The Philippines’ financial system resources grew to ₱33.66 trillion as of end-January 2025, driven by the central bank’s monetary easing and reserve requirement cut, which boosted loan demand and bank assets.
This is an increase of ₱2.48 trillion, or nearly eight percent, from ₱31.18 trillion a year earlier, according to the latest data from the Bangko Sentral ng Pilipinas (BSP).
Both banks and non-banking financial institutions (NBFIs) manage the country’s financial resources. In January, the banking sector took up over 83 percent of the total, holding ₱27.95 trillion.
The banking sector’s end-January resources climbed by over nine percent, or ₱2.33 trillion, from the ₱25.62 trillion seen in the same period in 2024.
Of the total bank-controlled resources, the 44 big—or universal and commercial—banks accounted for ₱26.14 trillion. This was nearly nine percent, or ₱2.14 trillion, higher than the ₱24 trillion recorded a year earlier.
Likewise, the 41 thrift banks infused ₱1.16 trillion, which increased by over nine percent from ₱1.08 trillion in 2024.
The six digital banks expanded their resources by nearly ₱41 billion, or nearly 44 percent, in January. It stood at ₱133.3 billion from the previous year’s ₱92.6 billion.
Further, the total resources controlled by the 361 rural banks and 21 cooperative banks rose nearly 81 percent to ₱527.1 billion, from ₱446.5 billion in January 2024.
Meanwhile, resources held by NBFIs or non-banks increased by ₱140 billion to ₱5.7 trillion as of end-January, from ₱5.56 trillion a year earlier.
NBFIs include investment houses, finance companies, investment companies, securities dealers/brokers, pawnshops and lending investors.
Some entities considered as NBFIs are non-stock savings and loan associations (NSSLAs), BSP-supervised credit card companies, private insurers, the Social Security System (SSS), and the Government Service Insurance System (GSIS).
According to Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), this financial system resource expansion mainly reflects the faster growth in banks’ total resources, outpacing the 5.6-percent gross domestic product (GDP) growth for the full-year 2024 and the 5.2-percent expansion in the fourth quarter of last year.
“This largely reflects the faster growth in bank loans,” Ricafort stressed, citing the total of 75 basis points (bps) in interest rate cuts and the reserve requirement ratio (RRR) reduction in October 2024, which injected ₱400 billion into the banking system and lowered lending costs.
“Faster loan demand enabled banks to sustain continued growth in deposits as part of the intermediation business that led to interest income/net interest margins,” Ricafort explained.
“As a result, banks have become one of the most profitable industries that further boosted capital, on top of capital infusion from strategic foreign and local investors in recent years, thereby contributing also to banks’ faster asset growth,” he added.
For the coming months, Ricafort said that the latest RRR cut, effective 10 days as of writing, would infuse ₱330 billion into the banking system, along with potential BSP rate cuts in line with future US Federal Reserve moves.
This is expected to boost loan demand and further expand banks’ and non-banks’ total resources.