By Katherine K. Chan, Reporter

NET INFLOWS of foreign direct investments (FDIs) into the Philippines hit a four-month high in November, even as inflows slipped year on year, the Bangko Sentral ng Pilipinas (BSP) said.    

Preliminary BSP data released on Tuesday showed that FDI net inflows dipped by 0.3% to $897 million in November from $900 million in the same month in 2024.

Month on month, inflows jumped by 39.7% from $642 million in October.

November saw the highest FDI inflows in four months or since $1.271 billion in July.

“Foreign direct investments into the Philippines posted net inflows of $897 million in November 2025,” the central bank said in a statement. “South Korea was the leading source of FDIs, with most inflows directed to the manufacturing industry during the month.”

Based on BSP data, investments in equity and investment fund shares soared by 71.6% to $187 million in November from $109 million a year ago.

Net investments in equity capital other than reinvestment of earnings more than tripled to $122 million in November, from the $35 million logged in November 2024.

This, as equity capital placements doubled year on year to $142 million from $71 million, while withdrawals dropped by 44.4% to $20 million from $36 million previously.

Meanwhile, reinvestment of earnings stood at $64 million, down by 12.7% from $74 million a year earlier.

Net investments in debt instruments fell by 10.2% annually to $711 million in November from $791 million a year ago.

According to the BSP, net investments in debt instruments include mainly intercompany borrowing or lending between foreign direct investors and their subsidiaries or affiliates in the Philippines. The rest are investments made by nonresident subsidiaries or associates in their resident direct investors, or known as reverse investment.

SM Investments Corp. Group Economist Robert Dan J. Roces said the nearly flat year-on-year change in FDI net inflows reflects steady but still selective investor sentiment.

“(It) shows stabilization after a softer stretch,” he said in a Viber message. “Some delayed equity placements and reinvested earnings likely came through, which tells you investors are pacing commitments, not exiting.”

11-MONTH SLUMP
Meanwhile, FDIs went down by 22.1% to $7.077 billion at end-November from $9.084 billion in the same period last year.

“For the first eleven months of 2025, equity capital placements were sourced primarily from Japan, the United States, Singapore, and South Korea, and were channeled largely into the manufacturing, wholesale and retail trade, and real estate industries,” the central bank said. 

BSP data showed that investments in equity and investment fund shares reached $2.297 billion in the 11-month period, declining by 10.8% from $2.576 billion the year prior.

This, as net foreign investments in equity capital, excluding reinvestment of earnings, fell by 23.3% year on year to $1.144 billion during the period from $1.491 billion.

Of the total, placements dropped by 12.2% annually to $1.741 billion, while withdrawals rose by 21.1% to $596 million.

On the other hand, reinvestment of earnings edged up by 6.2% to $1.152 billion in the period ending November from $1.085 billion in the previous year.

However, nonresidents’ net investments in debt instruments of local affiliates amounted to $4.78 billion, down 26.6% from the $6.508 billion logged as of November 2024.

FDIs account for foreign investors’ investments in local businesses where they hold at least a 10% equity capital, as well as investments by a nonresident subsidiary or associate in its resident direct investor. It can be in the form of equity capital, reinvestment of earnings or borrowings.

The BSP’s FDI data cover actual investment flows, compared to the Philippine Statistics Authority’s foreign investments data which include investment commitments that may not be fully realized in a given period.

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said the decline in FDI net inflows during the 11-month period shows that investors were more cautious last year.

“That mix suggests the Philippines hasn’t lost investor interest — sentiment just became more selective,” he said in a Viber message.

“The decline likely reflects global uncertainty, domestic policy noise, and tougher competition from our ASEAN (Association of Southeast Asian Nations) neighbors,” Mr. Ravelas added. “But the November bump signals that when investors see clearer direction and more stability, they begin to re‑engage.”

Mr. Roces said there could be annual growth in FDI inflows at the end of 2025 if companies log year-end reinvestments or intercompany loans, “but that will depend more on timing of flows than a sudden shift in confidence.”

Meanwhile, Mr. Ravelas said credible reforms, reduced uncertainty and faster execution could enhance the country’s investment climate.

“If the government sustains that clarity, we could turn that November momentum into a broader recovery,” he said.

By Katherine K. Chan, Reporter

THE PHILIPPINE BANKING sector’s lending activity expanded at its slowest pace in nearly two years at the end of 2025 as loans for both consumers and business activities eased as a corruption scandal dampened sentiment, the Bangko Sentral ng Pilipinas (BSP) reported.

Based on preliminary BSP data released late on Monday, the total outstanding loans of universal and commercial banks, net of reverse repurchase agreements, grew by 9.2% year on year at end-December to P14.349 trillion from P13.138 trillion.

This was the slowest loan growth seen in 22 months or since 8.6% in February 2024.

It was also the first time since April 2024 that bank lending grew at a single-digit pace.

Month on month, the pace of lending eased from the 10.3% growth posted at end-November.

On a seasonally adjusted basis, bank lending fell by 2% month on month.

Outstanding loans to residents stood at P14.046 trillion by yearend, up by 9.7% year on year from P12.808 trillion. This was slower than the 10.7% expansion seen in November.

