Bank lending accelerated to 12.1% in May

MANILA, Philippines – Bank lending in the Philippines grew at its fastest pace in 15 months in May as the central bank’s earlier monetary easing cycle started to seep into the economy.

According to the latest data from the Bangko Sentral ng Pilipinas (BSP), outstanding loans of universal and commercial banks climbed by 12.1 percent year-on-year to P15 trillion in May.

READ: Bank lending posts fastest growth in 9 months in April

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The increase was much faster than April’s 11.4-percent pace and marked the fastest expansion since the 12.2 percent growth in February 2025.

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Separate data also showed that domestic liquidity, or M3—the broadest measure of money supply—grew by 12.8 percent year-on-year to P20.6 trillion in May. This was faster than the 12.2-percent growth to P20.3 trillion recorded in April.

Economists said the strong loan growth could be attributed to the BSP’s earlier rate cuts.

As it is, the easing cycle ended last February when the Monetary Board lowered the key policy rate to 4.25 percent. In total, the BSP reduced rates by 225 basis points during the easing cycle that began in August 2024.

“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,” said Jonathan Ravelas, senior adviser at Reyes Tacandong & Co.

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READ: Bank loans grow faster despite Middle East shock

“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,” he added.

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Ruben Carlo Asuncion, chief economist at UnionBank of the Philippines, also acknowledged the “positive signal” on domestic demand and overall economic activity, although he warned that upside pressures remain amid inflation risks.

“While double-digit loan growth should remain supported by consumption, business expansion and infrastructure-related financing needs, the current pace may moderate somewhat amid inflation risks and external uncertainties,” he said. INQ

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