The Philippines’ banking giants experienced a noticeable slowdown in late 2025, a reflection of broader economic headwinds. Asset growth, while still present, eased to 8.54% – a deceleration from the previous year’s pace and signaling a shift in the financial landscape.
This cooling trend extended to lending, which expanded at its slowest rate in nine quarters. Total loans across the largest banks reached P15.36 trillion, but the 10.12% year-on-year increase was significantly lower than previous growth figures, indicating a more cautious lending environment.
The banks’ tempered performance mirrored a weakening national economy. The country’s GDP growth slowed to 3% in the final quarter, impacted by unforeseen challenges, and ultimately resulted in a 4.4% growth for the entire year – a step down from 2024’s 5.7%.
Despite the economic slowdown, inflation remained relatively contained, reaching 1.8% in December. This allowed the central bank, the Bangko Sentral ng Pilipinas, to implement a modest rate cut, bringing its key rate to a more than three-year low of 4.5%.
A positive sign emerged in the quality of loan portfolios. The nonperforming loan ratio – a measure of bad loans – actually decreased to 3.07%, suggesting banks were effectively managing credit risk despite the economic pressures.
However, profitability metrics showed a decline. The median return on equity dipped to 6.97%, indicating a lower return for shareholders compared to the previous year. This underscored the challenging environment impacting bank earnings.
Despite reduced profitability, the banking sector maintained a strong capital position. The median capital adequacy ratio stood at a robust 21.21%, well above both regulatory minimums and international standards, demonstrating resilience and stability.
Banks also demonstrated a healthy ability to absorb potential shocks, with a leverage ratio exceeding central bank guidelines and international benchmarks. This financial strength provided a buffer against unforeseen economic turbulence.
BDO Unibank remained the dominant force in the Philippine banking sector, leading in total assets (P5.41 trillion), lending (P3.64 trillion), and deposits (P4.19 trillion). Metrobank and Bank of the Philippine Islands followed as the next largest players.
Among banks with substantial assets, MUFG Bank Ltd. experienced the most rapid asset growth, surging by nearly 31%. Philippine Bank of Communications and Asia United Bank Corp. also posted impressive gains, showcasing dynamic competition within the industry.
The data, meticulously tracked since the late 1980s, provides a comprehensive view of the Philippine banking sector’s performance, revealing a period of adjustment and resilience in the face of economic headwinds.
