Analyst warns: Closely monitor credit quality
Consumer loans granted by Philippine banks grew 3.1 percent in the first quarter of the year from the quarter earlier, comprising more than 20 percent of the banking system’s total loan portfolio in the period, the latest central bank data showed.
In absolute figures, first-quarter consumer loans reached P3.182 trillion as of end-March 2025, up from P3.085 trillion in the fourth quarter of 2024.
Year-on-year, growth in the January-March 2025 quarter was even bigger at 18.1 percent from P2.964 trillion.
The latest statistics posted on the BSP website showed consumer loans for the first quarter comprised 21.3 percent of the Philippine banking system’s total loan portfolio of P14.958 trillion.
Consumer loans refer to the total loans outstanding with banks, including those for motor vehicles, salary, residential real estate and credit card receivables, among others.
Residential real estate loans in the first quarter of the year reached P1.127 trillion, accounting for 35.4 percent of the total consumer loans. This was 2.5 percent higher than the P1.099 trillion in the fourth quarter of last year and 10.8 percent higher than the P1.017 trillion a year earlier.
Credit card receivables, at P961 billion, accounted for a 30.2 percent share of the total.
This was higher by 2.8 percent than the
P935 billion in the previous quarter and by 28.9 percent over the P745 billion recorded for the first quarter of last year.
Motor vehicle loans, meanwhile, comprised 19.9 percent of the total consumer loans, after hitting P633 billion in the first quarter of 2025.
This was 5.3 percent higher than the previous quarter’s P601 billion and 18.5 percent higher than the P534 billion a year earlier.
Salary loans, which were 12.8 percent of the total, hit P407 billion in the first quarter, 3.1 percent higher than the previous quarter’s P392 billion.
Year-on-year, salary loans rose 15.3 percent from P353 billion in the first quarter of last year.
Mixed analyst views
Michael Ricafort, RCBC’s chief economist, pointed out that year-on-year growth at 18.1 percent in consumer loans “is more than three times faster than GDP growth.”
He attributed that to the country’s favorable demographics.
“This favorable demographics also made the Philippines among the fastest growing in Asean. With a population of more than 114 million, the 12th largest in the world, and with an average age of below 25 years old, more than half of the population is already at working age,” Ricafort said in a Viber message.
“So more Filipinos have incomes and spending power. More Filipinos are taking consumer loans to purchase homes, vehicles, availing of credit cards, salary loans, and other consumer loans,” Ricafort said.
Leonardo Lanzona, an economist at Ateneo de Manila University, said, however, the increase in consumer loans goes beyond the illiquidity of consumers.
“If the problem had only been due to illiquidity, this would not be a problem. With lower incomes and lower remittances, consumers have no other recourse but to increase their loans. Despite the lower inflation, unemployment is higher,” Lanzona said in a Viber message.
“Hence, this is due to inefficiency, where incomes have become lower than the value of their basic needs, and this would have serious consequences. The inability of the government to address basic economic issues has led to this situation,” Lanzona said.
John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, said sustained growth in consumer loans “signals resilient household demand and growing consumer confidence.”
“This is likely supported by easing inflation, stable employment, and strong remittance inflows, which have helped boost spending capacity. At the same time, banks remain aggressive in retail lending as it offers higher margins than corporate loans, especially in areas like personal loans, credit cards, and auto financing,” Rivera said in a Viber message.
Rivera warned, though, that the BSP and banks must closely monitor credit quality, as rising consumer debt can pose risks if income growth slows or interest rates shift.
“Still, this trend reflects a consumer-driven recovery, which bodes well for broader domestic economic activity,” Rivera said.
