The Philippine financial system’s total resources expanded by ₱2.28 trillion as of end-February, driven mainly by a double-digit jump in bank lending and lower interest rates, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP).

The latest BSP data showed that the combined resources of banks and nonbank financial institutions (NBFIs) increased by over seven percent to ₱33.61 trillion as of February, from ₱31.33 trillion a year ago.

But month-on-month, total resources decreased by 0.15 percent from ₱33.66 trillion in January.

Financial institutions’ resources include funds and assets such as deposits, capital, as well as bonds or debt securities.

According to the central bank, the banking system’s resources jumped by ₱2.01 trillion, or nearly eight percent, to ₱27.78 trillion as of February, from ₱25.77 trillion in the same period a year earlier.

Big banks—the 44 universal and commercial banks—accounted for over 77 percent of total resources, rising by almost eight percent annually to ₱25.96 trillion from ₱24.14 trillion in 2024.

Resources held by the 41 thrift banks contributed ₱1.17 trillion, up by over seven percent from last year’s ₱1.09 trillion.

The six digital banks’ resources, whose operations started during the pandemic, surged by over 33 percent, or ₱31.5 billion, to ₱126.8 billion, from ₱95.3 billion in February last year.

The combined resources of rural and cooperative banks stood at ₱527.1 billion, climbing by over 18 percent from ₱446.5 billion a year ago.

Meanwhile, nonbanks’ resources increased by nearly five percent to ₱5.83 trillion as of end-September 2024, from ₱5.56 trillion a year ago. Data on nonbanks has a lag period of at least six months.

Non-banks include investment houses, financing and investment companies, securities dealers, pawnshops, lending investors, and credit card companies. Government institutions, along with authorized agent banks (AAB) foreign exchange (forex) corporations, are also part of this sector.

The Social Security System (SSS), the Government Service Insurance System (GSIS), and private insurance companies are also considered as NBFIs.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said the growth in the country’s financial system’s total resources “largely reflects the continued growth in banks’ loans by about 12 percent year-on-year in recent months, more than twice faster than GDP [gross domestic product] growth.” The country’s GDP grew by 5.7 percent in 2024.

Ricafort noted that consumer loans surged nearly 25 percent in recent months, boosted by strong demand and favorable demographics.

“Furthermore, the country’s large banks are among the most profitable industries in the country’s, thereby adding to banks’ capital and total resources,” Ricafort said.

He added that lower United States (US) Federal Reserve and BSP rates, by about one percent since late 2024, brought down borrowing costs, easing funding expenses and boosting loan demand.

US President Donald Trump’s tariffs, however, “could slow down global investments, trade, employment, and overall world economic growth that could also slow down local economic growth amid some drag on Philippine exports.”

“This could also slow down the growth in the country’s major businesses and industries, thereby a potential drag on the business growth of banks and the financial system,” Ricafort noted, while possible rate cuts by both the US and Philippine central banks could offset this risk.