Philippine financial system’s resources surpass P38 trillion for first time

Abi Sarabia M., Philippine Canadian Inquirer
August 18, 2026

Photo courtesy: Philippine News Agency

MANILA, Philippines — The Philippines’ financial system posted a record P38.3 trillion in total resources in June, breaching the P38-trillion threshold for the first time as banks continued to expand lending and deposit-taking despite economic headwinds from the ongoing conflict in the Middle East, according to data released by the Bangko Sentral ng Pilipinas (BSP).

The figure, which excludes the central bank’s own funds and assets, represents an 8 percent increase from the same period last year and marks the highest level recorded since the BSP began tracking the data in 1970.

The total captures the combined resources of regulated financial institutions, including cash, loans, deposits, capital, investment securities, and the reserves that banks and other lenders are required to hold to cushion against potential losses and preserve financial stability.

Banks drive growth

Banks accounted for the overwhelming majority of the sector’s expansion, holding more than 83 percent of total system resources. Combined bank assets reached P32 trillion as of June, up 10 percent from a year earlier.

Among bank categories, universal and commercial banks, the country’s largest lenders, saw resources grow 11 percent to P30 trillion. Thrift banks recorded a more modest 7 percent increase, reaching P1.5 trillion.

Smaller and newer segments of the banking sector posted the sharpest gains. Digital banks’ resources surged more than 46 percent year-on-year to P208.4 billion, while rural and cooperative banks grew 38 percent to P587 billion.

Nonbank financial institutions, a category that includes investment houses, pawnshops, insurance companies, and state-run pension funds, grew more slowly, with resources rising 3 percent to P6.3 trillion.

Economic backdrop

The growth comes as the Philippines contends with external pressures tied to the war in the Middle East. BSP regulators have said the conflict poses a meaningful but manageable risk to the country’s financial stability, noting that Philippine banks have limited direct exposure to Gulf nations, even as some domestic companies face mounting pressure from the conflict’s broader economic effects.

Regulators identified the main channels through which the conflict could affect the Philippine economy: higher imported inflation, a wider current account deficit, and tighter external financing conditions. Sustained pressure through these channels, they said, could weigh on economic growth and increase credit risks across the financial system.

The steady expansion in system-wide resources suggests Philippine banks remain positioned to meet financing demand from households and businesses even as the broader economy navigates these external risks. 

The BSP has not indicated whether it expects growth in financial system resources to continue at a similar pace in the coming quarters.