Philippines Bank Loan Growth Eases to 4-Month Low in June

MANILA, Philippines — Credit growth slowed sharply in June as businesses and households turned more cautious about taking on new debt amid lingering economic uncertainties. Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed that outstanding loans of universal and commercial banks grew by 9.8 percent year-on-year in June, down from 12.1 percent in May. The June expansion was the slowest in four months or since the 9.6 percent growth in February. In peso terms, total outstanding loans reached P14.88 trillion, up from P13.55 trillion a year earlier, but lower than the P14.99 trillion recorded in May. The BSP attributed the moderation to cautious borrowing among companies and subdued consumer demand, with growth easing across both business and household loans. Loans for production activities grew by 9.2 percent year-on-year to P12.54 trillion in June, slowing from the 11.7-percent expansion in May. Business loans accounted for 84.3 percent of total outstanding credit. While lending remained positive across many major industries, growth weakened in several key sectors. Real estate, the largest borrowing sector, saw loan growth moderate to 6.1 percent, with outstanding credit at P2.9 trillion. Loans to electricity, gas, steam and air-conditioning supply increased by 22.6 percent to P2.05 trillion, slower than the 32.9-percent expansion in May. Wholesale and retail trade loans grew by 7.6 percent to P1.64 trillion, while manufacturing credit increased by seven percent to P1.3 trillion. In contrast, loans to construction fell by 13.9 percent to P441.77 billion, worsening from a 4.7-percent contraction in May. Lending to other service activities retreated by 7.6 percent, while education loans declined by 0.6 percent. Consumer lending also lost some momentum, growing by 17.8 percent to P2.05 trillion from a 19-percent expansion in May. The BSP attributed the slowdown to softer growth in credit card and motor vehicle loans, indicating a more measured pace of household borrowing. Credit card loans, which continued to account for the bulk of consumer credit, increased by 24.9 percent to P1.29 trillion, slower than 26.3 percent previously. Motor vehicle loans increased by 8.6 percent to P540.12 billion, while salary-based general-purpose consumption loans accelerated by 9.9 percent to P177.99 billion. Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said the slowdown suggests businesses and households are becoming more deliberate in their borrowing decisions. “Companies appear to be adopting a wait-and-see approach amid global uncertainties, focusing more on managing cash flow and improving operational efficiency rather than aggressively expanding,” Ravelas said. For households, Ravelas said easing inflation has not necessarily translated into greater appetite for debt. “Many households remain mindful of their finances and are prioritizing essential spending over new borrowing. The key takeaway is that this is less about weak credit availability and more about prudent decision-making,” he said.