Bank lending jumps 12%, fastest in 15 months

MANILA, Philippines — Credit growth accelerated for a fourth straight month in May, reaching its fastest pace in more than a year as businesses stepped up borrowing and household credit remained resilient, signaling that earlier monetary easing is beginning to filter through the broader economy.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed the outstanding loans of universal and commercial banks expanded by 12.1 percent year-on-year in May, faster than the 11.4 percent growth in April.

The latest reading was the strongest since February 2025, when bank lending grew by 12.2 percent.

The outstanding loans of big banks reached P14.99 trillion in May, P1.62 trillion higher than the P13.37 trillion a year earlier.

The BSP said the sustained expansion reflected banks’ expectations of steady loan demand from businesses and households in the second quarter, based on the results of its Senior Bank Loan Officers’ Survey.

Business loans continued to anchor overall credit growth, rising by 11.7 percent in May from 10.7 percent in April. Outstanding production loans climbed to P12.67 trillion, accounting for 84.5 percent of total bank lending.

The increase was led by stronger lending to several key industries.

Credit to the electricity, gas, steam and air-conditioning supply sector surged by 32.9 percent to P2.18 trillion, making it the biggest contributor to lending growth. Loans to manufacturing accelerated to 6.4 percent from the modest one-percent growth recorded in April, with outstanding loans reaching P1.31 trillion.

Lending to transportation and storage rose by 21.4 percent to P631.04 billion, while loans to wholesale and retail trade, including repair of motor vehicles and motorcycles, increased by 10.1 percent to P1.65 trillion.

Real estate remained the largest borrowing sector, with outstanding loans reaching P2.89 trillion, although annual growth eased to 7.3 percent from 8.1 percent in April.

Meanwhile, loans to households increased by 19 percent year-on-year in May, slower than the 19.6 percent growth in April as credit card and motor vehicle loans expanded at a softer pace.

Outstanding consumer loans reached P2.02 trillion, equivalent to 13.5 percent of total bank lending.

Credit card loans remained the largest component of household borrowing, climbing by 26.3 percent to P1.27 trillion. Motor vehicle loans grew by 10.2 percent to P540.9 billion, while salary-based general purpose consumption loans increased by 6.4 percent to P171.79 billion.

“The strong double-digit growth in both bank lending and domestic liquidity suggests that the BSP’s earlier rate cuts are now gaining traction in the real economy,” Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said.

Separate BSP data showed that domestic liquidity grew by 12.8 percent year-on-year to P20.6 trillion in May, driven by the continued expansion in borrowings by both the private and public sectors.

Ravelas said that lower borrowing costs, improving business confidence, steady consumer spending and continued government expenditures have encouraged more credit demand and increased liquidity in the financial system.

“What’s encouraging is that lending growth is broad-based from businesses expanding operations to households spending and investing, which points to a strengthening domestic demand environment,” he added.