Philippine banks' consumer-loan NPL ratio rises to 5.49%

Published 28 Sep 2026Data as of 9 Sep 2026PhilippinesCreditUnsecuredVehicle finance

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).

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.

Implications

ExecutivesRepayment strain has spread across all major household credit products.

InvestorsCoverage below full cover could add to credit costs going forward.

OperatorsStrengthen contact within the first thirty days of arrears and track delinquency by product and origination month.

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.

Figures: see definitions

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

Reports are for information only and are not investment advice. Methodology: sources, verification and definitions