Philippine Banks Signal Slower Loan Growth as Rates and Weak Demand Weigh on Borrowers

Philippine banks expect lending to expand more slowly in the months ahead as a softer economy and elevated interest rates make both lenders and borrowers more cautious, the Bankers Association of the Philippines said on November 8. The group's president, Ana Maria Aboitiz-Delgado, said the moderation reflects tighter credit standards at some banks as well as weaker demand from businesses and households.

Aboitiz-Delgado, who is also president and chief executive of Union Bank of the Philippines, told reporters that part of the slowdown is a deliberate choice by lenders and part simply reflects the absence of strong borrowing appetite. She said banks are preparing to resume support for economic growth once conditions stabilize.

Credit growth still near four-month high

The cautious outlook comes even as the latest central bank data showed credit growth accelerating. Outstanding loans at universal and commercial banks rose 11.4 percent to P15.265 trillion in September from P13.704 trillion a year earlier, preliminary Bangko Sentral ng Pilipinas figures showed. That was the fastest pace in four months, compared with 12.1 percent in May.

The central bank has raised its benchmark interest rate to 5.50 percent after a larger-than-expected 50-basis-point increase in October aimed at containing persistent inflation. Higher policy rates generally make borrowing more expensive and can soften loan demand, a dynamic bankers now expect to play out across several segments.

Mixed pressure across loan books

Aboitiz-Delgado said some parts of the market are showing signs of stress as repayment becomes less predictable for stretched households and firms, while other segments are strengthening. She noted that some corporate borrowers remain resilient despite softer economic conditions, and that the picture varies across lenders and types of lending.

At Union Bank, consumer loans account for 62 percent of the total loan book, nearly three times the industry average. The lender's gross nonperforming loan ratio improved to 6.56 percent, while its loan-loss coverage ratio rose to 75.77 percent. The bank reported a 53 percent increase in net income to P9.9 billion in the first nine months of 2026.

Aboitiz-Delgado said the bank has no immediate plans to cut back its consumer lending exposure, citing improving credit quality, and continues to expect double-digit loan growth this year without giving a specific target. It will keep growing retail segments while raising provisions against potential asset quality risks stemming from elevated inflation.

What it means for banking careers

For workers in banking and lending, the shift points to sustained demand for credit analysts, risk modelers and collections specialists who can assess borrowers in a slower economy. Lenders are balancing expansion against asset quality, which tends to raise the value of staff who can read repayment behavior and price risk accurately rather than simply chase volume.

The comments also suggest that hiring and training priorities at Philippine banks may tilt toward portfolio monitoring and loan-loss forecasting, since lending growth is expected to depend more on the quality of underwriting than on the size of the consumer book. Retail credit remains the main growth engine at some institutions, keeping pressure on teams that manage delinquencies and customer repayment plans.

Analysts will watch the next round of central bank credit data for confirmation that September's acceleration was a peak rather than a trend, and whether further rate moves add to borrower strain. Banks' quarterly disclosures on nonperforming loans and provisions will show how quickly the expected slowdown reaches their balance sheets and staffing plans.