'Phl banking system braces for evolving risks in 2026′

The Philippine banking system heads into 2026 from a position of strength, supported by solid capital buffers, robust liquidity and sustained profitability, even as the Bangko Sentral ng Pilipinas (BSP) flags emerging vulnerabilities tied to credit concentration, cybersecurity threats and shifting global conditions.

- Keisha Ta-asan

"The Philippine banking system remains resilient, backed by strong earnings and a healthy balance sheet, despite moderating economic growth," the BSP said in an interview with The STAR, underscoring the system’s ability to absorb shocks while continuing to support economic activity.

Total assets of the Philippine banking system grew by 7.1 percent year-on-year to P28.3 trillion as of end-October, driven mainly by loan expansion, according to the BSP.

Credit growth remained robust, rising by 10.7 percent to P16.1 trillion, with lending expanding across major sectors. The BSP said loan quality “remains stable, underpinned by a low nonperforming loan ratio, benign inflation, lower borrowing costs and effective credit risk management.”

On the funding side, deposits increased by seven percent to P20.8 trillion, largely due to higher savings deposits. The BSP noted that most deposits were peso-denominated and placed by residents, limiting exposures to external risks.

Profitability also held firm. Banks booked P302.6 billion in profits for the period ending September 2025, up by 4.3 percent year-on-year, supported by sustained interest income and stable fee-based revenues.

Capitalization remained well above regulatory and global standards. As of end-September 2025, the capital adequacy ratio stood at 16.1 percent on a solo basis and 16.5 percent on a consolidated basis, giving banks ample capacity to absorb losses and continue lending.

Liquidity conditions were similarly strong. Universal and commercial banks posted a liquidity coverage ratio of 181.3 percent as of end-September and a net stable funding ratio of 134.7 percent as of end-August 2025.

The BSP said these metrics reinforce market confidence and lending capacity even under stress.

Consumer credit, property segments under watch