The total resources of the Philippine financial system soared to a record ₱35.58 trillion in the first nine months of the year, driven by the recent lowering of key borrowing costs.

According to preliminary data from the Bangko Sentral ng Pilipinas (BSP), the increase of ₱2.18 trillion, or 6.5 percent, from ₱33.4 trillion in the same nine-month period in 2024, pushed the system’s total assets to the highest level in its history.

The end-September figure surpassed the previous record high of ₱35.06 trillion set at the end of June. These resources include assets like deposits, capital, and debt securities.

Banks accounted for the bulk of the increase, with their total resources rising 7.3 percent to ₱29.59 trillion at end-September, from ₱27.57 trillion a year earlier. Banks now hold 83.2 percent of the financial system’s total resources.

Big banks, specifically universal and commercial banks, held ₱27.61 trillion in resources, a 6.9 percent increase from last year’s ₱25.82 trillion. Thrift banks posted a significant jump, with resources climbing 23.1 percent to ₱1.4 trillion from ₱1.14 trillion a year earlier.

Digital banks, despite having the smallest resource base, grew the fastest, with their resources surging 33.9 percent to ₱149.7 billion from ₱111.8 billion a year ago.

Conversely, rural and cooperative banks registered their total resources fell 14.7 percent to ₱424.9 billion, from ₱498.3 billion last year.

Resources held by nonbank financial institutions (NBFIs), which represent 16.8 percent of the nine-month total, inched up 2.7 percent to ₱5.99 trillion as of end-September, from ₱5.83 trillion at end-September 2024.

The central bank noted that nonbank data for end-September remained incomplete. NBFIs include investment houses, finance companies, security dealers, pawnshops, and lending companies, as well as nonstock savings and loan associations, credit card firms, private insurance firms, and the state-run Social Security System (SSS) and Government Service Insurance System (GSIS).

Rizal Commercial Banking Corp. Chief Economist Michael Ricafort attributed this financial system growth—which is outpacing economic expansion—to banks’ sustained double-digit loan growth following the lower borrowing costs since 2024.

The BSP began trimming its key policy rate in August 2024 and has continued through this year, cutting rates by a total of 175 basis points (bps) to 4.75 percent.

Expectations for further easing next year have grown after the country's output expansion slowed sharply to four percent, missing the government’s lowered full-year target of five percent to 6.5 percent.

Ricafort expects continued easing by the US Federal Reserve and the BSP to further reduce lending costs, which he said would “spur greater demand for loans that, in turn, would further boost overall economic growth, while also helping sustain total resources in the financial system.”