The Philippines’ banking sector experienced a significant slowdown in lending activity at the close of 2025, marking the weakest growth in nearly two years. A comprehensive review by the central bank revealed a deceleration in both consumer and business loan expansion, signaling a shift in the economic landscape.
Total outstanding loans reached P14.349 trillion by year-end, representing a 9.2% increase compared to the previous year. While still positive, this growth rate is a notable dip from the 10.3% recorded just one month prior, and the slowest pace observed since February 2024. This marks the first time in months that lending growth has fallen into the single digits.
Loans extended to residents—constituting the vast majority of the portfolio—totaled P14.046 trillion, growing at a rate of 9.7% annually. Production activities continued to dominate, accounting for 84.4% of all resident loans, while consumer loans comprised 13.5% and loans to nonresidents a smaller 2.1%.
Within the production sector, a surge in lending to the electricity, gas, steam, and air-conditioning supply industry—a remarkable 26.8% increase—was a key driver of growth. Wholesale and retail trade also saw a healthy expansion of 10.8%, alongside real estate (8.3%) and financial/insurance activities (3.9%).
Consumer spending, as reflected in loan data, showed a continued, though moderating, upward trend. Total consumer loans reached P1.932 trillion, a 21.4% increase year-over-year. However, the pace of growth has softened slightly from the previous month’s 22.9%.
Credit card loans, a significant component of consumer lending, experienced a substantial rise of 27.7%, reaching P1.193 trillion. Loans for motor vehicles also increased, but at a slower rate of 15.5%. General-purpose salary loans saw a more modest expansion of 5.6%.
Interestingly, lending to nonresidents experienced a contraction, falling by 8.1% to P303.208 billion. This decline was steeper than the previous month’s decrease, reflecting a shift in international financial flows.
Alongside the slowdown in lending, overall liquidity growth also eased, reaching 7%—the weakest level in four months. The total amount of money circulating in the economy, known as M3, stood at P20.108 trillion by year-end, remaining relatively stable after seasonal adjustments.
Growth in domestic claims—loans to both private and government entities—slowed to 10.1%. Subdued lending to non-financial private corporations and households contributed to this deceleration, pulling down private sector claims growth to 10.1% from 11.1% the prior month.
Government borrowing, however, provided some offset, with net claims on the central government increasing by 10.8%. This growth, while positive, also represented a slight slowdown compared to the previous month.
Net foreign assets, reflecting the difference between assets held abroad and liabilities to nonresidents, experienced a modest increase of 6.1%. Both the central bank’s and commercial banks’ foreign asset holdings contributed to this growth, though at a slower pace than previously observed.
The central bank closely monitors these lending trends as a crucial indicator of economic health and a key channel for implementing monetary policy. These developments will be carefully considered as the bank works to maintain price stability and financial soundness in the coming months.
