BSP on Guard as Digital Banks Face Profit Strain

Why It Matters

Persistent profitability challenges signal a testing phase for the nascent digital banking market, while rapid deposit growth and higher credit risk compel the BSP to tighten oversight, shaping the sector’s future stability and consumer access.

Key Takeaways

• Only Maya Bank and OF Bank report profitability.
• Digital bank deposits hit P138.5 billion, up 44%.
• Customer accounts grew 75% to 33.9 million.
• Non‑performing loans at 6.16%, double system average.
• BSP monitors risk, ready to intervene aggressively.

Pulse Analysis

Five years after the BSP opened the digital‑banking frontier, the Philippines has become one of Southeast Asia’s fastest‑growing fintech ecosystems. The regulator granted six licenses in 2022, and by the close of 2025 digital banks collectively held P138.5 billion in deposits spread across 33.9 million accounts—growth rates of 44% and 75% year‑over‑year, respectively. This surge reflects a broader consumer shift toward mobile‑first financial services, driven by high‑yield deposit products and aggressive marketing that have attracted 22.4 million depositors, an 81% jump from the previous year.

Yet the rapid expansion has not translated into immediate earnings. Only Maya Bank and its Land Bank subsidiary, OF Bank, have disclosed profitability, while the remaining incumbents continue to post losses as they invest heavily in technology, customer acquisition, and loan underwriting. The sector’s loan book reached P71.5 billion, but the non‑performing loan ratio climbed to 6.16%, more than double the 3.31% average for the whole banking system. Higher‑risk consumer lending and fierce competition for cheap funding are amplifying credit risk, prompting concerns among investors and rating agencies.

In response, the BSP has adopted a risk‑based supervisory framework that emphasizes early engagement and the ability to intervene when aggressive growth threatens capital adequacy. The central bank’s willingness to reject or delay new licenses, as seen in the 2021 moratorium, underscores its commitment to a sustainable digital‑banking landscape. Looking ahead, continued deposit inflows and product innovation could improve margins, but banks must balance scale with disciplined risk management. Stakeholders should monitor the regulator’s guidance, NPL trends, and the entry of new players, which together will shape the sector’s profitability trajectory and its contribution to financial inclusion.