Financial system resources grow to P35.3 trillion

THE TOTAL RESOURCES of the Philippines’ financial system climbed to over P35 trillion as of October, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

Resources of banks and nonbank financial institutions increased by 6.76% to P35.312 trillion at end-October from P33.077 trillion in the same period last year.

However, this slipped by 1.3% from the P35.775 trillion seen at end-September.

The financial system’s resources include funds and assets such as deposits, capital, and bonds or debt securities.

Preliminary central bank data showed the banking sector’s resources stood at P29.208 trillion as of October, climbing by 7.19% from P27.249 trillion a year ago.

Broken down, total resources held by universal and commercial banks rose by 6.42% to P27.126 trillion at end-October from P25.49 trillion the previous year.

Thrift banks had P1.421 trillion in total resources during the period, jumping 24% year on year from P1.146 trillion.

Total resources of digital banks amounted to P155 billion, growing by 36.2% from P113.8 billion in the comparable year-ago period.

Lastly, resources of rural and cooperative banks inched up by 1.53% to P505.9 billion from P498.3 billion.

Meanwhile, nonbanks held resources worth P6.104 trillion as of June 2025, based on the latest available BSP data. This was up from the P5.704 trillion recorded a year prior.

Nonbanks include investment houses, finance companies, security dealers, pawnshops, and lending companies.

Institutions such as nonstock savings and loan associations, credit card companies, private insurance firms, the Social Security System, and the Government Service Insurance System are also considered nonbank financial institutions.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the growth in the financial system’s resources outpaced the economy’s expansion largely due to faster lending.

“[This is] a good signal since banks have been among the most profitable industries in the country for many years,” he said.

Bank lending expanded by 10.3% year on year to P13.793 trillion in October, the slowest growth seen in 16 months or since the 10.1% pace in June 2024.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, attributed the higher resources to the growth in financial institutions’ balance sheets.

“It reflects continued deposit inflows, balance sheet expansion by banks and nonbanks, and valuation effects as institutions accumulated government securities and other financial assets amid expectations of lower interest rates,” he said in a Viber message.

“Moving forward, resource growth should remain steady but moderate,” Mr. Rivera said. “As policy rates ease, deposits and investment assets are likely to keep growing, but the pace will depend on how quickly loan demand recovers and confidence improves.”

Mr. Ricafort added that further monetary easing by the BSP and the US Federal Reserve could boost resources as lower borrowing costs could help spur lending.

“These would also lead to more trading gains, net interest income, and overall net income of banks that, in turn, lead to further growth in the capital and total resources of banks and also of the whole financial system, especially if asset quality, NPLs, credit risks are better managed based on global best practices on credit risk management,” Mr. Ricafort added.

The BSP has so far lowered its key interest rate by a total of 200 basis points (bps) since it began its easing cycle in August 2024, with the policy rate now at an over three-year low of 4.5%.

Meanwhile, the Fed cut its target rate by another 25 bps last week to the 3.5%-3.75% range. It has delivered 175 bps in cuts since September 2024. — Katherine K. Chan