RESOURCES in the Philippine financial system rose to over P36.33 trillion in January, supported by steady deposit inflows and robust loan growth, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP).
Combined resources of banks and nonbank financial institutions climbed 7.29% year on year. Analysts attributed the expansion to sustained lending activity, solid deposit growth and higher investment holdings by banks amid elevated interest rates.
“Year-on-year growth in financial system resources reflects solid deposit inflows, steady loan expansion and banks holding more investments amid still high interest rates,” Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said via Viber.
Deposits anchored liquidity in the system, rising 7.4% to P21.88 trillion, while bank lending grew 9.3% to P14.24 trillion, reflecting sustained credit demand across sectors.
Total financial system resources fell 1.85% from December, a decline analysts said likely reflected seasonal factors.
“Balances are typically elevated at yearend due to government disbursements, bonuses and window-dressing by financial institutions,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said in a Viber message.
Banks continued to account for the bulk of resources, increasing 7.72% to P30.1 trillion. Universal and commercial banks held the biggest share, up 6.75%, while thrift banks posted the fastest growth at 26.3%.
Rural and cooperative banks rose 7.19%, and digital banks expanded almost 40%, though from a smaller base.
Data for nonbank financial institutions remain limited. The latest figures show nonbanks held P6.23 trillion as of end-September, up 5.25% from a year earlier. Nonbanks include investment houses, finance companies, security dealers, pawnshops, lending firms, nonstock savings and loan associations, credit card companies, insurers and state-run pension funds.
Analysts expect growth in financial system resources to continue, though at a more moderate pace.
Mr. Rivera said expansion would be supported by bank lending, domestic liquidity and confidence in the system, while global uncertainties and tighter financial conditions could temper gains.
“Resource growth will hinge on loan demand, inflation and interest rate moves, and global risks,” Mr. Ravelas said. “Rate cuts and improving confidence could lift activity, while external volatility may keep banks cautious.”
Monetary policy will also shape liquidity conditions. The Monetary Board has cut its key policy rate by 225 basis points since August 2024 to 4.25%, its lowest level in over three years. BSP Governor Eli M. Remolona, Jr. and Finance Secretary Frederick D. Go have indicated that rates might be raised if oil prices rise significantly, which could push inflation above the 2%-4% target. — Katherine K. Chan


