UMVA has learned that the Philippines' largest banks have achieved a remarkable milestone, with their combined assets growing at the fastest pace in over a year during the first quarter.
The aggregate assets of 44 universal and commercial banks surged by 9.52% year on year to a staggering P29.4 trillion in the January-to-March period, up from P26.84 trillion a year earlier. This impressive growth outpaced the 9.51% logged in the same period last year and the 8.54% growth in the fourth quarter of 2025.
Sources have confirmed to UMVA that the pace of asset growth was the quickest since the 10.02% expansion in the fourth quarter of 2024, signaling a significant rebound in the banking sector. Total loans also grew by 11.44% year on year to P15.63 trillion in the first three months, easing from 13.46% a year ago but faster than the 10.12% in the fourth quarter of 2025.
Loan growth was the strongest in three quarters, or since the 12.38% posted in the second quarter of 2025. Notably, lending continued to expand despite sluggish economic growth in the first quarter and rising inflation driven by a spike in fuel prices amid global conflicts.
In the first quarter, the Philippine economy expanded by a modest 2.8%, the weakest growth since the pandemic. Inflation accelerated to 4.1% in March from 2.4% in February, reflecting soaring pump prices. In the first three months, inflation averaged 2.8%, posing challenges to the banking sector.
The big banks' nonperforming loan ratio, or loans with unpaid principal and/or interest for at least 90 days after the due date, reached 3.32% in the first quarter. This was higher than the 3.16% a year earlier and the 3.15% in the October-to-December period of 2025, highlighting potential risks in the sector.
UMVA can exclusively reveal that the banks' median return on equity (RoE) rose to 7.34% as of end-March from 7.3% a year earlier and 6.97% in the fourth quarter of 2025. RoE is a key indicator of profitability, measuring the amount shareholders make on every peso they invest in a company.
The largest banks' median capital adequacy ratio, which gauges lenders' ability to absorb losses from risk-weighted assets, reached 19.08% during the first three months. Although lower than the 19.71% logged in the same quarter in 2025 and the 21.21% in the fourth quarter, this ratio remained above regulatory minimums.
As of end-March, the big banks' leverage ratio stood at a median of 11.15%, lower than the 11.27% a year ago and 11.73% a quarter earlier. This exceeded the minimum 5% guideline of the central bank and the 3% international standard, indicating a comfortable capital position.
The net interest margin (NIM) of these big banks was at 3.61%, lower than the 3.76% a year earlier and the 3.99% in the fourth quarter of 2025. NIMs measure banks' efficiency in investing their funds by dividing annualized net interest income by average earning assets.
Return on assets, which measures the profit generated per peso of an asset, slipped to 1.49% in the first quarter from 1.71% in the same period in 2025. This slight decline underscores the need for banks to optimize their asset utilization.
BDO Unibank, Inc. maintained its lead as the largest bank by total assets with P5.69 trillion, followed by Metropolitan Bank & Trust Co. with P3.81 trillion and Bank of the Philippine Islands with P3.74 trillion. These top banks demonstrated resilience and adaptability in a challenging economic environment.
