Loan growth accelerates in May, highest in 15 months

From AB Capital's The Opening Bell: Three Moves

Event

Bank lending grew 12.1% YoY in May to P14.99 trillion, the fastest pace in 15 months, while broad money (M3) expanded 12.8%, the quickest since August 2020. Production loans accelerated to 11.7%, led by power, transport, trade, real estate, and manufacturing.

View

In our view, the data shows credit demand remains resilient despite slower gross domestic product (GDP) and tighter policy. Earlier BSP cuts are still feeding through, while public and private borrowings continue to support liquidity. The risk is that stronger credit growth now meets higher rates and rising inflation pressure.

Catalyst

Key sensitivities are policy rates, loan repricing, asset quality, and whether production borrowing turns into real capital expenditure (capex). If lending remains broad-based and inflation eases, credit can support 2H26 growth. If consumer loans keep rising faster than incomes, credit costs may follow.

Action

We think this is constructive for banks' revenue momentum, especially those with strong deposit franchises and disciplined underwriting. Favor BDO and CBC, with MBT still defensive. Stay selective on banks with faster unsecured growth, lower coverage, and greater sensitivity to credit-cost normalization.

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