S&P sees steady growth in bank lending despite slowing PHL economy

By Katherine K. Chan, Reporter

BANK LENDING in the Philippines may continue to post double-digit growth this year, S&P Global Ratings said, even as the flood control fiasco continues to dampen business and consumer confidence.

S&P Global Ratings Director Nikita Anand said they still see banks’ loan growth ranging between 11% and 13% this year, unchanged from their earlier projection.

“Our credit growth forecast for 2026 remains 11%-13%, primarily driven by consumer loans,” she told BusinessWorld in an e-mail.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that universal and commercial banks’ total outstanding loans rose by 10.3% to P13.988 trillion as of November from P12.676 trillion in the same period in 2024. It was the same growth rate seen at end-October.

Ms. Anand also noted that consumer loans could see faster growth than corporate loans this year.

“This is because of (the) underserved nature of (the) Philippine market where consumer loans are growing fast from a smaller base,” she said. “Also, some corporates could hold off on capital expenditure plans amid tough operating conditions and rapidly evolving external environment.”

Based on BSP data, consumer loans climbed by 22.9% year on year to P1.892 trillion as of November from P1.54 trillion previously. Month on month, it eased from the 23.1% growth in October.

Meanwhile, big banks’ loans to businesses reached P11.789 trillion in the 11-month period, growing by 9% from P10.815 trillion in the previous year.

Domestic bank lending will likely gain some boost from further monetary policy easing this year, S&P also said.

Currently, the benchmark interest rate stands at an over three-year low of 4.5%.

Since the Monetary Board began its easing cycle in August 2024, it has so far lowered key borrowing costs by a cumulative 200 basis points (bps).

In a separate commentary, United Overseas Bank Ltd. (UOB) Group Global Economics & Markets Research said the Monetary Board could stand pat at its first policy meeting this year, before easing anew in the second quarter once it has more data to consider. 

“While we do not rule out the possibility of another 25-bp policy rate cut at this meeting, we continue to believe that the BSP can afford to remain patient,” UOB Senior Economist Julia Goh and economist Loke Siew Ting said on Feb. 5. “Additional incoming data — particularly inflation data for February to April and the (first-quarter) GDP (gross domestic product) release in early May — and greater clarity on FOMC (Federal Open Market Committee) leadership changes will be crucial for any policy adjustments in (the second quarter).”

The UOB economists expect the central bank to deliver a final 25-bp cut in the second quarter to bring the key interest rate to a terminal of 4.25%.

After headline inflation returned to the BSP’s target range for the first time in about a year at 2% in January, the Monetary Board said they see the current easing cycle nearing its end.

However, BSP Governor Eli M. Remolona, Jr. has said they could deliver a sixth straight cut if they determine demand-side issues from the weaker-than-expected fourth-quarter economic growth.

This came after the country’s GDP slumped to a post-pandemic low of 3% in the last quarter of 2025 due to the lingering effects of the flood control corruption scandal. This brought the full-year GDP growth to 4.4%, the worst in five years.

Still, the central bank chief noted that inflation remains their top deciding factor in their monetary policy path.

The Monetary Board will have its first policy review for 2026 on Feb. 19.