Local banking sector showed signs of resilience in February as lending growth by major lenders accelerated, snapping the cooling trend that had sent credit expansion to a near two-year low the previous month.

According to the latest data from the Bangko Sentral ng Pilipinas (BSP), bank lending growth quickened to 9.5 percent in February 2026 from 9.3 percent in January, which had been the slowest expansion since the 8.6 percent recorded in February 2024.

Broken down, the growth in outstanding loans to residents increased to 10.1 percent in February from 9.9 percent in the previous month. Meanwhile, the contraction in outstanding loans to non-residents deepened, with a 13.2 percent decline following the 10.4 percent decrease in January.

Non-resident loans include those extended by big banks’ foreign currency deposit units (FCDUs) to borrowers abroad. Foreign-currency-denominated bank loans in the country increased by 2.9 percent to $15.56 billion in the fourth quarter of 2025 from $15.13 billion in the third quarter.

However, FCDU loans dipped 1.6 percent from the $15.82 billion recorded in the same period in 2024. Of the total outstanding FCDU loans, $10.39 billion, or 66.8 percent, went to Philippine-based borrowers, while the rest was extended to non-residents.

FCDU loans are extended by local banks or local branches of foreign banks authorized to conduct foreign currency transactions. These loans support economic activities requiring foreign exchange, such as those of importers, businesses, and individuals with foreign currency needs.

On overall bank lending, loans meant to fund business activities expanded by 8.6 percent during the month, faster than the 8.2 percent in January. Trends across major industries were mixed, as electricity, gas, steam, and air-conditioning supply expanded faster at 23.5 percent from 20.3 percent in January.

Conversely, real estate activities slowed slightly to 9 percent from 9.1 percent. Wholesale and retail trade, including motor vehicle repair, moderated to 8.2 percent from 8.3 percent, while financial and insurance activities slowed to 3.7 percent from 5.5 percent.

Notably, consumer loans to residents—which cover credit card, motor vehicle, and general-purpose salary loans—expanded at a slower rate of 20.8 percent in February, down from 21.3 percent in January. This deceleration was attributed to a modest slowdown in credit card and motor vehicle loans.

Domestic liquidity, or the amount of money in the economy as measured by M3, expanded by 10.3 percent in February to reach ₱19.8 trillion, preliminary BSP data showed. This growth rate was faster than the 8.6 percent increase recorded in January. M3 is a broad measure of money supply that includes currency in circulation, bank deposits, and other financial assets that are easily convertible to cash.

Claims on the domestic sector, which cover both private and government entities, remained a driver of money supply, rising by 11 percent in February from 10 percent in January. Claims on a sector represent that sector’s liabilities to depository corporations, such as banks and the central bank.

Specifically, claims on the private sector grew by 10.6 percent in February, matching the growth seen in the previous month. This expansion was driven by continued bank lending to non-financial private firms and households.

Meanwhile, net claims on the central government increased by 12.4 percent in February, up from 8.9 percent in January, primarily due to higher government borrowings. The BSP stated it will continue to ensure that domestic money supply and bank lending conditions remain consistent with the goal of stabilizing consumer prices and the overall financial condition.