Philippine financial system’s total resources swelled to ₱37.45 trillion in the first quarter of 2026, fueled by resilient banking sector that managed to outpace macroeconomic headwinds and heightened geopolitical tensions in the Middle East.

Preliminary data from the Bangko Sentral ng Pilipinas showed the system’s asset base—comprising deposits, capital, and debt securities held by banks and non-bank financial institutions—expanded by 8.6 percent from ₱34.48 trillion in the same period last year.

The banking sector remained the primary engine of growth, accounting for 83.1 percent of the total financial system. Total bank resources climbed 9.2 percent to ₱31.1 trillion at end-March from ₱28.49 trillion a year earlier.

Within the sector, universal and commercial banks held the largest share at ₱28.87 trillion, an 8.4 percent increase from ₱26.63 trillion in March 2025.

On the other hand, mid-sized thrift banks recorded a 25.2 percent jump in resources to ₱1.48 trillion, while rural and cooperative banks saw a more modest four percent increase to ₱565 billion. Digital banks continued their rapid ascent, with assets surging 44.8 percent to ₱188.7 billion from ₱130.3 billion.

Non-bank financial institutions, which include investment houses, pawnshops, insurance firms, and state-run pension funds like the Social Security System and Government Service Insurance System, accounted for the remaining 16.9 percent of the system.

Their resources grew 5.8 percent to ₱6.35 trillion. The central bank noted that the latest figures for rural banks and non-bank financial institutions reflect data as of end-December 2025.

Economists attributed the expansion to aggressive loan front-loading by corporate borrowers looking to shield themselves from volatile global markets.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said credit growth accelerated as companies rushed to secure financing ahead of anticipated interest rate hikes and supply chain disruptions linked to the Middle East conflict.

This hedging strategy allowed firms to lock in funds for raw materials and finished goods before inflation and input costs could climb further.

While the financial system remains highly liquid, analysts warn that the pace of growth may face a cooling period.

John Paolo Rivera, a senior research fellow at the Philippine Institute for Development Studies, noted that while sustained savings flows and robust credit demand have kept the system resilient, elevated inflation and geopolitical uncertainty are likely to temper future borrowing and increase risk aversion among lenders.