Philippine financial system resources climb in Q1

By Katherine K. Chan, Reporter

THE PHILIPPINE financial system’s total resources rose to P37.45 trillion in the first quarter of 2026 as the sector’s assets ballooned despite headwinds stemming from the Middle East war, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

As of March, banks and nonbank financial institutions’ combined resources grew by 8.61% to P37.45 trillion from P34.481 trillion in the same period last year.

Month on month, it edged up by 1.38% from P36.941 trillion previously.

These include funds and assets such as deposits, capital, and bonds or debt securities, but exclude resources from the central bank.   

Banks alone held P31.103 trillion worth of resources during the period, climbing by 9.19% from the P28.485 trillion seen a year earlier.

Broken down, universal and commercial banks’ resources rose by 8.41% year on year to P28.871 trillion at end-March from P26.631 trillion previously. This was the bulk of the sector’s resources in the first quarter. 

Resources of thrift banks also jumped by 25.17% to P1.478 trillion at end-March from P1.181 trillion in the comparable year-ago period, while digital banks had 44.82% more resources at end-March with P188.7 billion from P130.3 billion in the prior year.

Meanwhile, resources held by rural and cooperative banks stood at P565 billion as of end-December last year, 4.01% higher than the P543.2 billion seen in the first quarter of 2025. There were no data for rural and cooperative banks as of end-March this year.

Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said the higher resources as of end-March came as banks and nonbank financial institutions’ balance sheets remained sound amid the Middle East conflict, with lending activity and deposit inflows likewise boosting their holdings.   

“The increase underscores the resilience of the domestic financial system, which remains well-positioned to intermediate funds despite external headwinds such as the ongoing Middle East conflict,” he said in a Viber message. 

Separate central bank data showed that lenders’ assets hit an all-time high of P30.336 trillion as of end-March, the first full month of the Middle East war. This was up by 9.77% year on year from P27.644 trillion.

Banks’ loan growth likewise hit its fastest pace in seven months in March, as lending to businesses and consumers climbed 10.7% to P14.603 trillion from P13.192 trillion a year ago.

Higher investment holdings and continued savings may have helped sustain the sector’s resource growth despite economic woes during the period, said John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies.

“(This) reflects continued expansion in bank lending, deposit growth, and investment holdings, indicating that the financial system remains liquid and broadly resilient despite a more challenging macroeconomic environment,” he noted.

The latest available BSP data also showed nonbanks held P6.347 trillion in resources as of end-2025. This reflects a 7.26% climb from the P5.917-trillion resources logged at end-2024.

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 firms.

In the coming months, analysts noted that tighter financial conditions amid lingering economic uncertainties could dampen the growth of the financial sector’s resources.

“Looking ahead, while resources are expected to continue expanding, the pace of growth may moderate amid tighter financial conditions, elevated inflation, and softer economic momentum,” Mr. Asuncion said.

“Key factors to watch include BSP policy direction, liquidity conditions, risk sentiment, and the strength of domestic demand, which will collectively shape the trajectory of financial system resources in the coming months,” he added.

The industry should also strive to maintain healthy asset quality and credit conditions, especially as economic risks continue to weigh on them, according to Mr. Rivera.