Bank lending growth slowest in 14 months

MANILA, Philippines — Credit growth cooled to its slowest pace in over a year in September as both businesses and consumers turned more cautious, signaling a softer appetite for credit amid lingering uncertainty despite the Bangko Sentral ng Pilipinas (BSP)’s series of rate cuts.

The outstanding loans of universal and commercial banks amounted to P13.7 trillion in end-September, P1.3 trillion higher than the P12.4 trillion in the same period last year.

The increase in September was slower than the 11.2 percent expansion in August. It marked the slowest pace in 14 months or since the 10.4-percent expansion in July 2024.

Jonathan Ravelas, senior adviser at professional services firm Reyes, Tacandong & Co., said the slowdown in bank lending reflects cautious optimism.

“Banks are steady, but borrowers are still hesitant,” Ravelas said. “Expect lending to stay soft through the year-end unless confidence picks up. For bankers and investors, it’s time to balance prudence with strategic positioning.”

Data showed outstanding loans for production activities grew at a slower pace of 9.1 percent in September from 9.9 percent in August. Total loans meant to fund business activities stood at P11.57 trillion, accounting for 84.4 percent of the total lending in end-September.

Loans released to the real estate sector went up by 9.2 percent to P2.78 trillion and accounted for 20.3 percent of the total disbursements. Credit to the electricity, gas, steam and air-conditioning supply also rose by 27.1 percent to P1.69 trillion for a 12.3-percent share.

Lending to the wholesale and retail trade as well as repair of motor vehicles and motorcycles increased by 9.1 percent to P1.56 trillion, making up 11.4 percent of total loans in September.

Meanwhile, loans to the manufacturing sector decreased by 10.4 percent to P1.16 trillion for a share of 8.5 percent.

The data also showed that consumer loans grew at a slightly slower pace of 23.5 percent to P1.82 trillion in end-September for a share of 13.3 percent of total loans.

Credit card loans jumped by 29.5 percent to P1.09 trillion. Motor vehicle loans increased by 18.5 percent to P516.32 billion, while salary-based general purpose consumption loans also inched up by 6.2 percent to P164.96 billion.

“Meanwhile, liquidity surged as rate cuts and consumer credit lifted money supply,” Ravelas noted.

In a separate data, the BSP reported a 7.3-percent increase in domestic liquidity to about P18.9 trillion in end-September, faster than the 6.6 percent expansion in end-August.

“The BSP monitors bank loans because they are a key transmission channel of monetary policy. Looking ahead, the BSP will ensure that domestic liquidity and bank lending conditions remain aligned with its price and financial stability objectives,” the central bank said.