Slow credit growth, rate cuts key bank challenges in 2026

Philippine banks are expected to contend with slower credit expansion, softer economic growth and further policy rate cuts from the Bangko Sentral ng Pilipinas (BSP) in 2026 as political uncertainty continues to weigh on business sentiment, according to BDO Unibank Inc.

- By KEISHA TA-ASAN

In an exclusive assessment shared with The STAR, BDO said the local banking industry will face many of the same headwinds seen last year, limiting momentum despite generally ample liquidity in the financial system.

"The industry will have to cope with similar challenges experienced in 2025: slower gross domestic product (GDP) growth from the political uncertainty, slower credit growth and further cuts in BSP’s policy rates,” the bank said.

BDO noted that these risks come after a year in which the banking sector managed to post modest income growth, even as operating conditions became more difficult.