for the bulk of resources, which climbed by 10.72% year on year to PHP 29.011 trillion from PHP 26.202 trillion.

Thrift banks’ resources also went up by 10.95% to PHP 1.489 trillion as of May from PHP 1.342 trillion in the prior year.

Meanwhile, the resources of rural and cooperative banks amounted to PHP 587 billion during the period, up by an annual 8.06% from PHP 543.2 billion.

Digital banks likewise saw their resources surge by 45.4% to PHP 203.7 billion at end-May from PHP 140.1 billion a year earlier.

On the other hand, the latest available central bank data showed nonbanks had PHP 6.347 trillion in resources as of end-2025, 7.26% more than the PHP 5.917 trillion it held at end-2024.

As of end-May last year, the total resources of nonbanks were PHP 5.996 trillion.

NBFIs include investment houses, finance companies, security dealers, pawnshops and lending companies, nonstock savings and loan associations, credit card companies, private insurance firms, and authorized agent banks of foreign exchange corporations.

State-run institutions such as the Philippine Guarantee Corp., Small Business Corp., Social Security System, and Government Service Insurance System are also considered nonbank financial firms.

According to Mr. Ravelas, the latest figures suggest that the local financial system remains “liquid, well-capitalized, and capable of supporting economic activity.”

“As long as credit demand, savings accumulation, and investment activity remain healthy, the sector should continue to post steady growth moving forward,” he added.

However, Mr. Ricafort noted that rising borrowing costs and tighter economic conditions will likely dampen loan growth in the coming months, which could eventually slow the expansion of the industry’s resources.   

“However, for the coming months, total assets or resources growth could slow down amid possible higher interest rates locally and globally for the coming months, also amid more cautious lending by banks to prevent further increase in nonperforming loans amid slower global and local economy (and) higher inflation and interest rates largely brought about by the adverse effects of the war (in the) Middle East,” he said.

The central bank has been on a tightening cycle since April, delivering a total of 50 basis points (bps) in hikes to bring the key policy rate to 4.75%.

BSP Governor Eli M. Remolona, Jr. earlier said the economy can still handle another 25-bp increase amid expectations of growth recovery by the second half of the year.

The central bank has also kept the door open for further monetary policy tightening to bring inflation back to its 3% goal following four straight months of the headline print settling above its target. — Katherine K. Chan, Reporter