Consumer borrowing and spending are expected to accelerate toward the year-end holidays following the Bangko Sentral ng Pilipinas (BSP)’s latest rate cut, according to global credit bureau TransUnion Philippines.
TransUnion said the timing of the rate cut coincides with the country’s peak retail and remittance season, when household consumption typically surges from September to December. Lower borrowing costs are expected to boost demand for consumer credit products such as credit cards, personal loans and buy now, pay later services.
‘This latest rate cut by the BSP sets the stage for a more active lending environment as we move through the BER months,’ TransUnion Philippines president and CEO Peter Faulhaber said in a statement.
Earlier this month, the BSP trimmed its benchmark rate by another 25 basis points to 4.75 percent, marking its fourth consecutive cut this year and the lowest level in three years. The move aims to support domestic demand amid signs of softer business confidence.
‘It’s a timely boost for consumers preparing for the holidays and for lenders aiming to meet that demand,’ Faulhaber added.
He also said that lenders can benefit from the easing cycle by rolling out ‘first-mover strategies’ that offer more personalized financial products while maintaining prudent risk management.
Based on BSP data, loans disbursed by universal and commercial banks expanded by 11.2 percent year-on-year in August, slower than the 11.8 percent increase in July. The August reading marked the weakest growth in nine months.
Bank loans reached P13.62 trillion in August, higher by P1.37 trillion compared to the P12.25 trillion recorded in the same month last year.
TransUnion also expects loan delinquencies to remain stable or even improve slightly in the coming months, supported by strong overseas remittance inflows that enhance borrowers’ repayment capacity.
‘What matters now is how the formal financial industry capitalizes on this momentum,’ Faulhaber said, emphasizing the importance of responsible borrowing and long-term financial discipline.
Separate BSP data showed that the industry’s non-performing loan ratio rose to 3.5 percent in August from 3.4 percent in July. It marked the fastest pace in three quarters or since the 3.54 percent in November 2024. Loans are classified as non-performing when unpaid for at least 90 days past their due date.
With inflation seen to moderate further and policy rates now at their lowest since September 2022, TransUnion said the lending environment is well-positioned for recovery heading into 2026, particularly as consumer sentiment improves alongside easing financial conditions.