The Philippine banking sector has seen its loan growth accelerate in May, with the fastest pace in over a year. According to preliminary data from the central bank, total outstanding loans, net of reverse repurchase agreements, grew by 12.1% year on year to P14.989 trillion from P13.37 trillion.
This growth was faster than the 11.4% expansion in April and marked the quickest lending growth seen in 15 months. The central bank attributed this to banks' expectations of steady loan demand from businesses and households in Q2 2026. In fact, most banks polled by the central bank expected businesses to sustain steady demand for credit in the second quarter, while 52.9% saw steady loan demand from households.
Outstanding loans to residents climbed to P14.692 trillion in May, a 12.6% jump from a year ago, with the remainder composed of loans to nonresidents. Bank lending to nonresidents, however, declined by 8.3% in May. Loans extended for residents' production activities reached P12.67 trillion, up 11.7% annually.
Loans to major industries surged in May, with electricity, gas, steam, and air-conditioning supply sector loans surging by 32.9%. Lending for transportation and storage jumped by 21.4%, while wholesale and retail trade, and repair of motor vehicles and motorcycles saw a 10.1% increase. Real estate activities and manufacturing also saw growth in loans.
Banks disbursed a total of P2.022 trillion in consumer loans, a 19% increase from the P1.699 trillion lent out a year earlier. Credit card loans rose by 26.3% year on year to P1.269 trillion, while motor vehicle loans increased by 10.2% to P540.9 billion.
The central bank monitors banks' lending activities to track the transmission of monetary policy. Private and public sector borrowings drove the country's liquidity (M3) to climb by 12.8% to P20.604 trillion in May from P18.265 trillion the prior year.
The central bank noted that domestic liquidity growth was driven mainly by the sustained expansion in borrowings by both the private and public sectors. The increase in domestic liquidity supports economic activity by facilitating consumption, lending, and investment.
M3, a measure of the amount of money in the economy, includes currencies in circulation, bank deposits, and other financial assets that are easily convertible to cash. Domestic claims picked up by 13.3% from 12.7% in April, rising to P23.672 trillion from P20.891 trillion in May last year.
Claims on the private sector, which is largely composed of loans to production sectors and households, rose faster by 13.2% in May to P15.204 trillion. Net claims on the central government likewise increased by 16.2% annually to P6.41 trillion in May.
The central bank noted that net foreign assets (NFA) in peso terms went up by 9.1% to P7.153 trillion in May from P6.559 trillion in the same month in 2025. Banks' larger holdings of foreign currency-denominated debt securities boosted their NFA position by 16.4% to P776.001 billion.
The central bank will ensure that local bank lending and domestic liquidity conditions remain consistent with its price and financial stability objectives.
