Bank lending grew at a faster pace in March, driven mainly by loans to the energy and transportation sectors amid the global energy shock, preliminary data from the central bank showed.

In an advisory, the Bangko Sentral ng Pilipinas (BSP) reported that loans extended by universal and commercial banks (U/KBs) accelerated to 10.7 percent year on year in March from the revised 9.6 percent in February, which the BSP said provided “even stronger support for production activities of businesses and consumption of households.”

After adjusting for seasonal fluctuations, outstanding U/KB loans increased by 1.7 percent month on month in March.

Loans for business activities accelerated to 9.7 percent in March from 8.6 percent in February, led by lending to the electricity, gas, steam, and air-conditioning supply sector (26.7 percent) and transportation and storage sector (19.4 percent).

The energy and transport sectors have been among the hardest hit domestically by the global energy crisis. Energy-related loans rose 3.2 percent month on month, indicating increased financing demand from businesses seeking to manage rising energy costs as the Middle East conflict—which escalated at the beginning of March—sent oil and power prices sharply higher.

Meanwhile, consumer loans to residents grew at a slower pace of 20.8 percent from 21.3 percent previously, which the BSP attributed to a modest slowdown in credit card and motor vehicle loans—possibly reflecting the conflict’s impact on consumer behavior and spending patterns.

In response to the additional burden on consumers and businesses, the BSP approved Monetary Board Resolution No. 296 on 8 April, allowing banks to grant temporary grace periods of up to six months on loan payments for affected borrowers, while agricultural loans may be deferred for up to one year, subject to assessment.

The BSP also allowed lenders to temporarily exclude these loans from being classified as past due or nonperforming for up to one year, giving borrowers breathing room while helping maintain stability in banks’ balance sheets. S&P Global Ratings earlier warned that the BSP’s relief measures could weigh on bank profitability, although they may help prevent a spike in non-performing loans (NPLs).

The BSP also views bank lending as a key transmission channel for monetary policy. A rate hike—such as the one enacted at the end of April in response to the Middle East conflict—encourages banks to hold more deposits while reducing demand for consumer borrowing as interest rates become more expensive.

While tighter monetary policy may help curb inflation—which has risen fourfold since the end of 2025—it may also weigh on economic growth, which slowed to 2.8 percent amid mounting domestic and external headwinds.