MANILA — The Philippine financial system remained stable last year, although regulators must continue monitoring emerging risks, according to the 2025 Financial Stability Report released by the Financial Stability Coordination Council (FSCC).

The report said the country’s banking sector continued to show resilience in 2025, supported by strong capital buffers, prudent regulation, and sufficient loan loss provisions. It also cited a well-functioning payment system as part of the system’s overall stability.

“The Philippine economy and financial system remain resilient. Credit growth remains steady in line with economic activity. Borrowing levels remain manageable and banks are well-capitalized. Inflation is benign, while interest rates show signs of stabilizing,” FSCC Chair and Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said.

Based on the BSP’s early warning system, the report said the country remains resilient to external shocks, supported by manageable external financing needs and adequate foreign reserve buffers.

It added that while global and domestic risks persist, these have not yet led to any significant weakening of the financial system or amplification of vulnerabilities.

However, the FSCC said domestic credit conditions and imbalances in the real estate market remain key sources of risk. These include rising leverage across sectors, elevated property prices, increased lending to conglomerates and selected industries, and the growth of unsecured consumer loans, particularly credit card debt.

The report also flagged cyber threats and geopolitical tensions, including conflicts in the Middle East, as additional risks to financial stability.

“These risks underscore the need for vigilance and coordinated oversight among regulators,” Remolona said.

To address these concerns, the FSCC recommended activating countercyclical capital buffers, strengthening oversight of non-financial corporations and complex conglomerates, expanding data coverage for non-bank financial institutions, and operationalizing a systemic crisis management framework.

The FSCC is an inter-agency body composed of the BSP, Department of Finance, Insurance Commission, Philippine Deposit Insurance Corporation, and Securities and Exchange Commission. The report is issued annually to assess systemic risks in the Philippine financial system. (PNA)