Bank lending slowed to a growth rate of 9.3 percent year-on-year in January, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP).

In a recent advisory, the central bank said loans from universal and commercial banks (U/KBs) expanded at a slower pace in January 2026 compared with the revised 9.6 percent growth recorded in December 2025.

After adjusting for seasonal fluctuations, outstanding U/KB loans rose by 1.0 percent month-on-month in January.

The BSP said outstanding loans to residents grew by 9.9 percent in January, slightly slower than the revised 10.1 percent expansion in December, while outstanding loans to non-residents fell by 10.4 percent, deeper than the 8.0 percent decline recorded in the previous month.

Loans used to fund business activities expanded by 8.2 percent in January. Lending increased in the following key industries: electricity, gas, steam and air-conditioning supply (20.3 percent); transportation and storage (19.1 percent); real estate activities (9.1 percent); wholesale and retail trade, repair of motor vehicles and motorcycles (8.3 percent); financial and insurance activities (5.5 percent); and information and communication (4.9 percent).

Consumer loans to residents — which include credit card, motor vehicle and general-purpose salary loans — grew by 21.3 percent, slightly slower than the 21.5 percent growth recorded in December.

The BSP said it monitors bank lending as “a key transmission channel of monetary policy,” noting that lower policy rates typically encourage banks to extend more credit, which supports consumption and can increase upward pressure on headline inflation.

The central bank also reported that domestic liquidity (M3) — the amount of money circulating within the Philippine economy — grew by 8.6 percent year-on-year in January. Money supply and bank lending maintain a reinforcing relationship: higher M3 increases deposits and reserves in the banking system, easing funding constraints and allowing banks to expand credit.

When banks issue loans, they create deposits, which raise the money supply and boost domestic liquidity. Lending also finances consumption — a major component of Philippine gross domestic product — as well as investment. Stronger economic activity supports income growth and savings, further reinforcing liquidity.