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BMI raises Philippine 2026 bank loan growth forecast to 10% but flags bad-loan risk

Published Data as of PhilippinesCredit
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Key points

Implications for lenders

BMI's higher forecast points to firm credit demand this year, but with the NPL ratio at 3.35% and inflation at 7.2%, affordability checks and early-arrears monitoring may matter more than volume. If loan growth slows towards 9% in 2027, provisioning and collections capacity planned on today's ratios may prove too light.

Implications

ExecutivesBudget for loan growth near the current pace this year but plan 2027 on a slower book, where existing arrears weigh more on reported ratios.
InvestorsRead Philippine bank NPL ratios alongside loan growth; a stable ratio during fast growth can mask a rising stock of bad loans.
OperatorsTrack roll rates in consumer books, where growth of 16.2% is fastest, while inflation remains at 7.2%.

Facts

Forecast: in a report covered by Philstar on 13 October, BMI raised its end-2026 forecast for Philippine bank loan growth to 10% (raised from 8.5%) 1 and projected 9% for end-2027. 2 BMI expects the central bank to raise its policy rate again in October; the rate stood at 5.0% after the August increase. 3

Current lending: BSP data show outstanding loans of universal and commercial banks grew 11.0% year on year in August (up from 10.4% in July). 4 Consumer loans of these banks grew 16.2% (down from 17.1% in July). 5

Asset quality and capital: the banking system's gross NPL ratio was 3.35% in August (unchanged from July; down from 3.50% in August 2025). 6 BMI compared this with an average of 2.6% in the decade before the pandemic. 7 Banks' capital adequacy ratio was 15.2% at end-June, 8 above the regulatory minimum of 10%, 9 though BMI noted the ratio has been declining in recent quarters.

Risks named by BMI: high inflation and unemployment could push more loans into delinquency, and slower lending could reduce the cover that fast credit growth has given to bad-loan ratios. Headline inflation was 7.2% in September. 10

Analysis

Time series: growth of universal and commercial bank loans has moved in a band this year and was 11.0% in August, up from 10.4% in July (chart). BMI's 10% end-year forecast implies lending growth holds close to the current pace for the rest of the year, then eases to 9% in 2027.

Cross-country: Indonesian bank credit grew 13.3% in August, 11 while Malaysian household loans grew 5.2%. 12 Philippine lending is growing at a pace close to Indonesia's, but with a gross NPL ratio of 3.35% against Malaysia's gross impaired loans ratio of 1.4%. 13 Ratios are compiled under different national definitions, so the comparison is indicative.

What matters for lenders: BMI's two points pull in opposite directions. Faster loan growth keeps the NPL ratio flat because the denominator grows; if growth slows as BMI expects for 2027 while inflation stays high, the same stock of bad loans would show up as a higher ratio.

Loan growth, universal and commercial banks (y/y) (%)
05101510.72026-0311.42026-0412.12026-059.82026-0610.42026-07112026-08
Loan growth, universal and commercial banks (y/y) (%)
2026-0310.7
2026-0411.4
2026-0512.1
2026-069.8
2026-0710.4
2026-0811

Outstanding loans of universal and commercial banks, y/y at month-end, BSP preliminary data as reported in the press (total loans, not consumer loans) · Source: Bangko Sentral ng Pilipinas monthly bank lending data, as reported by Philstar/Inquirer (2026-03, 2026-04, 2026-05, 2026-06, 2026-07, 2026-08) The July report states the figures exclude reverse repurchase agreements with the BSP. Preliminary figures.

Counterpoints and uncertainties

The forecasts come from one research house and are not BSP projections; other forecasters may differ, and a further rate increase in October could slow lending faster than BMI assumes. The pre-pandemic NPL average is BMI's figure and may not use the same coverage as the current BSP ratio. The capital ratio is a June figure and does not reflect any losses since.

