Bank lending and money supply continued to expand in January 2026, indicating steady credit conditions in the financial system, according to the Bangko Sentral ng Pilipinas (BSP). The latest data show that while credit growth remains strong, the pace of expansion has slightly moderated.
Loans issued by universal and commercial banks grew by 9.3 percent year-on-year in January, slightly slower than the revised 9.6 percent growth recorded in December 2025. On a seasonally adjusted basis, outstanding loans increased by 1.0 percent month-on-month, suggesting that lending activity continues to expand despite the slight slowdown.
Lending to Philippine residents rose by 9.9 percent, easing from the revised 10.1 percent growth in December, while loans to non-residents declined by 10.4 percent, a deeper drop compared with the 8.0 percent decline in the previous month. Credit extended to businesses expanded by 8.2 percent, reflecting continued demand for financing across several industries. Growth was recorded in sectors such as real estate, utilities, wholesale and retail trade, financial services, information and communication, and transportation and storage.
Household borrowing remained strong during the period. Consumer loans to residents, including credit card balances, motor vehicle loans, and salary-based loans, increased by 21.3 percent, slightly below the revised 21.5 percent growth in December but still indicating robust consumer demand for credit.
At the same time, the amount of money circulating in the economy also grew. Domestic liquidity, commonly referred to as M3 money supply, expanded by 8.6 percent year-on-year to ₱19.7 trillion in January, faster than the revised 7.2 percent increase recorded in December. After adjusting for seasonal factors, liquidity increased by 0.8 percent compared with the previous month. M3 is a broad measure of money supply that includes cash in circulation, bank deposits, and other financial assets that can easily be converted into cash.
The growth in liquidity was supported by continued increases in claims on the domestic sector, which rose by 10.0 percent year-on-year. This includes lending to both private entities and the government. Claims on the private sector alone grew by 10.6 percent, driven largely by ongoing bank lending to non-financial corporations and households. Net claims on the national government increased by 8.9 percent, reflecting higher government borrowing during the period. Meanwhile, net foreign assets in peso terms rose by 10.2 percent, as both the central bank and banks recorded improvements in their foreign asset positions.
The BSP monitors bank lending and liquidity conditions because they are key channels through which monetary policy affects the economy. When liquidity is ample and banks continue to extend credit, businesses are better able to finance investments and operations, while households have greater access to loans for consumption and major purchases. These trends help shape overall economic activity and influence inflation dynamics.
Looking ahead, the BSP said it will continue to ensure that domestic liquidity and bank lending conditions remain aligned with its mandate to maintain price stability and safeguard the country’s financial system.