Lending for residents’ production activities accounted for the bulk or 84.4% of banks’ outstanding loans at the end of December. The rest were consumer loans (13.5%) and loans to nonresidents (2.1%).

BSP data showed that loans for production activities grew by 8% annually to P12.114 trillion last year from P11.216 trillion in 2024. This eased from the 9% growth seen in the 11 months to November.

This was driven by the 26.8% jump in lending for the electricity, gas, steam, and air-conditioning supply sector. Loans extended for wholesale and retail trade, repair of motor vehicles and motorcycles also grew by 10.8%, followed by real estate activities (8.3%) and financial and insurance activities (3.9%).

Meanwhile, consumer loans to residents reached P1.932 trillion at end-December, up 21.4% from P1.592 trillion a year ago. However, consumer loan growth eased from the 22.9% at end-November.

Credit card loans jumped by 27.7% to P1.193 trillion at end-December, softening from the 29.5% growth the prior month.

Loans for motor vehicles also rose by 15.5% to P524.86 billion, slower than the 16.3% growth as of November.

Loans for general-purpose salaries rose by 5.6% to P166.807 billion at end-December, easing from 6.4% at end-November.

On the other hand, lending to nonresidents contracted by 8.1% to P303.208 billion, marking a steeper decline from the -4.5% logged at end-November. These include loans disbursed by big banks’ foreign currency deposit units.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the slower growth in bank lending and domestic liquidity may have stemmed from infrastructure underspending that dampened activity in key sectors, such as construction.

“Slower bank loans growth and M3 (domestic liquidity) growth are largely consistent with the economic slowdown in the latter part of 2025 largely due to government underspending especially on infrastructure that reduced sales, earnings, profits, employment and other business activities,” he said via Viber.

Union Bank of the Philippines (UnionBank) Chief Economist Ruben Carlo O. Asuncion also attributed banks’ subdued loan growth to the country’s recent economic slowdown.

“Business loans softened as manufacturing, construction, and trade‑related sectors remained weighed down by weak demand, while consumer loan growth also eased as both households and banks turned more cautious,” he said in a Viber message.

Weak sentiment amid the graft scandal also prompted investors to adopt a cautious approach “thereby reducing the demand for loans amid the decline in investments that are financed by loans,” Mr. Ricafort added.

Multiple public officials and private contractors had faced corruption allegations linked to government flood control projects, which sparked public outrage and later weighed on consumer and business confidence.

Loan demand could improve this year with the help of the government’s spending catch-up plan and the central bank’s further easing, Mr. Ricafort noted.

“Lower interest rates by the BSP and by the Fed, as well as possible further reduction in large banks’ RRR (reserve requirement ratio) that also increase further banks’ loanable or investible funds would further reduce borrowing costs and that would increase demand and growth in bank loans,” he said.

The benchmark interest rate currently stands at an over three-year low of 4.5%. Since August 2024, the Monetary Board has so far lowered borrowing costs by a cumulative 200 basis points (bps).

BSP Governor Eli M. Remolona, Jr. earlier said that they could ease for a sixth straight meeting on Feb. 19 if the fourth-quarter growth slowdown proves to be demand-driven.

He also left the door open for a potential RRR cut, though noted that they are still looking for the right timing to do so.

“BSP’s rate cuts continue to support credit conditions, but the impact is being tempered by soft domestic demand and tighter risk management by banks,” UnionBank’s Mr. Asuncion said. “Monetary easing is helping prevent a sharper deceleration, though it cannot fully offset the broader economic slowdown.”

He also noted that bank lending may get some lift from the loan demand in the energy sector, particularly for renewable energy projects.

LIQUIDITY GROWTH SLOWS
Meanwhile, separate BSP data showed that liquidity growth fell to its weakest in four months at 7% as of December. This was also slower than the 7.6% increase in the previous month.

M3 — a measure of the amount of money in the economy that includes currencies in circulation, bank deposits, and other financial assets easily convertible to cash — stood at P20.108 trillion by yearend.

“After adjusting for seasonal fluctuations, M3 remained broadly stable from November,” the central bank said in a statement.

Domestic claims, which include claims from private and government entities, climbed by 10.1% year on year to P22.588 trillion, slowing from the 10.6% growth as of November.

This came as subdued bank lending to nonfinancial private corporations, and households dragged growth of claims on the private sector down to 10.1% from 11.1% a month ago. Private sector claims reached P14.512 trillion during the period.

Meanwhile, the BSP said higher borrowings lifted net claims on the central government by 10.8% to P6.135 trillion. However, this was slower than the 11% growth seen at end-November.

Central bank data also showed that net foreign assets (NFA) in peso terms climbed by 6.1% as of December from 4.4% a month prior.

Broken down, the BSP’s NFAs edged up by 5.3%, picking up from 1.9% in the previous month.

On the other hand, banks’ NFAs went up by 13% annually driven by larger holdings of foreign currency-denominated debt securities. However, this marked a sharp slowdown from the 26.9% pace as of November.

NFAs reflect the difference between depository corporations’ claims and liabilities to nonresidents.

“The BSP monitors bank loans because they are a key transmission channel of monetary policy,” the central bank said. “Looking ahead, the BSP will ensure that domestic liquidity and bank lending conditions remain consistent with its price and financial stability mandates.”