Bank lending grows 12.8% in January 2025, fastest in 2 years —BSP data

Lending activities by large banks in the Philippines grew at its fastest pace in two years in January 2025, reaching P13.019 trillion, according to data released by the Bangko Sentral ng Pilipinas (BSP).

Preliminary central bank data showed that outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the BSP, rose 12.8% in the very first month of the year from P11.54 trillion in January 2024.

In an emailed commentary, Rizal Commercial Banking Corp. chief economist Michael Ricafort said that the lending growth rate seen in January was the fastest since December 2022, describing it as a “good sign for the economy as a bright spot/growth driver.”

The growth in lending activities by large banks came after a total local policy rate cuts of 75 basis points implemented by the BSP’s Monetary Board in 2024 —25 basis points each in August, October, and December.

Ricafort said the monetary easing has lead to lower borrowing costs.

The BSP said that large banks’ outstanding loans to residents grew by 13.3% in January from a 12.4% growth a month ago. 

However, outstanding loans to non-residents decreased by 3.5% in January, following a 5.7% increase in the previous month.

“Loans for production activities rose by 11.8% in January from 10.8% in December, due largely to sustained increase in lending to key industries such as: real estate (9.%); electricity, gas, steam, and air-conditioning supply (23.6%); wholesale and retail trade, repair of motor vehicles and motorcycles (13.9%); transportation and storage (21.4%); and manufacturing (4.6%),” the central bank said.

“Consumer loans to residents expanded by 24.4% in January from 25% in December, driven by the increase in credit card and motor vehicle loans,” it added.

Domestic liquidity

BSP data also showed that domestic liquidity or M3 — the broadest measure of money in the financial system —rose by 6.8% year-on-year to P18.1 trillion in January 2025.

This, as domestic claims for the month expanded by 10.9% year-on-year with claims on the private sector growing by 13.1% amid “continued expansion in bank lending to non-financial private corporations and households.”

Meanwhile, net claims on the central government expanded by 7.4% “due to higher borrowings by the national government.”

Central bank data showed that net foreign assets increased by 2.6% year-on-year.

“Looking ahead, the BSP will continue to ensure that domestic liquidity and lending conditions remain aligned with its price and financial stability mandates,” it said.—LDF, GMA Integrated News