Philippine banks' consumer-loan NPL ratio rises to 5.49%
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Key points
- The banking system NPL ratio was 3.35% in July (up from 3.29% in June); NPLs totalled about PHP 585 bn.
- Consumer 5.49%, card 5.34% and auto 5.51% ratios all rose from June.
- NPL coverage slipped to 92.45% (down from 92.52% in June).
Implications
Facts
System-wide: the gross NPL ratio of banks was 3.35% at end-July 2026 (up from 3.29% in June). NPLs were about PHP 585 bn (up more than 9% year on year) against total loans of PHP 17.4 trn. Source: BSP data as reported by the Inquirer on 9 September. 1
Household loans: consumer loans 5.49% (up from 5.44% in June); credit cards 5.34% (up from 5.28% in June); auto loans 5.51% (up from 5.49% in June). Business loans were 3.27%, the lowest in six months. Same source. 2
Provisions: loan loss reserves were about PHP 541 bn; NPL coverage was 92.45% (down from 92.52% in June). Same source.
Analysis
Deterioration is concentrated in household lending while business lending is improving. With consumer loan growth slowing for an eleventh month (July 17.1%), arrears on earlier loans are surfacing in the ratios. The consumer NPL ratio is also above Indonesian finance companies' gross NPF of 3.03% (July, OJK), though institutions and definitions differ. Coverage below full cover means provisioning has not kept pace with NPL growth.
Counterpoints and uncertainties
Month-on-month increases were small (0.02–0.06 pp); several months of data are needed before calling a trend. The Inquirer attributes the rise to inflation-driven household strain, but causality has not been tested.
Key figures
- Banking system NPL ratio: 3.35% (up from 3.29% in June). Non-performing loans as a share of total loans (BSP data). Philippine banking system. Basis date: 31 Jul 2026. Source: Inquirer: Bad loans up amid continuing consumer strain (2026-09-09)
- Consumer loan NPL ratio: 5.49% (up from 5.44% in June). Non-performing consumer loans as a share of consumer loans (BSP data). Philippine banking system. Basis date: 31 Jul 2026. Source: Inquirer: Bad loans up amid continuing consumer strain (2026-09-09)
Sources
SEA Lending Brief
A weekly summary of lending, credit and regulation across Southeast Asia.
Reports are for information only and are not investment advice.
A Japanese version of this article is available: 日本語版