Banks navigate volatility with cautious optimism

As digital shift accelerates

MANILA, Philippines — The country’s banking sector closes 2025 marked by uncertainty, uneven growth and evolving customer behavior, as lenders brace for another year shaped by political noise, shifting market sentiment and rapid digital transformation.

Traditional banks continued to face a challenging operating environment, with business confidence dampened by global tensions and domestic disruptions, while digital players accelerated expansion and customer acquisition.

Despite these mixed conditions, industry leaders see pockets of opportunity heading into 2026. BDO Unibank Inc., the country’s largest lender, summed up the mood succinctly.

“We’ll just have to do our work despite all of the political noise,” BDO chairperson Teresita Sy-Coson said, noting that the group intends to stay focused on ongoing plans. “And I think we will be able to achieve our targets next year.”

BDO president and CEO Nestor Tan described 2025 as a year defined by sudden swings in confidence and operating conditions.

“2025 was a roller–coaster year,” Tan said. “We started very strong, honestly. I’m referring to the banking industry and the business environment. We had a very strong fourth quarter last year. It was carrying over.”

Momentum, however, was interrupted by the political upheavals surrounding US President Donald Trump’s Liberation Day, which prompted many businesses to pull back. As the landscape slowly stabilized, new pressures began to emerge.

“And then, as things are starting to stabilize, things are starting to improve, then what happens? We have geopolitical risks, problems and then as things are starting to settle, supply chains are being normalized, then we have the flood control thing,” Tan said. “And now, the mood is, I would say at best, somber.”

The uneven environment is expected to spill into the coming year. “From a business perspective, it’s tough this year,” he said. “And we continue to think that 2026 will (also be difficult) because the business is uncertain.”

According to Tan, uncertainty has prompted investors and firms to adopt a wait-and-see stance. “The business community is not sure what’s likely to happen and therefore, if they’re not sure, then they will hold back. Not because they don’t want to invest, but they will hold back a little.”

He added that recent downgrades in the country’s growth outlook have added pressure. “Sends a negative message,” Tan said. “So people will probably rethink or just defer whatever they need to do.”

Still, he maintained that investor appetite has not disappeared. “I think generally we still have a very good economy. There are still many opportunities here for most investors. It’s just a question of timing because they don’t want uncertainty.”

Despite the headwinds, BDO sees pockets of resilience. “We still see provincial expansion going on. It’s growing faster than the National Capital Region on average,” Tan said.

Infrastructure and energy also continue to draw capital. “People continue to invest. It’s just not a general positive move across the board.”

Digital banks post hypergrowth

While traditional institutions navigated volatility, digital banks reported strong gains.

GoTyme Bank president and CEO Nathaniel Clarke said 2025 marked a breakout year for the sector, with the Digital Bank Association posting good customer growth, loan expansion and deposits.

“The numbers were such a huge jump from last year,” Clarke said. He attributed the surge to product-led growth. “I think all of us have continued to roll out very compelling products.”

He also cited the strengthening of the payments ecosystem. “The combination of the easy physical card distribution, QRPH and virtual cards. Now we have Google Pay, which is driving up payments and transaction adoption,” he said, adding that “QRPH as a whole has really helped fund the industry.”

Digital banks are also benefiting from a gradual shift in consumer trust. “There’s a lag effect for adoption on huge banking brands because they trust,” he said. “Now we’ve been around for three years. GoTyme is not going anywhere. To me, this is a decade-long project.”

With credibility rising, he expects faster growth ahead. “I’d say that 2025 is like hypergrowth. It’s been wild and fun. And I would say for next year, we want to repeat this growth.”

UnionBank eyes sustained customer expansion

Union Bank of the Philippines, one of the country’s leaders in digital banking transformation, is positioning for steady growth across retail and corporate segments.

UnionBank chief marketing and experience officer Albert Cuadrante said the bank expects to maintain its pace of acquiring 1.5 to two million new retail customers a year.

“So, every year, we add an average of about 1.5 to two million customers on top of our base,” Cuadrante said. “We’re really not after aggressively expanding our base...our focus is to make sure that we really deliver on the value that we promised.”

UnionBank is balancing expansion with platform strengthening. “We’re strengthening our platform to be able to make sure that the 18 million plus customers we have right now enjoy these things that we’re promising.”

He projects that the retail customer base will reach around 19 million by 2026.

For corporates, UnionBank is shifting focus. Apart from providing banking services to the top 1,000 corporations and over one million small businesses, the bank is targeting companies aligned with emerging business models.

“We want to be more focused in terms of what the types of customers are that are aligned with our vision,” Erika Dizon-Go, senior vice president at UnionBank, said. These include firms “looking toward the future and changing how their operations might work... changing how their business models might work.”

She noted the rise of “new economies,” driven by changing consumer habits and digital-first enterprises. “We want to focus and target people who are aligned with what we want to achieve together.”

As the banking sector transitions into 2026, the landscape remains mixed. Traditional lenders expect cautious sentiment to continue, weighed down by uncertainty, while digital players anticipate another year of rapid expansion driven by trust, customer experience and technology-driven services.

Yet across the sector, one theme stands out: resilience.

Even in a somber environment, banks see room for growth — from provincial expansion and infrastructure spending to digital adoption and new economic ecosystems.

Despite disruptions, the industry is preparing to move forward, striking a balance between caution and innovation as it enters another unpredictable year.