By Katherine K. Chan, A reporter
Philippine bank loan growth posted its fastest pace in more than a year in May amid brisk lending to residents' business activities, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.
Total outstanding loans of international and commercial banks, net of repurchase agreements, grew 12.1% year-on-year in May to P14.989 trillion from P13.37 trillion.
This is faster than the 11.4% increase in April.
There was also the fastest growth in loans seen in 15 months or from 12.2% in February 2025.
“This reflects banks' expectations for continued demand for loans to businesses and households in Q2 2026,” the central bank said in a statement on Tuesday.
The majority or 53.8% of banks polled by the BSP expect businesses to continue with continued demand for credit in the second quarter of the year, while 52.9% see continued demand for loans to households, according to the central bank's latest Senior Bank Loan Officers' survey.
BSP data showed outstanding loans to residents increased to P14.692 trillion in May from P13.046 trillion a year ago, showing a rapid jump of 12.6% compared to April's 11.8%.
This accounted for a large portion of the sector's total outstanding loans during the period, the remainder being made up of loans to non-residents.
Among non-residents, bank loans fell sharply by 8.3%, from 7.9% in April, to P296.887 billion in May from P323.828 billion last year. This includes loans from major banks and foreign currency deposit units to non-residents.
Based on BSP data, loans for productive activities of residents reached P12.67 trillion, up 11.7% year-on-year from P11.347 trillion. This was an improvement from the 10.7% increase in April.
This happened amid an increase in loans to large industries, said the BSP, as loans for electricity, gas, steam, and air-conditioning increased by 32.9%.
Transportation and storage lending increased by 21.4 percent, wholesale and retail trade, and auto and motorcycle repair by 10.1 percent, real estate operations by 7.3 percent, and manufacturing by 6.4 percent.
Meanwhile, central banks disbursed a total of P2.022 trillion in consumer loans, 19% higher than the P1.699 trillion they lent last year.
“This is slower compared to the 19.6% growth in the previous month, which reflects a slower growth in credit card and car loans,” the central bank said.
In May, credit card loans increased by 26.3% year-on-year to P1.269 trillion, while auto loans increased by 10.2% to P540.9 billion, and income-based loans by 6.4% to P171.79 billion.
The central bank monitors the lending activities of banks to track the transmission of monetary policy.
CASH OFFERING
Meanwhile, continued growth in loans to the private and public sector led the country's money supply (M3) to increase by 12.8% to P20.604 trillion in May from P18.265 trillion in the previous year.
This was faster than the 12.2% increase recorded in April, and marked the fastest growth in the money supply in nearly six years or since a 13.7% increase in August 2020.
“Growth in domestic capital was mainly driven by continued growth in private and public sector borrowing,” the BSP said in a separate statement. “An increase in domestic currency supports economic activity by facilitating consumption, borrowing and investment.”
M3 is a measure of the amount of money in the economy that includes currencies in circulation, bank deposits, and other financial assets that are readily convertible to cash.
Based on preliminary BSP data, domestic claims increased 13.3% from 12.7% in April as they rose to P23.672 trillion from P20.891 trillion in May last year.
Claims on the private sector, which mainly includes loans to the manufacturing and household sectors, rose 13.2% in May to P15.204 trillion, improving from 12.6% in the previous month.
“Credit to the manufacturing and household sectors, particularly in the form of bank loans, has continued to grow and support economic activity,” the BSP said.
Total claims to the central government likewise increased by 16.2% year-on-year to P6.41 trillion in May. This is faster than the 15.1% in April.
The central bank noted that this was driven by “the National Government's issuance of debt securities and the withdrawal of deposits from the BSP and banks for financing.”
Industry claims refer to the industry's debts to depository institutions such as banks and the central bank.
Meanwhile, net foreign assets (NFA) in peso terms rose 9.1% to P7.153 trillion in May from P6.559 trillion in the same month in 2025.
Banks' large shares of foreign currency debt increased their NFA position by 16.4% to P776.001 billion.
Central bank NFAs also increased by 8.2% year-on-year to P6.377 trillion.
NFAs show the difference between corporate claims and liabilities to non-residents.
On the other hand, M1 – considered the minimum measure of money supply that includes current account deposits and liabilities – was 9.5% higher at P7.982 trillion from P7.287 trillion last year.
The BSP said it will ensure that local bank lending conditions and domestic credit conditions “remain consistent with price and financial stability objectives.”