Key figures

  1. BMI forecast: bank loan growth, end-2026: 10% (raised from 8.5%)
    Research-house forecast, not an official projection.
    . BMI (Fitch Solutions unit) forecast of Philippine bank loan growth, y/y at end-2026. Philippine banking system. Basis date: 13 Oct 2026. Source: Philstar: BMI hikes bank lending growth forecast for Philippines (2026-10-13)
  2. BMI forecast: bank loan growth, end-2027: 9% (below the 2026 forecast)
    Research-house forecast, not an official projection.
    . BMI (Fitch Solutions unit) forecast of Philippine bank loan growth, y/y at end-2027. Philippine banking system. Basis date: 13 Oct 2026. Source: Philstar: BMI hikes bank lending growth forecast for Philippines (2026-10-13)
  3. BSP policy rate (as reported): 5.0% (unchanged since the 28 August 2026 increase from 4.75%). BSP overnight reverse repurchase rate as cited in press coverage. Philippines, national. Basis date: 9 Sep 2026. Source: Inquirer: Bad loans up amid continuing consumer strain (2026-09-09)
  4. Bank lending growth: 11.0% (up from 10.4% in July)
    BSP preliminary data.
    . Year-on-year growth of outstanding loans. Universal and commercial banks. Basis date: 31 Aug 2026. Source: Philstar: Bank lending growth reaches 3-month high (2026-10-02)
  5. Consumer loan growth: 16.2% (down from 17.1% in July). Year-on-year growth of outstanding consumer loans to residents. Universal and commercial banks. Basis date: 31 Aug 2026. Source: Philstar: Bank lending growth reaches 3-month high (2026-10-02)
  6. Banking system NPL ratio: 3.35% (unchanged from July; down from 3.50% in August 2025)
    Preliminary BSP data as reported in the press; BSP may revise them.
    . Gross non-performing loans as a share of total loans (BSP data). Philippine banking system. Basis date: 31 Aug 2026. Source: Philstar: Banks' bad loan ratio steady at 3.35% in August (2026-10-05)
  7. Average gross NPL ratio, decade before the pandemic (BMI): 2.6%. Average gross non-performing loan ratio of Philippine banks in the decade before the pandemic, as stated by BMI. Philippine banking system. Basis date: 13 Oct 2026. Source: Philstar: BMI hikes bank lending growth forecast for Philippines (2026-10-13)
  8. Capital adequacy ratio, banks: 15.2% (declining in recent quarters, per BMI). Capital adequacy ratio of Philippine banks, end-Q2 2026, as cited by BMI. Philippine banking system. Basis date: 30 Jun 2026. Source: Philstar: BMI hikes bank lending growth forecast for Philippines (2026-10-13)
  9. Regulatory minimum capital adequacy ratio (BSP): 10%. BSP regulatory minimum capital adequacy ratio for banks. Philippine banking system. Basis date: 13 Oct 2026. Source: Philstar: BMI hikes bank lending growth forecast for Philippines (2026-10-13)
  10. Headline CPI inflation (PSA): 7.2% (up from 6.1% in August; matches April 2026). Year-on-year change in the consumer price index. Philippines, national. Basis date: 30 Sep 2026. Source: Inquirer: PH inflation climbs to 7.2% in September (2026-10-06)
  11. Bank credit growth (BI, YoY): 13.3% (up from 13.0% in July 2026)
    Bank Indonesia's money-survey credit series (loans only; excludes debt securities and bankers' acceptances). Differs from OJK's commercial-bank series. Headline total growth confirmed in BI's release (bi.go.id, checked 2026-09-29); segment breakdowns from media reports citing BI (Kontan, Industry.co.id), which agree.
    . Year-on-year growth of outstanding bank loans (BI money survey). Indonesia, banking system (BI money-survey basis). Basis date: 31 Aug 2026. Source: Kontan: Kredit Bank Makin Kencang, Tembus Rp9.019 Triliun pada Agustus 2026 (2026-09-24), citing Bank Indonesia
  12. Household loan growth (BNM): 5.2% (down from 5.3% in July). Year-on-year growth of outstanding household loans, banking system. Malaysia, banking system. Basis date: 31 Aug 2026. Source: Bank Negara Malaysia: Monthly Highlights & Statistics, August 2026 (released 2026-09-30)
  13. Gross impaired loans ratio (BNM): 1.4% (broadly unchanged from July). Gross impaired loans / total loans, banking system. Malaysia, banking system. Basis date: 31 Aug 2026. Source: Bank Negara Malaysia: Monthly Highlights & Statistics, August 2026 (released 2026-09-30)

Sources

  1. Philstar: BMI hikes bank lending growth forecast for Philippines (2026-10-13)
  2. Philstar: Banks' bad loan ratio steady at 3.35% in August (2026-10-05)
  3. Philstar: Bank lending growth reaches 3-month high (2026-10-02)
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A Japanese version of this article is available: 日本語版

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