BSP: Bank Lending and Money Supply Growth Moderate in June as Borrowing Slows

Business | BANKING Posted on 2026-08-02 04:33:59

MANILA – Growth in bank lending and domestic liquidity eased in June, reflecting a more cautious borrowing environment among businesses and consumers while remaining supportive of continued economic expansion, according to the Bangko Sentral ng Pilipinas (BSP).

Data released by the central bank on Friday showed that outstanding loans extended by universal and commercial banks (U/KBs) increased by 9.8 percent in June, slower than the 12.1 percent growth recorded in May. Total outstanding loans reached PHP14.88 trillion during the month.

Business lending expanded by 9.2 percent, driven by sustained credit demand from key industries, including real estate, electricity, gas, steam and air-conditioning supply, wholesale and retail trade, motor vehicle repair, manufacturing, transportation and storage, as well as agriculture, forestry, and fishing.

However, the BSP noted that business loan growth moderated from 11.7 percent in May due to weaker borrowing in several major sectors, particularly construction, education, and other service-related industries.

Consumer lending also slowed, with loans to households growing 17.8 percent in June compared to 19 percent in the previous month. The BSP attributed the deceleration to slower expansion in credit card and motor vehicle loans, indicating that households are becoming more prudent in managing their finances.

The central bank closely monitors bank lending as it serves as one of the primary channels through which monetary policy influences economic activity.

Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said the slower lending growth reflects a more cautious outlook among both businesses and consumers.

"Companies appear to be taking a wait-and-see approach amid continuing global uncertainties, prioritizing cash flow management and operational efficiency rather than aggressive expansion," Ravelas said in a Viber message.

He added that despite easing inflation, many households continue to exercise caution by focusing on essential spending instead of taking on additional debt.

"Lending growth remains healthy and positive, indicating that the economy continues to expand, although at a more measured and sustainable pace," he said.

Domestic Liquidity Also Moderates

The BSP likewise reported that domestic liquidity (M3) grew by 10.6 percent to PHP20.5 trillion in June, slower than the 12.8 percent expansion posted in May.

Despite the moderation, the BSP said liquidity levels remain sufficient to support economic activity.

Domestic liquidity continued to be driven primarily by borrowings from both the private and public sectors. Bank lending remained an important source of financing for businesses and households, while government debt issuances and withdrawals of deposits from the BSP and banking system to finance public expenditures also contributed to money supply growth.

The expansion was further supported by higher net foreign assets (NFAs). The BSP's NFA increased by 6.1 percent, although banks' NFA declined due to higher foreign currency-denominated bills payable compared to the same period last year.

M3, also known as broad money supply, measures the total amount of money circulating in the economy, including currency in circulation, bank deposits, and other highly liquid financial assets.

The BSP reiterated its commitment to maintaining adequate liquidity in the financial system while safeguarding price and financial stability.

"The BSP will continue to ensure that domestic liquidity conditions remain consistent with its price and financial stability objectives," the central bank said.

NPO News Team I PNA-PR

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