Manila Times
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Tuesday, Jun 16, 2026
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Philippine Banks' Non-Performing Loan Ratio Increases to Five-Month High
April data reveals a rise in bad loans amid slow economic growth, though year-on-year comparisons show improvements.
Preliminary data from the Bangko Sentral ng Pilipinas (BSP) indicates that the non-performing loan (NPL) ratio of Philippine banks increased to 3.39 percent in April 2023, up from 3.3 percent in March 2023. This level marks the highest ratio observed in five months, coinciding with an economic environment characterized by weak income growth and slowed business activity.
The current NPL ratio of 3.39 percent is the highest since November 2022, when it was recorded at 3.54 percent.
However, this figure represents an improvement compared to the 3.45 percent reported in April 2022.
Experts attribute the rise in NPLs, which are loans that have not been serviced for at least 90 days past their due date, to increasing unemployment rates, leading to diminished earnings growth and consequently impacting borrowers' ability to meet their financial commitments.
Reinielle Matt Erece, an economist at Oikonomia Advisory & Research Inc., noted that diminished demand and lackluster business growth could further complicate cash flow for businesses.
Despite this upward trend in NPLs, there was an eight percent increase in the total amount of bad debts held by banks, amounting to P519.23 billion in April, compared to P480.65 billion in the same month of the previous year.
In contrast, banks experienced a significant rise in loan disbursements, which grew by ten percent to P15.34 trillion from P13.94 trillion year-over-year, a development attributed to the BSP's gradual easing of monetary policy.
Additionally, past due loans, which include a variety of unsettled loan types, rose by 5.7 percent to P653.26 billion in April from P618.04 billion in April 2022, resulting in a past due ratio of 4.26 percent.
The volume of restructured loans, which are accounts modified to prevent default, grew by 7.3 percent to P311.66 billion from P290.37 billion, producing a restructured loan ratio of 2.03 percent.
In response to the increasing ratio of problem loans, banks have augmented their allowance for credit losses by 4.8 percent, reaching P493.79 billion in April, up from P471.35 billion a year earlier.
This adjustment leads to an NPL coverage ratio of 95.1 percent as of the end of April.
Overall, the NPL ratio has remained below four percent since April 2022, as the banking sector retained cautious credit standards.
The NPL ratio in July and August 2022 peaked at a 13-year high of 4.51 percent, a consequence of the economic disruptions triggered by the COVID-19 pandemic.
The current NPL ratio of 3.39 percent is the highest since November 2022, when it was recorded at 3.54 percent.
However, this figure represents an improvement compared to the 3.45 percent reported in April 2022.
Experts attribute the rise in NPLs, which are loans that have not been serviced for at least 90 days past their due date, to increasing unemployment rates, leading to diminished earnings growth and consequently impacting borrowers' ability to meet their financial commitments.
Reinielle Matt Erece, an economist at Oikonomia Advisory & Research Inc., noted that diminished demand and lackluster business growth could further complicate cash flow for businesses.
Despite this upward trend in NPLs, there was an eight percent increase in the total amount of bad debts held by banks, amounting to P519.23 billion in April, compared to P480.65 billion in the same month of the previous year.
In contrast, banks experienced a significant rise in loan disbursements, which grew by ten percent to P15.34 trillion from P13.94 trillion year-over-year, a development attributed to the BSP's gradual easing of monetary policy.
Additionally, past due loans, which include a variety of unsettled loan types, rose by 5.7 percent to P653.26 billion in April from P618.04 billion in April 2022, resulting in a past due ratio of 4.26 percent.
The volume of restructured loans, which are accounts modified to prevent default, grew by 7.3 percent to P311.66 billion from P290.37 billion, producing a restructured loan ratio of 2.03 percent.
In response to the increasing ratio of problem loans, banks have augmented their allowance for credit losses by 4.8 percent, reaching P493.79 billion in April, up from P471.35 billion a year earlier.
This adjustment leads to an NPL coverage ratio of 95.1 percent as of the end of April.
Overall, the NPL ratio has remained below four percent since April 2022, as the banking sector retained cautious credit standards.
The NPL ratio in July and August 2022 peaked at a 13-year high of 4.51 percent, a consequence of the economic disruptions triggered by the COVID-19 pandemic.
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