Q1 bank asset growth fastest in over a year

By Isa Jane D. Acabal, Researcher

GROWTH in the combined assets of the Philippines’ largest banks accelerated to its fastest pace in more than a year in the first quarter, despite disruptions from the Middle East conflict.

In the latest edition of BusinessWorld’s quarterly banking report, the aggregate assets of 44 universal and commercial banks expanded by 9.52% year on year to P29.4 trillion in the January-to-March period from P26.84 trillion a year earlier.

This pace was a tad faster than the 9.51% logged in the same period last year, and the 8.54% growth in the fourth quarter of 2025.

However, the pace of asset growth was the quickest since the 10.02% expansion in the fourth quarter of 2024.

Total loans grew by 11.44% year on year to P15.63 trillion in the first three months, easing from 13.46% a year ago but faster than the 10.12% in the fourth quarter of 2025.

Loan growth was the strongest in three quarters or since the 12.38% posted in the second quarter of 2025.

Lending continued to expand despite sluggish economic growth in the first quarter and rising inflation driven by a spike in fuel prices amid the Middle East war.

In the first quarter, the Philippine economy expanded by 2.8%, the weakest growth since the pandemic.

Inflation accelerated to 4.1% in March from 2.4% in February, reflecting soaring pump prices. In the first three months, inflation averaged 2.8%.

The big banks’ nonperforming loan ratio, or loans with unpaid principal and/or interest for at least 90 days after the due date, reached 3.32% in the first quarter.

This was higher than the 3.16% a year earlier and the 3.15% in the October-to-December period of 2025.

Data also showed that the banks’ median return on equity (RoE) rose to 7.34% as of end-March from 7.3% a year earlier and 6.97% in the fourth quarter of 2025.

RoE is an indicator of profitability which measures the amount shareholders make on every peso they invest in a company.

On the other hand, the largest banks’ median capital adequacy ratio — the lenders’ ability to absorb losses from risk-weighted assets — reached 19.08% during the first three months.

This was lower than the 19.71% logged in the same quarter in 2025 and the 21.21% in the fourth quarter.

The ratio was above the Bangko Sentral ng Pilipinas’ (BSP) regulatory minimum of 10% and the international minimum standard of 8% under the Basel III framework.

As of end-March, the big banks’ leverage ratio stood at a median of 11.15%, lower than the 11.27% a year ago and 11.73% a quarter earlier.

This exceeded the minimum 5% guideline of the central bank and the 3% international standard.

Leverage ratio gauges an institution’s ability to absorb shocks by measuring the bank’s capital in relation to total exposure.

The net interest margin (NIM) of these big banks was at 3.61%, lower than the 3.76% a year earlier and the 3.99% in the fourth quarter of 2025.

NIMs measure banks’ efficiency in investing their fund by dividing annualized net interest income by average earning assets.

Return on assets, which measures the profit generated per peso of an asset, slipped to 1.49% in the first quarter from 1.71% in the same period in 2025.

BIGGEST BANKS
In the first quarter, BDO Unibank, Inc. (BDO) kept its lead as the largest bank by total assets with P5.69 trillion, followed by Metropolitan Bank & Trust Co. (Metrobank) with P3.81 trillion and Bank of the Philippine Islands (BPI) with P3.74 trillion.

BDO also led all banks in lending as it issued P3.75 trillion worth of loans in the first quarter. This was followed by BPI with P2.59 trillion in loans and Metrobank with P2 trillion in loans.

The Sy-led bank posted the largest total deposits with P4.42 trillion during the period, followed by Land Bank of the Philippines with P3.04 trillion and BPI with P2.85 trillion.

Among banks with at least P100 billion in assets, the Philippine Veterans Bank recorded the fastest year-on-year asset growth with 44.78%, followed by MUFG Bank Ltd. (20.17%), and Bank of Commerce (19.06%).

Meanwhile, Citibank NA was the most aggressive lender with an annual increase of 43.77% in total loans, followed by Standard Chartered Bank at 27.82% and Philippine Veterans Bank at 26.81%.

BusinessWorld Research has been tracking the financial performance of the country’s largest banks quarterly since the late 1980s, using banks’ published statements. To read the full data of the report, visit https://bworld-x.com/.