Banks’ loans to micro, small, and medium enterprises (MSMEs) increased by 5.2 percent to ₱575 billion by the end of December 2025, a figure still seen as providing limited financing opportunities for the segment.

The latest data from the Bangko Sentral ng Pilipinas (BSP) showed that total loans to MSMEs reached ₱574.8 billion as of the fourth quarter of 2025, higher than the ₱546.2 billion recorded in the same period the previous year.

This amount accounted for 4.7 percent of the country’s ₱12.14-trillion banking industry lending portfolio, remaining well below the prescribed ratio of 10 percent.

Banks are encouraged to set aside eight percent of their lending portfolio for micro and small enterprises (MSEs), while two percent must be allocated to medium-sized enterprises.

Broken down, loans disbursed to MSEs stood at ₱238.5 billion during the fourth quarter. This was equivalent to two percent of the total loan book, falling short of the prescribed eight-percent ratio.

BSP figures indicate that lenders should have set aside a minimum of ₱971.5 billion for MSEs.

Notably, the fourth-quarter figure was 5.9 percent higher than the previous quarter’s level of ₱225.2 billion.

Meanwhile, loans to medium enterprises stood at ₱336.4 billion during the October-to-December period. This accounted for 2.8 percent of the total loan book, surpassing the two-percent ratio.

It was 2.2 percent higher than the previous year’s level of ₱329.1 billion and eight percent higher than the third quarter’s ₱311.3-billion level.

Universal and commercial banks (U/KBs), or big banks, extended ₱153 billion in loans to MSEs during the fourth quarter, equivalent to 1.5 percent of their ₱11.03-trillion loan portfolio.

Their loans to medium enterprises amounted to ₱276.2 billion, or 2.5 percent of their total loan book.

Thrift banks lent ₱49 billion to MSEs, making up 3.9 percent of their ₱896.7-billion loan book. Loans to medium enterprises reached ₱39 billion, accounting for 4.4 percent of their portfolio.

Rural and cooperative banks continued to meet the overall MSME prescribed lending ratio. They disbursed ₱35.8 billion to MSEs, representing 20.1 percent of their ₱177.6-billion portfolio. They also lent ₱21.1 billion to medium enterprises, or 11.9 percent of their total loans.

Loans disbursed by digital banks to MSEs stood at ₱740 million during the quarter, accounting for 1.69 percent of their ₱43.8-billion loan book, while lending to medium enterprises amounted to ₱70 million, or 0.2 percent of total.

While banks are lending more to MSMEs, signaling the banking system’s support for the segment, Reyes Tacandong & Co. Ravelas senior adviser Jonathan Ravelas said the “bigger message is that MSMEs are still underfinanced.”

Ravelas said their below-five-percent share of banks’ total loan book “is far below their importance to jobs and growth.”

“What’s holding banks back are risk concerns, higher costs, and limited data—many MSMEs lack collateral and formal financial records, making lending harder to scale,” he said.

To raise this figure, Ravelas urged the establishment of “better credit information, more digital tools, and stronger risk-sharing mechanisms, so banks can lend with confidence and MSMEs can grow faster.”

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort, meanwhile, said the expansion remained faster than the country’s output growth, as the economy expanded by only three percent in the fourth quarter of 2025 and 4.4 percent for the full year.