PHL bank asset growth eases in Q4 as lending momentum weakens

By Heather Caitlin P. Mañago, Researcher

THE PHILIPPINES’ largest banks saw asset growth ease in the fourth quarter of 2025 as lending expanded at its slowest pace in nine quarters, reflecting the broader economic slowdown.

The latest edition of BusinessWorld’s quarterly banking report showed that the aggregate assets of 44 universal and commercial banks grew by 8.54% year on year to P28.92 trillion in the October-to-December period from P26.64 trillion a year earlier.

This was slower than the 10.02% growth in the fourth quarter of 2024, but faster than the 7.42% logged in the third quarter.

Asset growth of big banks during the period was the strongest in two quarters or since the 9.05% expansion in the second quarter of 2025.

Meanwhile, the aggregate loans of the country’s biggest lenders went up by 10.12% year on year to P15.36 trillion in the October-to-December period.

This expansion was slower than the 13.59% growth in the same period in 2024 and the 10.91% recorded in the third quarter of 2025.

Lending growth was also the weakest in the nine quarters or since the 7.01% recorded in the third quarter of 2023.

The banks’ modest performance in assets and loans aligned with the weaker economic activity and benign inflation in the last quarter of 2025.

In the fourth quarter, the country’s gross domestic product (GDP) expanded by an annual 3%, slower than the 5.3% growth in the same period last year and the revised 3.9% print in the third quarter of 2025, amid a corruption scandal.

This brought GDP growth to 4.4% in 2025, slowing from the 5.7% growth in 2024.

Meanwhile, inflation in December picked up to 1.8%, faster than 1.5% in November. Still, this was slower than 2.9% in December last year. The December print brought average inflation to 1.7% in 2025, easing from 3.2% in 2024.

At its December meeting, the Bangko Sentral ng Pilipinas (BSP) delivered a 25-basis-point rate cut to bring its key rate to 4.5% — the lowest level in more than three years.

NPL RATIO EASED
Data also showed the share of bad loans to the total loan portfolio, also known as the nonperforming loan ratio (NPL), eased to 3.07% in the fourth quarter.

This was also lower than 3.11% a year earlier and 3.49% in the third quarter.

Loans are considered nonperforming if any principal and/or interest are left unpaid for over 90 days from the contractual due date or accrued interests for more than 90 days have been capitalized, refinanced, or delayed by agreement.

Meanwhile, the banks’ median return on equity (RoE), which is an indicator of profitability, dipped to 6.97% in the fourth quarter from 8.98% in the fourth quarter of 2024. The RoE measures the amount that shareholders make on every peso they invest in a company.

Additionally, the largest banks’ median capital adequacy ratio — which reflects the lender’s ability to absorb losses from risk-weighted assets — stood at 21.21% during the period.

This was higher than the 20.73% recorded in the same period last year and the 20.32% a quarter earlier.    

The ratio remained well above the regulatory minimum of 10% set by the BSP as well as the international minimum standard of 8% under the Basel III framework.

The leverage ratio, which gauges the institution’s ability to absorb shocks by measuring the bank’s capital relative to total exposure, stood at a median of 11.73% as of end-December. The current figure exceeded the central bank’s 5% guideline as well as the international standard of 3%.

Meanwhile, the net interest margin (NIM) of these big banks stood at 3.99%, higher than the 4.13% a year earlier.

NIMs are an indicator of banks’ investing efficiency by dividing annualized net interest income by average earning assets.

During the period, the return on assets, which measures the profit generated per peso of an asset, dipped to 1.44% from 1.55% in the fourth quarter of 2024.

LARGEST BANK
In the October-to-December period, BDO Unibank, Inc. (BDO) remained the largest bank in terms of total assets with P5.41 trillion, followed by Metropolitan Bank & Trust Co. (Metrobank) with P3.92 trillion and Bank of the Philippine Islands (BPI) with P3.71 trillion.

In lending, the Sy-led bank also led the industry with P3.64 trillion worth of loans issued, followed by BPI with P2.6 trillion and Metrobank with P1.97 trillion.

In terms of deposits, BDO also has the biggest amount of deposits with P4.19 trillion, followed by Land Bank of the Philippines with P3.12 trillion and BPI with P2.84 trillion.

Among banks with at least P100 billion assets, MUFG Bank Ltd. posted the fastest year-on-year asset growth with 30.96%, followed by Philippine Bank of Communications (17.68%), and Asia United Bank Corp. (12.72%).    

On the other hand, MUFG Bank Ltd. was also the most aggressive lender with a year-on-year growth of 19.57%, followed by Bank of Commerce with 19.43% and East West Banking Corp. with 15.04%.

BusinessWorld Research has been tracking the financial performance of the country’s large banks quarterly since the late 1980s using banks’ published statements.