Banks’ bad loan ratio rises to 3.35% in July
Philippine banks saw their non-performing loan (NPL) ratio rise to 3.35% in July, driven by high inflation and borrowing costs. While the ratio remains lower than the previous year, the increase reflects ongoing financial strain on households and businesses.
Why it matters
Rising bad loans can signal broader economic instability and potential credit risks within the national banking sector.
MANILA, Philippines - The share of bad loans held by Philippine banks edged higher in July as some households and businesses continue to feel the strain of high borrowing costs and elevated inflation.
Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed the banking industry's non-performing loan (NPL) ratio climbed to a two-month high of 3.35 percent in July from 3.29 percent in June, although it remained below the 3.4 percent recorded a year ago.
NPLs are loans whose principal or interest payments have remained unpaid for at least 90 days after their due date. A higher ratio means a larger share of banks' total loans is considered problematic, which can signal greater repayment stress among households and businesses.
In peso terms, gross bad loans increased by 9.3 percent to P585.08 billion in July from P535.45 billion a year earlier.
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