BDO Unibank Inc. expects lending activity to remain resilient this year despite rising inflation, higher interest rates and global uncertainties, although the country’s largest bank acknowledged that growth could slow in the second half if geopolitical tensions persist.
Speaking during the Philippine Stock Exchange STAR Investor Day, BDO executive vice president Luis Reyes Jr. said the bank is still seeing strong demand for loans, particularly from private capital expenditures that spilled over from projects initiated last year.
‘Well, part of the stronger loan growth in the first quarter was the private capex coming through, and there are still a number of transactions in the pipeline along the same trend,’ Reyes said.
‘So we hope that we will be able to see, at least in the near term, that there’s a possibility that we may see this growth continuing,’ he said.
BDO’s gross loans expanded by 16 percent to P3.8 trillion in the first quarter, accelerating from the 13 percent full-year growth recorded in 2025 and outpacing the banking industry’s 9.5 percent growth.
The Sy-led bank said expansion was broad-based across large corporates, middle market and consumer lending.
‘However, looking at the second half of the year, that’s going to be a bit more difficult to predict,’ Reyes said, citing uncertainties surrounding oil prices, inflation and consumer spending.
BDO said consumer spending remains one of the key drivers supporting economic activity, helped by steady remittance inflows and revenues from business process outsourcing firms.
Reyes noted that overseas Filipino workers tend to send more money home during periods of crisis to help families cope with rising costs.
At the same time, BDO is steadily increasing the share of consumer loans in its portfolio as part of efforts to cushion the impact of lower interest rates on margins.
The bank’s consumer portfolio now accounts for 25.5 percent of total loans, up from about 21 percent five years ago.
Reyes said the long-term goal is to eventually achieve a roughly equal split among large corporates, middle market and consumer loans.
‘Our ambition is to have an equal split of the loan book among the three sectors,’ he said.
According to Reyes, every one percentage-point increase in the consumer loan share improves margins by around three basis points, helping offset pressure from declining policy rates.
Still, the bank said it remains cautious about asset quality as consumer exposure grows.
BDO expects normalized credit costs to rise to around 55 to 60 basis points this year from the historical level of about 45 basis points, reflecting both faster consumer lending growth and preemptive provisioning against potential risks.
‘We did preemptive provisioning to cover future potential losses,’ Reyes said. ‘Given the environment today, it is expected that there will be some companies who will potentially experience some difficulties or some challenges because of inflation and higher interest rates.’
Despite the more cautious stance, the bank said asset quality indicators remain stable so far, with no major deterioration seen from the ongoing Middle East conflict.
Reyes also acknowledged that the recent rate hikes by the Bangko Sentral ng Pilipinas (BSP) present both risks and opportunities for banks.
‘I think the BSP is in a difficult situation at the moment,’ he said. ‘This high inflation environment puts them in a position where they may need to increase policy rates,’ he said.
While higher rates could temper economic activity, Reyes said BDO’s large base of low-cost current and savings accounts positions the bank to benefit from a higher-rate environment.
The bank is also monitoring the continued depreciation of the peso, which recently weakened past the 61-per-dollar level amid global market volatility and concerns over oil prices.
Reyes said BDO’s exposure to foreign exchange risks remains limited due to BSP regulatory caps on banks’ open currency positions.
BDO has also continued expanding both its physical and digital footprint, saying financial inclusion still requires branches in cash-heavy communities while digital transaction volumes continue to rise by 30 to 40 percent annually.