By Katherine K. Chan, Reporter

Assets held by the Philippine banking industry grew 10.72% year on year to P30.716 trillion as of end-July, supported by continued expansion in lending and deposits, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

The figure was up from P27.742 trillion a year earlier but 1.33% lower than the P31.129 trillion recorded at the end of June. Balance-sheet data of this kind is watched as a broad gauge of banking-sector health, since asset growth reflects both the volume of credit flowing through the economy and the industry’s capacity to keep intermediating funds between savers and borrowers.

Banks’ assets are primarily composed of deposits, loans and investments, including cash and due from banks, interbank loans receivable (IBL) and reverse repurchase (RRP) transactions, net of allowances for credit losses.

Universal and commercial banks continued to account for most of the sector’s assets, with P28.711 trillion as of July. Their assets increased 10.73% from P25.929 trillion a year earlier.

Thrift banks followed with P1.408 trillion, up 8.95% from P1.292 trillion a year earlier. Digital banks’ assets surged 51.55% to P204.651 billion from P135.042 billion, the fastest increase among the bank categories.

The latest available data also showed that assets held by rural and cooperative banks rose 23.44% to P475.782 billion as of June, from P385.446 billion during the same period the previous year.

The banking system’s total net loan portfolio, including IBL and RRP, reached P16.907 trillion at the end of July. This was 10.8% higher than the P15.259 trillion recorded a year earlier, although it declined 1.93% month on month from P17.24 trillion at the end of June.

Net investments, consisting of financial assets and equity investments in subsidiaries, increased 8.04% to P8.905 trillion from P8.242 trillion a year earlier. On a monthly basis, however, the figure was 2.03% lower than the P9.089 trillion recorded at the end of June.

Net real and other properties acquired by banks rose 27.72% year on year to P165.702 billion from P129.735 billion. They also increased 3.02% from P160.842 billion a month earlier.

The industry’s other assets stood at P2.602 trillion in July, up 18.97% from P2.187 trillion a year earlier and 1.37% from P2.567 trillion in June.

Cash and due from banks increased 11.06% year on year to P2.136 trillion at the end of July from P1.923 trillion. The amount was also 3.13% higher than the P2.071 trillion recorded a month earlier, according to BSP data.

Total banking-system liabilities amounted to P27.061 trillion in July, rising 11.73% from P25.22 trillion a year earlier but falling 1.39% from P27.442 trillion at the end of June.

Deposits accounted for most of the liabilities, increasing 7.94% year on year to P22.063 trillion from P20.44 trillion. Peso-denominated deposits totaled P18.147 trillion, while foreign currency deposits amounted to P3.916 trillion.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the continued expansion of banks’ balance sheets largely reflected strong lending growth.

“This has been consistent and reflective of bank loans growth around 10% levels amid faster growth in consumer loans amid some frontloading and hedging of purchases before prices and interest rates go up further as a result of the war in the Middle East since Feb. 28, 2026,” he said in a Viber message.

“The faster increase in prices or inflation due to the said war reduced purchasing power or disposable incomes, thereby also increasing the demand for loans,” Mr. Ricafort added.

Separate BSP data showed that total outstanding loans of big banks, net of reverse repurchase agreements, jumped 10.4% year on year to P14.98 trillion at the end of July from P13.574 trillion.

The increase exceeded the 9.8% expansion recorded in June and was the fastest lending growth since the 12.1% increase in May.

Jonathan L. Ravelas, senior adviser at Reyes Tacandong \u0026 Co., said the steady growth in banks’ assets indicated that the sector remained sound despite global headwinds.

“The banking sector remains well-capitalized, liquid, and supportive of growth despite external uncertainties and softer global economic conditions,” he said in a Viber message.

Mr. Ricafort said, however, that economic pressures resulting in higher interest rates and increased nonperforming loans (NPLs) could weigh on bank assets in the coming months.

“Geopolitical risks, especially the war in the Middle East, led to higher interest rates globally and locally, which could be a potential headwind for net income growth and asset growth of banks for the coming months; higher NPLs are also a drag,” he said.

The latest BSP data showed that banks’ gross bad-loan ratio, which measures nonperforming loans as a share of the total loan portfolio, rose to a two-month high of 3.35% in July from 3.29% a month earlier. It nevertheless improved from 3.4% a year earlier.

The central bank has been in a tightening cycle since April raising its policy rate by a cumulative 75 basis points (bps) to 5%.

After the BSP’s August meeting, Governor Eli M. Remolona, Jr. said he hoped the central bank would not need to tighten further, while leaving the door open to additional rate increases if necessary to bring inflation closer to its 3% target.

Inflation averaged 5.2% as of August, with the headline rate remaining above the BSP’s target for a sixth consecutive month.

The Monetary Board is scheduled to hold two more policy reviews this year, on Oct. 22 and Dec. 17 — the next checkpoints for the rate path analysts flagged as a potential drag on banks’ asset growth in the coming months.

Source: https://bworldonline.com/editors-picks/2026/09/18/778208/banks-assets-grow-at-end-july/